May 4, 2020

About Broken Leg Investing

Broken Leg Investing is a website devoted to the practice of deep value investing. Deep value investing itself was popularized by Benjamin Graham in the 1930s through his night school seminars at Columbia University, and then through his popular Security Analysis textbooks.

Deep value investing is the practice of buying securities at deep discounts to their conservatively stated valuations. Through careful study of the underlying securities using the company's published financial results, an investor can work out a conservative assessment of fair value. If the stock or bond is cheap enough relative to that fair value assessment, and the business outlook is decent, s/he buys.

What's with the name?

The broken leg problem is a well known investor bias where an investor assumes that a specific stock that fits a certain deep value strategy will not produce a good investment return due to some problem the business is going through. In reality, that problem is often the chief reason why the stock is cheap and stands ready to produce a good return once the issue is overcome.

Over the years, many famous value investors employed the approach, from Walter Schloss, Seth Klarman, Mohnish Pabrai, Irving Kahn, John Templeton, Howard Marks, Warren Buffett, and even Charlie Munger. All of these practitioners earned the highest returns of their careers buying beaten down securities for a fraction of what they were worth. And, while Buffett and Munger were forced into buying great businesses at good prices due to the amount of capital they were investing, many have chosen to stick with deep value throughout their careers.

Broken Leg Investing is focused on helping to educate small investors on the practice of deep value investing. For investors who want help picking deep value stocks, we also offer investment analysis on international deep value stocks through the Broken Leg Investment Letter subscription service.