John Buckingham is Principal and Portfolio Manager of Kovitz. Mr. Buckingham joined AFAM Capital in 1987 and Kovitz in 2018 as part of the Kovitz acquisition of AFAM.
He has more than 30 years of investment management experience and serves as Editor of The Prudent Speculator, which has been a trusted newsletter for over 40 years. Mr. Buckingham chairs the AFAM investment committee, leading a team that performs comprehensive investment research and financial market analysis.
In this 6,387 word interview, exclusively in the Wall Street Transcript, Mr. Buckingham stays true to his investing philosophy:
“Benjamin Graham says, when shopping for stocks, choose them the way you would buy groceries, not the way you would buy perfume.
Unfortunately, these days, we’re in an environment where investors are fascinated or fixated on stories, on companies that appear to be able to grow significantly, especially given the pandemic, and they’re paying little attention to the price they pay for those stocks.
We saw the euphoria around the Tesla (NASDAQ:TSLA) stock split, and somehow people thought that because it was cheaper in price, it was worth more, and so the stock was bid up significantly by a lot of investors, even though a stock split doesn’t alter the pie, if you will. It’s still worth the same. It should be worth the same.
I would imagine, given that many value investors have closed up shop, we’re one of the few that are left that have been disciplined, consistent and patient in implementing our strategy. ”
The Buckingham portfolio is biased towards dividend payers:
“We want to buy quality companies, we want to buy them at reasonable prices, and we want to be patient with them and milk the dividend income.
I didn’t mention dividends yet, but if you look at Fama-French data going all the way back to the 1920s, dividend-paying stocks have outperformed non-dividend-paying stocks by over 1 percentage point per annum. And by the way, they’ve done so with lower volatility.
Investors are always looking for higher returns and lower risk, if risk is defined as volatility, and market history shows that dividend payers give you the holy grail, so to speak, which is higher returns and lower risk or lower volatility.
So we do like dividend payers, and especially in the environment today, where interest rates are extraordinarily low, dividend payers make a whole lot of sense to us.”
One example of a current Buckingham pick is Nordstrom:
“For those who are willing to be maybe a little more speculative, we also recently bought Nordstrom (NYSE:JWN), which is the department store giant…in looking at Nordstrom, we think it is a name that discounts a tremendous amount of bad news.
It doesn’t discount bankruptcy, of course, but it discounts a lot of negatives that we do not think are going to materialize, so we feel we’ve got a margin of safety.
But again, it is a very volatile stock, as it has been going up and down 3% every day it seems.”
To get all of John Buckingham’s picks and the detailed analysis underlying the decisions to buy them, read the entire 6,387 word interview, exclusively in the Wall Street Transcript.
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