Contrarian investing is an investment strategy that goes after the unpopular choice, the beaten down stock or sector, and doesnt follow the crowd. Why contrarian allan gray holds naspers techcentral. The stock market may be the only exchange in which buyers rush in when prices are raised and stand back warily when prices are marked down. Contrarian investing would probably make it to the top of the list, but there is an even better strategy that takes contrarian investing one step further. It started in 1973 when our founder allan gray launched allan gray proprietary limited.
Sep 15, 2014 the surprising power of contrarian thinking. As famously contrarian investors, the one stock allan gray might be thought least likely to hold is naspers. Its an investing strategy that rewards patience, confidence, and rationality with high returns, and is the strategy that most of historys worldclass investors applied to earn their outsized gains. We learn about the feast and famine nature of contrarian investing, why a longterm approach is essential to success, an. Money and life what could we possibly learn from candid. Contrarian investing redefined brainys share market toolbox. The contrarian investor admits it has had a difficult year, but it has no intention of giving up the search for value and will ride out the money. The recent run, however, will not change allan gray s belief in contrarian investing.
Contrarian investing is the best way to make money in the. Last year for the first time in 44 years berkshires gain in book. At least, this is the view of contrarian investors allan gray australia aga, whose equity fund looks for oversold stocks in industries that are. As the gfc started to unfold, real estate investment trusts reits quickly fell in value, from a generous premium to just 75% of their book.
Our consultants can discuss our various investment options with you, to help you understand your investment choices, and can answer queries that you may have about any existing investment with us. Contrarian investment strategies ebook by david dreman. Howard marks regularly focuses his client memos on contrarian investing. Difficult as it may be to apply the contrarian investment philosophy, it remains a very profitable way of investing in shares. Dreman is the chairman and chief investment officer of dreman value management, l.
When things are going well, you can look like a magician earning extraordinary returns while others flounder. Allan gray in australia, formerly orbis investment management australia, is an australian investment manager and incorporated company. Nothing in contrarian outlook is intended to be investment advice, nor does it represent the opinion of, counsel from, or recommendations by bnk invest inc. This is how weve been investing in australia for the past years and globally for over 45 years. David dreman is regarded as the dean of contrarians by many on wall street and in the national media. Contrarians believe the market can overreact in both directions. Contrarian investment strategies provides a clear synthesis of the research that backs value investing.
Contrarian investment outfit allan gray is getting ready for higher oil prices, saying theres value to be found in the energy sector. In plain language, dreman explains that the real risk is in. It also helps to have guide to help you when youre thinking about investing. As the gfc started to unfold, real estate investment trusts reits quickly fell in value, from a generous premium to just 75% of their book value.
Managing director and chief investment officer email. Contrarian and mass psychology strategies sol tactical. The classic edition book online at best prices in india on. If you intend on being a passive investor this read will optimize your passive efforts. Simon mawhinney, managing director and chief investment officer of allan gray, discusses their contrarian investment philosophy. As the name suggests, it s an approach to investing that is contrary to more popular approaches, which enables you to resist trends and not follow the crowd.
We invite you to join us for a breakfast session on 25 june at the bafta 195 piccadilly for a refreshingly distinctive take on thinking and investing differently. In 1989 he set up orbis to take his fundamental, longterm, contrarian approach global. If youre willing to take risks and commit yourself to a unique vision, you will. A contrarian investment strategy built for the long run. Allan gray at allan gray australia, our investment philosophy is simple we take a contrarian approach, apply it consistently and invest for the long term. Contrarian investing is an investment strategy that is characterized by purchasing and selling in contrast to the prevailing sentiment of the time a contrarian believes that certain crowd behavior among investors can lead to exploitable mispricings in securities markets. At the tactical investor, while we embrace the concept of contrarian investing our true focus is on joining the key rules of contrarian investing with the powerful concept of mass psychology. Over the last decade, it hasnt, leading an increasingly large chorus to proclaim that value investing is dead. Contrarian thinking applies to every aspect of business ownership. Investing in this way across multiple african equity markets enhances the likelihood of finding attractive investment opportunities at any given time. They will cover the outlooks for their respective portfolios and also look at how these times of surprise and uncertainty can throw up great opportunities for contrarian investors. At allan gray we use a contrarian investment approach, which means we invest in a manner that differs from the conventional wisdom, when the consensus opinion appears to be wrong. Contrarian investing can be seen as an extreme form of value. Hear directly from allan gray managing director and chief investment officer, simon mawhinney, together with orbis investment director, charles dalziell.
Allan gray australia pty limited, abn 48 112 316 168, afsl 298487, is the appointed investment manager of the allan gray australia equity fund arsn 117 746 666 and has prepared this document. Buy a cheap copy of contrarian investing book by anthony m. Sixty percent equities and forty percent bonds has become such a standard for moderate risk that any other allocation raises eyebrows. With memories still fresh from the stock markets most recent boondogglethe technology frenzy of 1999 and 2000the contrarian investor s by benj gallander will undoubtedly find a wide and highly receptive audience.
