Phil Fisher-Type Growth Company at a Ben Graham-Like Price

This is Part 7 of a Series. Go to Part 6: Buffett’s “Discounted Cash Flow Model”

The following is an edited partial transcript of Alice Schroeder’s speech/lecture during the Value Investing Conference 2008 held at the Darden School of Business, University of Virginia.

And that was typical. I gave you this example in part because it was that other time, apart from Geico that he got a Phil Fisher-type growth company at a Ben Graham-like price. It was the most vivid example of that that I found. But it was a private investment and there's not a lot of public information about it available.

And he ended up putting $60,000 of his personal non-partnership money into this company which was about 20% of his net worth at the time. He got 16% of the company stock plus some subordinated notes. And the way he thought about it was really simple. It was a one-step decision. He looked at historical data, then he had this generic return that he wants on everything, it was a very easy decision for him, and he relied totally on historical figures with no projections. I think that's a really interesting way to look at it because I saw him do it over and over on different investments.

So what happened? Well, the company changed its name to Data Documents. he owned the investment for 18 years. He ended up putting up another million dollars over time. It was bought out by Dictograph in 1979 and he earned a 33% compounded return over the 18 years that he owned the investment. So it was not too bad.

And that was typical. I gave you this example in part because it was that other time, apart from Geico that he got a Phil Fisher-type growth company at a Ben Graham-like price. It was the most vivid example of that that I found. But it was a private investment and there's not a lot of public information about it available. Continue to Part 8: The Purpose of the Margin of Safety is to Render Forecast Unnecessary