Customer Reviews

The 5 Keys to Value Investing

5 star:		(11)
4 star:		(2)
3 star:		(2)
2 star:		(0)
1 star:		(1)

 

 

I got my copy of "The Five Keys to Value Investing" as a graduation gift from my dad who is a longtime professional equities investor. He thought this book would be a good way for me to prep before I start my career on Wall Street. I was not disappointed. The Five Keys is a very good summary of what I learned in business school and much, much more. The author draws heavily from his own professional experiences as a disciple of one legendary value investor and couples it with the value investment styles of other great investors like Buffett and Graham. The experience that the reader is drawn into is very worthwhile; but what makes this book very special is the framework. I have read several investment books over the years, but none like this one. Putting thousands of lessons and teachings of prominent value investors into a solid frame of mind is clearly the draw. In addition, reading along as the author analyzes and dissects companies and few special situations add gravitas to the body of work. The clarity in the concepts and the "conversation-like" tone was particularly attractive to me. In sum, this is a very coherent, practical book on the principles of value investing despite the fact that it is not too objective -- considering the authors' strong unapologetic bias towards value investing.

This is a wonderful book on the principles of value investing. The author does a fantastic job putting together (in a very understandable way) some of the most important tenets that every value investor should uphold. The book starts with "The Mind of the Value Investor" - which I believe to be the book's most important chapter. Here, Mr. Jean-Jacques describes what many successful practitioners believe to be the most critical attribute to becoming a good investor... and that is emotional intelligence. After examining the book a great detail (my copy is dog-eared, highlighted and well marked up), I would consider the following sections to be most important:

-- All of Chapter 1
-- Business Quality Red Flags (in Chapter 2)
-- Assessing Value: Tools to Consider (in Chapter 3)
-- All of Chapter 4
-- Identifying the Opportunity (in Chapter 6)
-- Appendices A, C and E

What I did not like about the book was the length. While it what not as lengthy as some books of this type might be, "The Five Keys to Value Investing" should have been much more concise in the breadth of topics and concepts covered. Also, the examples were good but were too many in number while using analytical concepts that might be a bit too philosophical for non-professional value investors, like me. However, on a lighter point, the analogy between the game of golf and value investing in Chapter 6 was very insightful and much appreciated (it was the only light moment in the entire book!!)

Look, this book is an absolute buy. No question about that. Readers just have to be a bit skilled in order the get the most out of this very informative and thorough work.

I am a portfolio manager and I've worked with Dennis Jean-Jacques. I am very happy to see him assemble these lessons from the great investors in a simple framework. My. Jean-Jacques did a great job giving all the credit to those superb investors like Peter Lynch, Michael Price, Warren Buffett, Benjamin Graham, etc. While Mr. Jean-Jacques does not claim to be (or compare himself with) great investors in the book, he makes a solid case that the lessons of the great ones are still useful and valid today. He then goes on to simplify the lessons into these 5-key lessons as he calls it (like Ben Graham's "Margin of Safety" principle) by explaining each "key" from the vantage point of an investment analyst. That is one of the most important benefits from the book - how value analysts analyze companies starting from a company's annual report on down. After reading this book, I have gained a deeper appreciation of how the mind of a value investor works (or should work). This is not a portfolio manager's book. It is simply a solid book written from the perspective of a solid business analyst. It will be a great addition to your library.

Interesting concepts and applicable... This book provides an interesting way to look at stocks. The author focuses on what makes the companies "tick" and outlines a few points to consider when considering buying shares of public companies. The five-point approach makes a lot of sense and can be a good foundation for an investment program. I am not sure however, if this book is for non-professionals. The author goes into detail with good examples, but he seems to forget his reader (the average, Joe... like me!). This book is a great addition to any serious investment library but I think one should read a few "beginner" books before picking this one up. This is clearly a value investing book for the experienced.

Mr. Jean-Jacques bares the nitty gritty details of where and how to look for information to value the companies, determining which techniques are applicable when, and arriving at a valuation range based on triangulation from multiple relevant frameworks. IMHO, he spends a bit too much time philosophizing -perhaps, this consistent mental framework is useful to value investors starting out afresh.

The book does a good job showing us how professional value investors use ordinary resources like Value Line and The Wall Street Journal. I got lots of very insightful advice on how to search for good companies to buy and how to build a solid value portfolio. It is clear that the author is very passionate about his craft; he begins by drawing the reader into his world with a very thoughtful explanation on why controlling one's emotions is paramount to successful investing. This book is well put together. The only draw back is that the book could have been a bit longer - a lot of topics are covered in a limited number of pages.

Here are the five keys:
1. Is this a good business run by smart people?(How has management performed in the past?)
2. What is this company worth? (How does the actual book value of the company comapare to the market value of the outstanding shares?)
3. How attractive is the price for this company, and what should I pay for it?(Are you getting a great price for the stock based on the value of the company,earnings per share,52 week stock price, etc.?)
4. How realistic is the most effective catalyst?(Will something happen in the next year to cause the stock price to move to real value?)
5. What is my margin of safety at my purchase price?( Are you getting a low enogh price that it can not drop much farther based on intrinsic company value?)

If you understand how to analize these keys save your money on this book, if not it can show you how.

This book also has great appendixes:
Business assesment tools
Analyzing wall street analysts recommendations
The critical failing of EBITDA
Managements plan to restructure a company
Descriptions of SEC forms.

It was a boring, clinical read, but had great keys hidden in it.

The framework introduced in this book is excellent and the information is broad and thorough. I read a lot of Buffett and Graham; this book gives a very good description of their teachings as well of the perspectives of many other great value investors in the US. However, I thought that the author could have spent more time explaining each of the "five keys" with more examples and perhaps use a few international companies as well.

If you are interested in value investing. This book is for you. I can't help reading it over and over again in order to dig more information from the book. Invaluable and easy to understand. Read it and use it.

Summer preparation... I found The Five Keys to Value Investing very informative and well presented. Although I was expecting more of a "beginner's book," this book did provide me with a useful framework to apply. The first chapter - "The Mind of the Value Investor" is the chapter found most interesting. It describes how being of a certain mindset to be the utmost importance as a value investing practitioner. The next few chapters describe the Five Keys in detail. Chapter six is perhaps the most thought provoking as the author describes how value investors use different tools in various situations (unfortunately, not for beginners). The Chapter on generating investing ideas was a little thin on substances - I was looking for a step-by-step method to help me find the very best ideas. Instead, the book talks about reading the Wall Street Journal, IBD and Barron's! Gee, thanks! I would only recommend this book only to those few hard-core value investors who are somewhat experienced in the craft. The Five Keys is definitely a book to be accompanied with a more basic book of value investing. I found Value Investing Made Easy: Benjamin Graham's Classic Investment Strategy Explained for Everyone by Janet Lowe was very helpful.