I don’t think I’ve ever written a word about Charles Mizrahi, but he’s been around for a while as a respected value stock picker with at least one newsletter under his name … and he’s got a teaser ad out now that’s getting the attention of Gumshoe readers, so I thought it an opportune time to have a look.
Mizrahi puts out the Hidden Values Alert, which has been covered with kind words by Hulbert from time to time and which reportedly follows Warren Buffett’s wisdom almost to the letter, but this pitch is for his Inevitable Wealth Portfolio, which I haven’t ever heard of before.
Sounds like a similar advisory, though perhaps not focused on smaller companies as Hidden Values is … the same basic strategy of buying value-priced “bulletproof” stocks seems to be the order of the day. Oddly enough, this letter is far more expensive than Hidden Values Alert (Hidden Values is about $200/year, Inevitable Wealth is more like $200/month), and has done significantly worse over the last year. (Hidden Values Alert has been tracked for five years and has beaten the market with less risk, Inevitable Wealth has been tracked for just a year and has underperformed the market with more risk, all according to Hulbert — not a fair comparison yet, but an interesting anomaly.)
But really, it’s tough to argue with a patient value investing strategy — at least for me, since it’s similar to what I try to do with my own money. Not that it will outperform the market all the time, but buying great companies at good prices and letting them compound their earnings (or maybe even their dividends) has certainly been a safe and effective strategy for decades. With the possible exception of this most recent decade, when it seems that nothing was “safe” and little was “effective” (present company excepted, of course).
And if you’re going to come out and tease that you’ve found the “next Berkshire Hathaway,” well, I’m going to stand up and pay attention.
It’s an old strategy, of course — newsletters have been promising to find the next Warren Buffett for as long as there have been teaser ads. In fact, one of the very first teasers covered here at Stock Gumshoe, way back in the glory days of 2007, was for Louis Navellier, of all people, promising that he’d found the company that might be Berkshire’s successor (that one was for Brookfield Asset Management, a copmany that I also like but that has been beaten by both Berkshire Hathaway and the S&P 500 in the interim). Other “next Berkshires” have been touted and teased through the years by many pundits, including Markel, Loews, Biglari Holdings, Eddie Lampert’s Sears and several others.
Why? Well, because getting in early with Warren Buffett in the 1960s, when he was a brand new, unproven investment manager, made a bunch of folks really, really rich. And they were small-time folks, just like you and I and our neighbors, so the romance of finding that fabulous investors is incredibly compelling, probably we all secretly want to lock eyes with the next wunderkind CEO, hop on his coattails, and ride to glory on that one decision.
So that’s the most compelling part of this ad from Mizrahi — the stories of a few ordinary Omaha families who put a couple thousand dollars in Buffett’s care 50+ years ago and now have $100 million+ family fortunes. Or, if you’re motivated more by fear than by greed, the story of Don Keogh, who has certainly made something impressive of himself but who famously decided not to invest his young family’s college funds with Buffett and regrets it to this day. (Of course, no one ever went back and checked on the record of the other thousands of startup investment partnerships that were active at the time, or figured out how — other than luck and proximity — these people chose Buffett over the other folks, long since forgotten by time and poor per