Thomas Kahn Quotes
101 Thomas Kahn Quotes (Thomas Graham Kahn [Named in honour of Benjamin Graham], Kahn Brothers Group, Son of
Irving Kahn, Tommy Kahn, Tom Kahn, Alan Kahn Brother)
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One of the good things about investing is that there is no mandatory retirement age; you only get wiser as you get older.
Thomas Kahn
Value investing is essentially a contrarian approach. It involves buying something that is currently unpopular and waiting for it to become popular again. It’s like buying a long skirt at a thrift shop when miniskirts are in fashion or buying a heater in the summer and an air-conditioner in the winter.
Thomas Kahn
[In June 1983.] We just plant seeds every year. And some will germinate and sprout and be ready for harvest. But we don’t know what we are going to harvest each year. It comes to us as sort of a surprise. But every year, a few of our little plants do get harvested at maturity. And we can’t tell you the timing, and we can’t say what the exit door price will be. And we can’t tell you why that exit door will suddenly open up. But every year it does.
Thomas Kahn
[In November 1991.] We’re always dealing in blemished fruit. Polished apples are too damned expensive.
Thomas Kahn
[In 2012.] It’s important to have capital working for you instead of you working for it!
Thomas Kahn
[In 2012.] You need to train yourself to become a contrarian!
Thomas Kahn
[In 2012.] I have learned that successful investing is more art than science.
Thomas Kahn
[In 2012.] We have never forgotten the importance of a margin of safety.
Thomas Kahn
[In 2012.] Patience and discipline are the keys to success.
Thomas Kahn
[In 2012.] Undervalued stocks can remain undervalued indefinitely if nothing happens to them. We always ask ourselves what the catalysts are that can turn around these fallen companies.
Thomas Kahn
[In 2012.] We like to pay attention to companies that create concerns among investors because they are more likely to be underpriced assets.
Thomas Kahn
[In 2012.] As contrarians, we never expect to time the market correctly because something that is out of favor tends to lag behind the market in the short term.
Thomas Kahn
[In 2012 at the age of 69 with his father being 106 at the time and still actively working.] I too have no intention of retiring.
Thomas Kahn
[In 2012.] I don’t know of any successful investors who come up with good ideas without reading.
Thomas Kahn
[In 2012.] Irving started with nothing, but thanks to the fundamental analysis he learned from Ben [Graham], he was able to put what money he had to work by investing in the stock market wisely and intelligently.
Thomas Kahn
[In 2012.] For my father, investing is not just a business, but also a hobby. I remember him coming home with a briefcase full of annual reports and reading them to me and my brothers, Donald and Alan, at the dinner table. On vacations, he always made sure that he had enough business and science materials to read, as he never read fiction. He taught us that if we wanted to control our destiny, we would have to delay immediate pleasures and save and invest wisely for the future.
Thomas Kahn
[In 2012.] There is nothing wrong with being an emotional person, but when it comes to investing, you need to set your own valuation standard. Then you also need to keep your emotions in check so that you are not affected by the general market.
Thomas Kahn
[In 2012.] Sometimes, the best thing to do is nothing. But when the market is strong and everyone is telling you to buy, fighting temptation is easier said than done. Similarly, in a market crisis, when everyone is saying the stock market is dead, you need the courage to buy. In many ways, you need to train yourself to become a contrarian!
Thomas Kahn
[In 2012.] Often going against the crowd, I have learned that successful investing is more art than science.
Thomas Kahn
[In 2012.] If the investment game were all about numbers and calculations, then… you should be able to punch in the right criteria and make money all of the time. It doesn’t work that way, however…
Thomas Kahn
[In 2012.] Investing must be more of an art that involves having the right temperament and an understanding of companies.
Thomas Kahn
[In 2012 on Abraham & Company electing to be acquired by Lehman Brothers in 1975 and three years later the Kahns deciding it was time to launch their own investment firm.] Abraham & Company was a first rate firm that was well capitalized and extremely well run. Before the acquisition, different investment teams managed clients’ money. When Lehman came in, they wanted to put us all together to form a single team. We didn’t like the new arrangement because the company had become too big. More importantly, our clients didn’t like it either. They didn’t want to deal with Lehman Brothers; they wanted to deal directly with the Kahns.
Thomas Kahn
[In 2012.] Nowadays, when people ask us about our investment strategy, I say we are ‘modified’ Graham investors. Ben [Graham]used to look mainly at the balance sheet, buying stocks that were trading below their net working capital. He never paid much attention to the nature of a business. Although we are similar to Ben [Graham] from the mathematic standpoint, we have modified his teachings by also looking into the quality of a business and its assets. We often look at turnaround situations and often evaluate the true value of underpriced assets, such as land, intellectual property, and brand names.
