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Jean-Marie Eveillard and Marty Whitman

These famed investors go where they please in search of value.

Morningstar Advisor, 11/01/2007

Jean-Marie Eveillard and Marty Whitman met in 1990 shortly after Whitman launched what would become his signature fund, Third Avenue Value TAVFX. They were two kindred spirits on a conference panel with a third portfolio manager, who was speaking about financial theories and hypotheses.

"He was talking in a language that was completely different from ours," Eveillard says. "Martin and I chatted afterwards about the fact that it was good that the other was there, because we simply didn't speak the same language as the third guy."

To Eveillard and Whitman, such academic speak only applied to conventional money managers, whose goal was to keep up with a benchmark in the short term. Eveillard and Whitman, on the other hand, didn't give a whit about benchmarks nor the short term; they were buy-and-hold investors who bought companies they knew from the bottom up at ridiculously cheap prices.

"I was very impressed, from that day to this, on what Jean-Marie had to say," Whitman says. "He was very, very value-oriented. Very interested in not taking investment risk, and willing to go all places in the world, and very skilled at doing things that I am particularly unskilled at, such as investing in gold--which is a talent all unto itself."

Nearly two decades later, this mutual respect remains. We asked Eveillard, 67, and Whitman, 82, to sit down together to talk about investing. The following conversation took place Aug. 22 at the offices of First Eagle Funds in New York; they had just returned from having lunch together. Their conversation has been edited for clarity and length.

Marty Whitman: Talking about not speaking the same language, I'd put it this way, in academic terms: modern capital theory, the efficient market theory of the efficient portfolio hypothesis. It's all only extremely tangential. It's really not relevant to what you do, Jean-Marie. It's certainly not relevant to what I do.

Jean-Marie Eveillard: No, I think the consultants, the specialized magazines, they all talk the academic language, and it's an instance where the academics are simply wrong.

MW: Well, I don't think they're wrong, except they're a special case. That's what you really ought to do if you really don't know anything about what the security you're investing in, or you're dealing with borrowed money, or for some reason you're very interested in day-to-day and even hour-to-hour price fluctuations. In that special case, I think you and I agree, it's got validity. But it's got nothing to do with what Jean-Marie Eveillard does for a living.PAGEBREAK

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