Quotes from John Neff:

“It’s slow and dull, but it’s strictly based on value and almost always works.”

“One must leave sufficient incentive for the next buyer to take the merchandise off your hands.”

John Neff’s strategies for value investing

• Look for companies with low P/E ratios, or its opposite, companies that have high Earnings Yield
• Look for companies that are relatively good, but not popular. As an example: Seagate Technology – a company that managed to stay afloat and profitable, while its competitors went bankrupt. [And they’re still around today].
• Avoid the “widely recognized” worst, and also avoid the “widely recognized” best.
• John Neff had between 1-5% position on a single stock or security, in his portfolio.
• He owned between 70-80 stocks in his company’s portfolio (few with 5%)
• John Neff wanted to avoid Buffett and Berkshire’s size problem of buying up large positions that moved market prices.
• John Neff bought when stocks went up and sold when stock prices went down. The reason was that he wanted to be able to find a buyer when he wanted to sell – and vice versa.
• Avoid the most popular stocks: in 2001, right after the Internet bubble, John Neff didn’t own a single one of the 50 largest on the S&P. This is typical of a value investor, but it would be even more interesting to know what John Neff actually did own in 2001..

Read on: About the strategies of other famous value investors.