We recently published a list of Warren Buffett Disciple Guy Spier’s 10 High Conviction Stock Picks. In this article, we are going to take a look at where Daily Journal Corporation (NASDAQ:DJCO) stands against Guy Spier’s other high conviction stock picks.
Guy Spier’s Aquamarine Capital Management is a Zurich, Switzerland-based investment manager that employs the same long-term oriented, value investment approach as Warren Buffett, who Mr. Spier proudly considers himself a disciple of.
Spier earned a degree in philosophy, politics, and economics from Oxford University in 1988 and followed that up with an MBA from Harvard Business School. Foollowing that, he spent several years working as a researcher and investor on Wall Street, including stints at Braxton Associates and Buffett’s Berkshire Hathaway, the latter of which inspired him to launch his own value investing fund in 1997.
Spier is noteworthy in the investment world for his $650,100 lunch (alongside Mohnish Pabrai) with Warren Buffett in 2007, which was purchased through a charity auction. Spier took several important lessons from that meeting, including the necessity of saying no, and ultimately wrote a book about his takeaways from that lunch and his broader investment journey entitled ‘The Education of a Value Investor: My Transformative Quest for Wealth, Wisdom, and Enlightenment’.
Mr. Spier makes all of his firm’s investment decisions himself and is an even more ardent value investor than Buffett, holding on to many of his positions for several years without touching them. In the second quarter the fund added two small new positions to its 13F portfolio while otherwise leaving the rest of it untouched. Its 13F portfolio held $263 million worth of assets on June 30, 74% of which were invested in finance stocks.
Aquamarine’s total return stands at 874% since inception through the end of 2023, or 9% annually, outperforming the S&P 500’s 717% returns during that period. Spier’s fund hasn’t been as successful in recent years however. It returned 18.7% last year, which underperformed the market, the sixth-straight year it’s failed to top the market. 2000, 2002, and 2006 were three of the fund’s strongest years, as it beat the market by more than 20%.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here). That’s why you should pay close attention to this important indicator.
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The esteem with which Guy Spier holds Warren Buffett and his long-time right hand man, the late Charlie Munger, is evident through his prominent investments in both Buffett’s Berkshire and Munger’s Daily Journal Corporation (NASDAQ:DJCO). The latter company’s stock was owned by just four other hedge funds as of March 31, only one of which had greater than 0% exposure to it (that being Touk Sinantha’s AltraVue Capital). Spier’s fund has 1.72% exposure to DJCO.
Munger, who passed away last year at the age of 99, bought the Daily Journal Corporation (NASDAQ:DJCO) in 1977, which we discussed in our look back at Charlie Munger’s Life History & Stock Portfolio: 4 Biggest Positions. In its first financial report since Munger’s passing, the newspaper publisher and software company pulled in $32.6 million in revenue, a 14% year-over-year increase, driven primarily by increased software licensing and maintenance fees.
Daily Journal Corporation (NASDAQ:DJCO) also boasts a noteworthy portfolio of close to $300 million in marketable securities as of March 31. That portfolio was largely overseen by Mr. Munger and it’s unclear what direction the company will now take with those assets. It sold off just over $40 million worth of securities during the six-month period ended March to pay down more than half its margin loan balance.
Overall, DJCO ranks 8th on our list of Guy Spier’s high conviction stock picks. While we acknowledge the potential of DJCO, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than DJCO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.