Walter Schloss was a direct student of Benjamin Graham, and is one of the “Super Investors” mentioned by Warren Buffett in his famous essay, The Super Investors of Graham-And-Doddsville.
Walter Schloss followed Benjamin Graham’s cigar-butt style of investing throughout his five-decade long career on Wall Street. From 1955 to 2002 — when he stopped managing money — by Schloss’ estimate, his investments returned 16% per annum on average after fees, compared with 10% for the S&P 500 over the period.
Even today, Walter Schloss’ deep value philosophy remains relevant. His common sense approach to investing provides a road map for long term success that can easily be replicated.
Walter Schloss: Rare letter
Unfortunately, Walter Schloss didn’t give many interviews over his career, but there’s still a great deal of information out there that details his style of investing, as well as his thoughts on the market.
Below is an excerpt, followed by a copy of a letter Walter Schloss wrote to the Commercial and Financial Chronicle in December 28 1953, while he was still working at the Graham – Newman corporation.
The letter, titled In Defense of Stock Dividends, comments on advantages to stockholders of stock (scrip) dividends over their cash alternatives.
“…no one, I believe, has said that paying cash dividends is worse than paying stock dividends, although sometimes payment of large cash dividends may jeopardize a corporation’s expansion program. The payment of stock dividend is used when a corporation decides that earnings have to be retained for expansion purposes, but that the stockholder should get some tangible evidence that the directors are cognizant of his needs…a stock dividend will also help those investors in companies which have been paying small cash dividends and re-investing the balance of earnings without giving the stockholder a fair return on his investment (capital and surplus).”
The post From The Archives: Walter Schloss In Defense Of Stock Dividends appeared first on ValueWalk.
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