Finding undervalued securities comes first
“Primary attention is given at all times to the detection of substantially undervalued securities.”
Business
Work-outs profit from corporate action
“A work-out is an investment which is dependent on a specific corporate action for its profit rather than a general advance in the price of the stock as in the case of undervalued situations.”
Work-out risk lies in the deal
“Work-outs come about through: sales, mergers, liquidations, tenders, etc. In each case, the risk is that something will upset the applecart and cause the abandonment of the planned action, not that the economic picture will deteriorate and stocks decline generally.”
Matching a rising market would satisfy him
“In a year when the general market had a substantial advance I would be well satisfied to match the advance of the Averages.”
While buying, he wants the price flat
“Obviously during any acquisition period, our primary interest is to have the stock do nothing or decline rather than advance. Therefore, at any given time, a fair proportion of our portfolio may be in the sterile stage.”