Thomas Kahn
[In 2012.] Like Ben, we look for discrepancies between pricing and valuation, but our definition of value and our expectation of the catalyst that will unlock that value are not always the same as those envisioned by Ben [Graham].
Thomas Kahn
[In 2012.] If a stock sells below our calculated value and provides a comfortable margin of safety, then we are interested in learning about it. Whether or not it fits into one of a consultant’s ‘investment categories’ – large cap, small-cap, emerging markets, etc. – is of less concern to us than finding strong, downside-protected investments wherever they may be.
Thomas Kahn
[In 2012.] We are also ‘absolute’ value managers. We never look at relative valuations. For example, we would never say that a company with 20 times earnings is undervalued simply because simply because its peers trade at 30 times.
Thomas Kahn
[In 2012.] Although we compare companies qualitatively, our main approach is to analyze their balance sheets, earnings, cash flows, and businesses. Hence, we would only say that a company is undervalued if it sells at a discount to what we determine to be an appropriate adjusted book value or trades below what we determine to be a conservative multiple of more normalized earnings.
Thomas Kahn
[In 2012.] We don’t look at simple book value or simple price-to-earnings (P/E) ratios. We always make necessary adjustments and then evaluate the retooled numbers within the context of discussions with management.
Thomas Kahn
[In 2012.] Although earnings may have much to say about a company’s prospects, they may reveal little about its corporate health.
Thomas Kahn
[In 2012.] Corporate health provides a much better margin of safety than good current earnings! We would rather invest in a company with a solid balance sheet, strong working capital, and little leverage than in a company with a lot of debt but strong earnings at present.
Thomas Kahn
[In 2012.] We often favor companies that have near-term weak earnings or even no earnings but still have good corporate health because these types of companies offer better value. We call these companies ‘fallen angels’.
Thomas Kahn
[In 2012 on ‘fallen angels’.] They are usually in good market and financial positions, but are suffering temporary problems. If our research shows that such a firm has the capacity to fix its problems and improve earnings, then its share price should eventually rise again. If its problems persist and its earnings do not improve, then we will delve more deeply into its balance sheet to determine whether it has any valuable assets. These assets are sometimes so attractive that the company becomes a perfect takeover candidate.
Thomas Kahn
[In 2012.] Patience and discipline are the keys to success. Investors must not be overly short-sighted in holding onto value stocks. Just because they fail to rise in price in a few months or years does not necessarily mean that they are non-performers. Indeed, value stocks often lag behind the general market for the majority of the holding period. Then, when their true worth is finally recognized, investors are often surprised at their attractive annualized investment returns relative to the broader market.
Thomas Kahn
[In 2012.] I like to talk to management, assess their abilities and personalities, and understand their way of thinking so that we are on the same page. I am always friendly, and my intention is to look them in the eye and get a good sense of their character. This may seem an old-fashioned way of judging people, but it’s very effective.
Thomas Kahn
[In 2012.] We have been involved in shareholder rights litigation in the past. My older brother, Alan [Kahn], who is now retired from our firm, was quite active in the scene. Although I am less confrontational than he is, when management tries to harm shareholders, it is important to stand up for our rights!
Thomas Kahn
[In 2012.] We are uncomfortable about paying up for great prospects because we are unable to assess their downside risks. We would rather go in the other direction and look for companies that people feel terrible about and then analyze whether, from the perspective of a long-term investor, the negative sentiment is warranted. Doing so allows us to focus on the strengths of beaten-down companies and to assess how serious their downside risks really are.
Thomas Kahn
[In 2012.] Investing is about finding opportunities that grow your capital, not necessarily finding companies that will grow. Sometimes you can grow your capital with non-growth companies.
Thomas Kahn
[In 2012.] We look for opportunities in less likely spots. Instead of asking what’s right, we ask what’s wrong. If the situation is not catastrophic, and the stock is selling at a deep discount, then we have limited downside risk and good upside potential.
Thomas Kahn
[In 2012.] As Warren Buffet once said, ‘Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.’
Thomas Kahn
[In 2012 on sometimes looking at the holdings of ‘friendly competitors’, fellow value investors who he respects to get ideas. But never paying attention to recommendations of financial actors or television talking heads.] They are interested in fashionable stocks, and we are interested in those that are out of fashion!
Thomas Kahn
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