How I came to value investing

When I was just 15 I loved sport and I had high aspirations. I knew nothing about economics. Neither my family nor anyone in my close circle of friends was involved in financial or investment matters. But I always wondered what I would do with the money I would earn if I was successful in sport, and I thought that one way of investing this future income would be in the stock market.

So, for Christmas that year I asked for a book about the stock market. I even went with my father to the department store, and as neither he nor I – nor the sales assistant, of course – knew anything about the stock market, we chose the book that was easiest to read and contained the most charts.

That book was not about value (I didn’t know such a thing existed). It was about trading for dummies, and I couldn’t wait to dive in. I recognise that it was more of an introduction to the subject than a book about technical analysis, but as I progressed I found it increasingly difficult to remember all the figures, indicators etc., and in the end I didn’t finish it.

After completing high school, it was in the first year of my degree in Business Administration that I revisited my concern for the stock market from the standpoint of trading. I started attending conferences or watching them online, and I read many blogs. I already saw myself as the new wolf of Wall Street and… Boom! One day at college I came across an information desk for an investment club being formed by a university association.

My curiosity was piqued and I was instinctively drawn to it. The person on the desk told me that the university finance club had been founded very recently. But more importantly, that student, Julio Morán, who is today a professional analyst, introduced me to the world of value investing, and became my mentor in this area.

Every Wednesday we met on campus to educate ourselves in value investing.

At that time, I was at the height of my speculative and short-term awareness, but when he started explaining about value philosophy and its main features, buy when the value of a company has fallen by a long way or be patient … a lightbulb went on in my head and I thought “I like what this guy is telling me and things make more sense to me now (quality, well-managed companies…)”.

A week later, we were meeting, no more than seven of us, every Wednesday on campus to learn about value investing from scratch. At these meetings I started to hear names such as García Paramés, who by coincidence studied at this same university, and that fuelled my research into what this kind of investment involved and how it was done. I continued looking into this type of investor, and in terms of return, analysis, capital, customer numbers … it all seemed “just great.” Until one day I said: I want to be one of them.

From then on, I read anything I could get my hands on containing the words “value” or “long term”, I watched all conferences with managers, attended events… Even in the half hour lunch breaks at university we would discuss companies, investment ideas and theses! In sum, I did everything I could to continue my education.

The first time I analysed a company was during an event I attended where they asked us to research a company selected by the organisers. I was given Indra, a real heavyweight for a first job – with interests in many sectors, a restructuring plan, contracts, a strategic plan coming to an end that had not been too successful… In short, a tall order.

I learned a lot from that experience, and I started to analyse companies when my exams and classes permitted. To be honest, when I had any free time, whatever the hour or day, I rolled up my sleeves and set about “tracking” for opportunities and building my own portfolio. The investment club has also gained more knowledge to build our own portfolio, and we are still doing so, but always in adherence to the philosophy of value investing.

Lastly, I would mention that last July I attended the first Summer Course run by Value School. This, for me, was the icing on the cake, as I was schooled and given advice by the best managers and analysts in the field of value investment. The course completed a year full of interesting events, knowledge gained and above all the opportunity to have deepened my understanding of an investment philosophy that has changed my life, and if things go well, will change the life of those around me.