The Hindu Business Line : Investment Nuggets

Manager of Wintergreen Fund and formerly chief executive officer and chief investment officer of Franklin Mutual Advisers, David Winters is a value investor.

He believes in holding solid companies for the long-term.

He invests in companies that he thinks will do well in all market conditions, and avoids the current craze.

His investments outperformed S&P 500 Index by about 10 per cent per year between 2001 and 2004, after which he launched his own Wintergreen Fund. In the prospectus of Wintergreen Fund, Mr Winters listed what he thought were the key elements to global investing, which were later referred to as the ABC of global investing:

A: Arbitrage

B: Bankruptcy- Securities of companies that are, or are about to be, involved in bankruptcy.

C: Cash and convertibles- Cash equivalent instruments and debt securities or preferred stock convertible into common stock.

D: Distressed Companies- Securities of companies that are, or are about to be, involved in reorganizations, financial restructurings, or bankruptcy.

E: Equities -Those that are under valued

F: Financial restructurings

G: Global Value- Securities of issuers even in emerging markets

H: Hedging

I: Integrity of management

David Winters made a name for himself by venturing into unloved and underappreciated areas of the market. He went beyond cheap equity to include distressed securities and bankruptcy situations. The formula behind his investment strategy as he quotes: “Travel the extra mile far and away from the crowd and from home”; “Go to all kinds of places where no one is willing to go” and “Do the dirty work that most people find too complicated.”

Below are a few nuggets from David Winters:

“Pick up companies whose valuations are low relative to what you believe they could be worth.”

“If you have a longer-term perspective, there are tons of things to do. I’m less concerned about the short-term movements, except to take advantage when stuff is on sale.”

“I particularly like investments where time is a friend to the investor. By that, I mean we seek to invest in companies that are not overly sensitive to specific investment fads, but rather in companies that I believe will do well in all market conditions. Many of the Fund’s portfolio holdings are companies that are buying back their own stock and are positioned to respond to consumer demand in an up or down market.”

“Be flexible and search globally for assets that could be acquired for meaningful discounts.”

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