Warren Buffett, the greatest investor of modern times, stresses that all fund managers should read the works of other investors to help perfect their process.
He has said on many occasions that Benjamin Graham’s The Intelligent Investor is the best book on investing ever written (incidentally, I’m reading it at the moment, and would thoroughly recommend it).
Here are the choices of some of the UK’s leading fund managers.
Carl Stick – Competition Demystified: A Radically Simplified Approach to Business Strategy, by Bruce Greenwald
"Bruce Greenwald is a professor at Columbia University's Graduate School of Business. In this book he expounds the doctrine of Benjamin Graham – widely accepted as being the father of value-investing," said Stick (pictured right), who runs the five crown-rated Rathbone Income fund.
"Professor Greenwald examines company strategies in a bid to determine why certain businesses succeed and why others fail. It also discusses the concept of ‘economic moats’ and why some businesses are able to sustain earnings growth in a competitive environment."
"Professor Greenwald’s text uses diverse case studies to analyse this phenomenon, including behemoths such as Intel and niche businesses like Kiwi International Airlines – a former low-cost carrier in the US. In both cases, the progressive thinking or failures of managements are apparent."
"It has taught me to find what makes or breaks a business; the fact that businesses evolve and the impact this might have, and the importance of asking ‘why’ of management teams. This text has proved invaluable."
Gervais Williams – Antifragile, by Nassim Taleb
"I think that The Intelligent Investor by Ben Graham has huge relevance currently – it was written at a time of austerity and therefore its investment thesis is particularly appropriate," said Williams (pictured left), who heads up the recently soft-closed Miton Multi Cap Income fund.
"For something a little less conventional, I have just very much enjoyed reading Antifragile by Nassim Taleb."
"This book highlights the scale of the vulnerabilities of so many investment factors that we take for granted. Although many find this book indulgent, I think it is really insightful and again is really relevant to a post-credit boom world given that austerity is likely to be with us for years."
"I still feel Slow Finance is very relevant too but then I am biased on that one," he joked, referring to his own book.
Ed Lam – Common Stocks, and Uncommon Profits, by Philip Fisher
"As well as Charlie Munger, Philip Fisher was also highly influential in transitioning Warren Buffett’s approach away from pure or historical value, towards future value – that is to say growth," said Lam (pictured), who heads up the popular five crown-rated Somerset Emerging Markets Dividend Growth fund.
"The key with Fisher is to take away the emphasis on accounting or statistical value and to focus on what is 'real'."
"It is the perfect antidote to the pure dividend investor who can often be too focused on the nominal yield to see what is actually creating it."
Kevin Murphy – Contrarian Investment Strategies, by David Dreman
"This is a bible on how and why value investing works – and why other strategies do not," explained Murphy (pictured), who runs the top-performing Schroder Income and Schroder Recovery funds.
"With empirical evidence and common sense explanations, it is worth every penny."
Jamie Lowry – Margin of Safety, by Seth Klarman
"Klarman is founder, chairman and chief executive officer of Baupost Group and is one of the world’s most successful investors still operating," said Lowry, the manager of the Schroder ISF European Equity Alpha fund.
"This book expands on the ideas in The Intelligent Investor, with new areas and more up-to-date examples."
Aruna Karunathilake – Hedgehogging, by Barton Biggs
Karunathilake (pictured) , manager of the Fidelity UK Select fund, commented: "This book is written by Barton Biggs who is best known as a long-standing investment strategist at Morgan Stanley."
"It is written in a semi-autobiographical style from the time he first started investing in the 1950s through his time at Morgan Stanley and ending with him starting his own investment company."
"I enjoyed reading it as it gave some insight into what the market was like through the 1960s and 70s through recounting Biggs’ interactions with some of the best investors of that time in an informal way."
"It’s an easy and enjoyable read that teaches you a few things about investment along the way."
"Personally, I enjoy reading autobiographies about investors who were active in the past, as it makes you realise that many of the things we see in the world and markets today are similar to previous episodes, which can give us insight into what the implications may be."
Matthew Tillett – Value Investing: From Graham to Buffett and Beyond, by Bruce C N Greenwald, Judd Kahn, Paul D Sonkin and Michael van Biema
"While Ben Graham’s classics The Intelligent Investor and Security Analysis are brilliant books, from a practical perspective they are now somewhat dated," explained Tillett, who runs the Allianz UK Unconstrained portfolio.
"What this book does is bring the Ben Graham framework into the 21st century investment world, incorporating areas such as barriers to entry and intangible assets. It has had an enormous influence on my approach to fundamental analysis and company valuation."
"Essential reading for any investor wishing to employ the value approach," he finished.