Allan grays simon mawhinney is sticking to his outof. In this major revision of his investment classic, one of the premier investment managers introduces vitally important ne. Warren buffett, one of the richest investor of this time, follows this approach which itself validates the power of contrarian investing. Allan gray has built a reputation of being an outspoken, almost activist shareholder in unloved, struggling companies. This website is for information only and does not in any way constitute a solicitation or offer by allan gray proprietary limited or any of its associates or subsidiaries collectively allan gray to buy or sell any financial instruments or to provide any investment advice or service. Mahesh cooper explains why being different at times to the crowd can make us appear risky to clients, yet it is exactly by being different that we are able to. The next generation, dremans focus on the understanding of risk should free investors from the mathematical traps of socalled risk measurement. See what it can mean in practice with a truly contrarian longterm manager. We have spent an embarrassingly large amount of time in the latter camp of late, says ben preston. If you are new to investing then this page has a plethora of free resources for the novice investor. The fund is offered by equity trustees limited, abn 46 004 031 298, afsl 240975, as. This suggests there should be opportunities for contrarians with. At allan gray, our investment philosophy is simple we take a contrarian approach, apply it consistently and invest for the long term.
Allan gray australia equity fund average top 10 holdings of the five largest managers weight of share in asx. Your guide to contrarian investing 2 contents introduction 3 the allan gray australia investment approach 4 how contrarian investing works 5 the benefits of contrarian investing 6 increasing the chance of upside 6 tempering the impact of market bubbles 8 diversification 8 opportunities from behavioural errors 9 how emotional investing can create opportunities 11. Birte joined allan gray namibia in april 2011 and is an investment analyst with a focus on namibian and africa exsa companies. The next generation shows investors how to outperform professional money managers and profit from potential wall street panics all in dremans trademark style, which the new york times calls witty and clear as a silver bell. Dreman mentions the stock market went nowhere for the seventeen years prior to 1982.
The following key points are a redefinition of contrarian investing, and in fact could serve as underlying principles in a revised investment strategy for the new investing climate. And we must apologise for any tongueincheek sarcasm that might come across. A guide to contrarian investing julian morrison livewire. Your guide to contrarian investing allan gray australia. Cape town as famously contrarian investors, the one stock allan gray might be thought least likely to hold is naspers. Allan gray doubles down after rough patch professional planner. The value in being contrarian livewire exclusive livewire. Duncan joined allan gray in 2001 and has been managing a portion of client equity and balanced portfolios since january 2005. There arent many investment firms that have had as tough a time in recent years as allan gray.
Nov 26, 2017 contrarian investing is one of the most successful investment approaches over the long term. The well known and respected funds manager, self described as a contrarian and deep value. Contrary to the wall street herd, contrarian investors prefer to buy stocks in periods of maximum pessimism and sell stocks when investor enthusiasm drives up stock prices to astronomical levels. There are relatively few good money managers or good writers on investments. Going against human instinct and taking a contrarian approach to investing is not for everyone, however there can be great rewards for the patient investor who embraces allan gray s approach. As investors flee gold, allan gray is taking a shine. True to form, nayak said the firm is doing exactly what it should be doing and doubling down on its strategy. Mahesh cooper explains why being different at times to the crowd can make us appear risky to clients, yet it. Allan gray was a noted south african contrarian investor that believed the best value was typically to be had when the market was down. Sep 11, 2017 in his books, david dreman presents a proven strategy for investing while also addressing the psychological reasons that many investors fail.
Allan gray is an australianbased investment manager. Bargain hunters allan gray set sights on energy sector. Of course, it could be argued that all investors seek out mispriced. Our founder, allan gray, developed our distinctive contrarian investment philosophy and this philosophy remains in place today. Allan gray shares the same investment approach, culture and commitment to our clients as the orbis group, a global fund manager that dr allan wb gray.
As the global economy struggles to find growth, investors scour markets for yield and valuations in some sectors balloon out, those who swim against the tide and look for opportunities in unloved places have an edge in a world overloaded with information. As contrarian investors you would expect us to do what weve done, which is to lean into that underperformance and buy more of those cyclical. True contrarian investors should understand the basicpsychologyhology. Jan 12, 1980 a modern ben graham, dremen is driven by fundamentals and underlying data, an approach that oddly marks him as a contrarian investor in todays emotiondriven markets. We learn about the feast and famine nature of contrarian investing, why a longterm approach is essential to success, and then finish with simons contrarian case for telstra.
However, we are not allowed to make recommendations. As contrarian investors, we cannot help but take notice when one of the most widely read newspapers in the us reports that main street has lost interest in the stock market. When the panicselling comes and the value of their. The classic edition from the worlds largest community of readers. She completed her b acc hons degree at the university of stellenbosch in 2006, her m phil in finance at the university of cambridge in 2008 and is a cfa charter holder. Jul 09, 20 yet, a contrarian investor sees an opportunity, does the opposite, and walks inside. The emotions an investor may naturally feel are overlaid. Allan gray on finding investment opportunities in africa. If there is an increase in demand for an item, but supply is.
