Ricky Sandler, the Managing Member and Senior Portfolio Manager of Eminence Capital, has been added to the lineup of speakers to present at the 7th Annual New York Value Investing Congress. In his August 2006 interview with Value Investor Insight, he described his investing philosophy as such:
The philosophy is still very much the same. We called it then and I call it now “quality value.” Morris Mark, for whom both Wayne and I worked at Mark Asset Management, had a big influence because of his emphasis on research and on owning great businesses – great companies in secular growth businesses with excellent industry structures. Morris was more willing to buy a great business with less regard for price, but we believed you could pay too much for even the greatest business. We were also more open to the fact that there was a price at which a mediocre business could be attractive. So our focus was along the spectrum between “reasonable business at a great price” and “great business at a reasonable price”, with the rest being uninvestable. That’s still what I do today.
He also described how he comes up with ideas:
Our best ideas tend to come from what I call “old research, new events”. That’s typically the good company you’ve studied carefully and would love to own at the right price, that gets marked down after it trips or its industry goes out of favor. A great example was Yum Brands a couple years ago. Comp sales at one of their restaurant chains, KFC, were way off one quarter and the stock crashed 35%. It instantly became an idea – I knew it was a good business and now it was on sale at a 35% discount.
We also learn a lot from other investors. I go to idea dinners and regularly talk to a lot of people in the business. I’m not afraid of ideas owned by other people, but you obviously need to do your own work and make sure they fit what you do.
Many of our other ideas just come from having our eyes wide open. You read publications like yours. You talk to contacts you’ve developed in various industries. It’s often just about paying attention to what’s going on in the world.
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