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Whitman, Hawkins, and Browne on Finding Bargains

Celebrated value gurus share insights on value investing.

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Are the traditional equity classifications of "growth" and "value" meaningless distinctions? After all, isn't the goal of investing to buy any company on the cheap and see it appreciate in value over the long term? This seemed to be the consensus of three value-investing gurus at the Morningstar Investment Conference in Chicago.

 Third Avenue Value (TAVFX) manager Marty Whitman said he likes to find companies that are "cheap and safe", favoring those selling at $0.50 to $0.60 on the dollar. Often, he noted, his stocks' near-term outlooks are bleak. He focuses on bottom-up stock-picking--putting "growth" and "value" labels aside--and favors companies with reliable financial statements and businesses he understands. Of  Sun Microsystems (SUNW), a purchase he made several months ago, Whitman said, "We will consider high-tech stocks when cash alone is well in excess of liabilities, it is trading at 10 times past peak earnings, and [it is trading] less than two times book value."

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Karen Wallace does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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