Over multiple decades, the traditional value approach of buying cheap stocks has worked remarkably well. The valuationbased approach to investing used by allan gray and our offshore partner orbis is often contrarian since the shares that are most attractively priced relative to intrinsic value are also often those that are least popular. Allan gray saw a contrarian opportunity, stepped up to the plate, and started investing in the sector. The 10 best contrarian stocks to buy in the new year. Orbis has been going through a period of painful underperformance.
Understanding orbis performance and potential allan gray. The book is out of print,is one of the most stolen books from libraries, and sells for thousands of dollars online. Mar 01, 2020 contrarian investing means to invest against the crowd, and to be skeptical of general market sentiment. However, in the current market environment orbis doesnt think its going to work, which is why the orbis global balanced fund is positioned quite differently. Jonathan brodie reminds investors what orbis is trying to achieve. What is the most recent best book on contrarian investing. Allan gray was an investment disruptor and changed many young lives 5 steps to make you a better investor the simple economics of supply and demand illustrate why following the crowd is not good for investing. A contrarian investor tends to get maximum benefits of both good and bad market. The contrarian investment house has had a tough period as investors piled into growth stocks and expensive defensives, with allan grays.
Yet today, each trades for less than its book value. Dreman may be contrarian but he shows how it does work over time. I have been reading investing books for quite a number of years and this is among the best. Recommended reading list klarman himself has written one of the most coveted books on value investing, margin of safety. Many people who consider themselves value investors only act as value investors when the market goes up. The best investing books of all time seeking alpha. Theres value in australias energy sector, allan gray says.
Jun 25, 2019 contrarian is an investment style that goes against prevailing market trends by buying poorly performing assets and then selling when they perform well. According to a recent poll by gallup, your best investing strategy might be to do the exact opposite of what everyone else is doing. I recently asked a number of my favorite writers to list their five favorite investing books. Notwithstanding the preponderance of evidence supporting the superiority of the contrarian investment strategy, other researchers have adduced evidence in support of superior performance from momentum investment strategy. He is a director of allan gray group proprietary limited. Duncan holds an honours degree in business science and. Besides being the flavour of the market, the counter is trading on multiples that most value investors wouldnt want to be anywhere near an historic pricetoearnings ratio of 110 times, and priceto book of over 10.
At other times, you can follow precisely the same process and look hopelessly out of touch. Neither has our goal to deliver superior longterm returns. Duncan joined allan gray in 2001 and has been managing a portion of client equity and balanced portfolios since january 2005, when he was appointed as a portfolio manager. We manage money for retail and institutional clients, applying our contrarian, fundamental investment approach over the. Contrarian investing wikimili, the free encyclopedia. Contrarian investing is a market timing strategy thats based around reversing crowdthink. Profitable investment fund takes different tack allafrica.
We expect profitability to improve at both companies over our investment horizon, which should allow them to grow their pershare book value by 1015% p. Allan gray chief investment officer simon mawhinney told the australian investing in the resources sector has been like trying to catch a falling knife over the last 12 months, despite the. The next generation is an excellent investing book by david dreman. The first two hundred pages make for dry reading but sets the stage for the last two hundred pages. Allan gray contrarian investing and different performance. The trick to contrarian investing is to have a firm, unshakeable belief in the unchangeable nature of the human psyche. We continue to seek out and invest in undervalued assets and will sell those assets once they reach their intrinsic value.
I dont know anyone else that writes like you, shares market points of view like you, and makes things seem personal and approachable. Its now south africas largest private asset manager. According to chris inifer head of retail strategy at allan gray contrarian investing is foremost a philosophy and approach to investing, as opposed to an investment style. Brett moshal and michael heap from our offshore partner, orbis, investigate. The allan gray investment team is in regular contact with orbis and when. Our job is to find the needles in the haystack the asymmetric opportunities in which potential return significantly exceeds risk. This may not always conform to market sentiments and may lead us to experience periods of. But when it comes to investing, being a contrarian can be a very effective investment strategy. Contrarian investment strategies in the next generation by.
This weeks guest is simon mawhinney, chief investment officer of allan gray. Jan 03, 2017 the 10 best contrarian stocks to buy in the new year looking for some of the best stocks for 2017. Read contrarian investment strategies the psychological edge by david dreman available from rakuten kobo. Contrarian investing can be seen as an extreme form of value investing. Allan gray doubles down after rough patch professional.
The allan gray australia equity fund with richard whiteoak explores the principles behind a contrarian investment philosophy and how allan gray utilises this to access optimum australian stocks and achieve growth over the longterm. One of the key features of contrarian investors is that they looked to unloved or outoffavour sectors and stocks to find find good value. You can read the fantastic list that resulted here. We believe this is the most robust system out there as psychology is the key.