Eubel Brady & Suttman’s (EBS) value-oriented investment philosophy has been molded over time with influence from many investors we respect. For those in need of summer reading material, we would invite you to check out the titles below. This is not an exhaustive list, but these books provide a great baseline to understand what guides our investment philosophy.
The Intelligent Investor (Benjamin Graham) – Many consider this to be the Bible of value investing. Graham’s lessons from his 1949 work have stood the test of time and still apply today.
Margin of Safety (Seth Klarman) – Another timeless book that inspired one of our core values. Margin of safety is the difference between a security’s price and its intrinsic value. Klarman explains that investing with a margin of safety can help minimize risk of permanently losing capital. Valuation is not an exact science, and a margin of safety can help protect investors from uncertainty, potentially benefiting patient long-term investors. Hard copies of Klarman’s work are hard to come by (and expensive!). Digital copies are easier to find, more economical and still provide the same great lessons.
The Essays of Warren Buffett (Lawrence Cunningham, Warren Buffett) – This book is a curated collection of Warren Buffett’s letters to Berkshire Hathaway shareholders. Spanning decades, Buffett shares his insight into his investment philosophy. The collection covers his views on capital allocation, valuation, corporate governance, accounting practices and his own management principles. Similar to Graham and Klarman’s work, Buffett’s words apply today just as they did decades ago.
Why Moats Matter (Heather Brilliant, Elizabeth Collins) – Moats are sustainable competitive advantages that can keep competitors at bay. This book by Morningstar lays out their five main moat sources (intangibles, switching costs, network effects, cost advantage and efficient scale). Moats play a major role in our investment decision-making process. They influence our assessment of durability, earnings power, valuation assumptions and prospects for future growth in intrinsic values.
The Investment Checklist (Michael Shearn) – This book provides a practical guide to making more informed investment decisions. Shearn helps take emotion out of the process by relying on various checklists to identify potential quality investment opportunities. The investment universe is vast, weeding out companies that don’t pass these checklists can help enable more efficient time spent researching companies we understand and that we believe have durable competitive advantages.
New Reads
At EBS one of our core values is relentless learning. While the books above are fantastic, in our view, we are never content standing still. We continuously learn to enhance and build on our investment process. Below are a few books that our team has recently been reading that can provide additional insight into the investing world.
The Humble Investor (Daniel Rasmussen) – Rasmussen’s work focuses on fundamentals and how forecasting is tragically flawed. He uses data and empirical evidence to suggest returns for private equity are overrated and high yield bonds often do not account for default risks. This holistic view on asset allocation gives readers a better understanding of where better opportunities may lie.
What I Learned About Investing from Darwin (Pulak Prasad) – Prasad takes lessons from nature that draw parallels to investing. His mantras support avoiding big risks, buying high quality businesses at a fair price and holding for the long term.
Thinking in Bets (Annie Duke) – Annie Duke is a former professional poker player. In this book she argues that life (and investing) is closer to a game of poker than it is chess. Chess is typically a game where decisions and outcomes are determined by skill. Poker (and life) is more complex, with uncertainty and luck playing major roles. The book embraces the idea of framing decisions as a series of bets, using a probabilistic mindset to make informed decisions and improve the decision-making process. We also recommend Duke’s follow up books, “How to Decide” and “Quit”. Both build on her framework for making better decisions.
This content is for educational purposes only and should not be construed as investment advice or a recommendation to adopt any particular investment philosophy or strategy. Past investment approaches and philosophies do not guarantee future results. Investing involves risk, including the potential loss of principal. References to specific books, authors or third-party content are for informational purposes and do not constitute endorsements of, or by, EBS.
