Highlights From The Ben Graham Centre�s 2025 Value Investing Conference

Each spring, global value investors make the pilgrimage to Toronto to attend The Ben Graham Centre’s Value Investing Conference. This year, those hoping to gain deep insight into the shambolic state of the markets got the headline message: “Don’t over-emphasize the macro.” Here are some highlights from this year’s event:

Scott Phillips, principal and chief investment officer at Templeton and Phillips Capital Management in Tennessee, is co-author of (along with his wife and Sir John’s great niece, Lauren C. Templeton), Investing the Templeton Way. He spoke about three sources of alpha:

1) information,

2) modelling/trading algorithms, and

3) behaviour.

Successful investing, he says, also means addressing the role human physiology plays in mental, physical, and emotional well-being. “Regular exercise, practising mindfulness, looking out at the horizon and being in nature to lower cortisol levels. These are important factors in being a better investor over the long term.”

“A stock portfolio is a lot like a bar of soap. The more you handle it, the smaller it gets.”

The behavioural factor may be the hardest to manage. A study by Fidelity¹ that reviewed customer portfolio performance from 2003 to 2013 found those with the best returns were either inactive or dead.

“Always accommodate the sellers”

- Sir John Templeton

Sir John Templeton made his name and his fortune on Wall Street by taking contrarian bets, like using leverage to buy every stock he could for under a dollar at the start of World War II. By 1968, he decamped to the Bahamas where he ran his business. In pre-internet days, his favourite newspapers, including The Wall Street Journal and The Financial Times, arrived on the island several days late. Far from being disappointed, Templeton appreciated the mental space. “If I were on Wall Street, I’d probably be a lot poorer… a short focus is not conducive to long profits. Here, I can just focus on what businesses are worth.”

One lesson from Sir Templeton is the importance of mental flexibility. Phillips says, “For the past 15 years of low interest rates, investors’ minds have been primed to ‘buy the dip’. The average human has 40-50 thoughts per minute. Over 15 years, this amounts to over 315 million thoughts. If a percentage of the thoughts involve ‘buy the dip’, it becomes more challenging to problem-solve a new regime” of potentially higher inflation amid a global tariff war. During a cycle of higher interest rates, Phillips is looking for opportunities outside the Magnificent 7 and at U.S. small cap, international and secular growth companies, such as HDFC Bank in India.²

“It is easy to turn an aquarium into fish soup but not so easy to turn fish soup back into an aquarium.”

- Lech Walesa

Classic value investing, as practised by Benjamin Graham, the father of value investing, is based on hand-selecting a small basket of stocks with the most attractive quantitative and qualitative profiles to ensure a suitable margin of safety. Graham’s modern-day disciplines use value metrics as price-to-earnings (P/E), price-to-book (P/B), debt-to-equity (D/E), return-on-equity (ROE), and earnings-per-share (EPS) to winnow the potential winners from the losers.

However, times have changed since Graham’s era, argued keynote speaker Michael Mauboussin, noted author and financial researcher at Counterpoint Global Capital in New York. The global economy is increasingly driven by investments in intangible assets, which outpace tangible assets 2:1. (It’s like “capitalism without capital”.) Tangible assets are physical objects such as factories, machinery, and real estate. Intangible assets are non-physical. They include brand awareness, employee talents, software code, customer loyalty, and company culture.

Intangibles have four characteristics:

Scalability (high upfront costs but low incremental costs, e.g. network effects).
Sunkeness (tangible assets retain more resale value due to their standardization)
Spillovers (intangible assets are easy to copy but have protection from copyright)
Synergies (innovation arises from combining existing technologies)

Mauboussin points out that tangible investments are capitalized on the balance sheet and depreciated over time. Intangible assets are marked as an expense thus they decrease stated earnings.

Except for accounting nerds, why should investors care about how intangible assets are stated on the balance sheet? According to Mauboussin, treating tangible and intangible assets differently introduces bias into common metrics, such as P/B, which value investors often use as shorthand. For a company that is intangible intensive, adjusting the balance sheet will result in operating profit margin expansion once intangible assets are capitalized in the same way as tangible investments. (In fact, the net income for the S&P 500 would be around 12 per cent higher than reported if this adjustment were made.)

The takeaway for investors: Exercise caution when comparing earnings and multiples from different periods and different industries. “Value factors are not value investing,” says Mauboussin.

“You make most of your money in a bear market, you just don't realize it at the time.”

- Shelby Davis

Professional and retail investors alike are suffering from whiplash. The cadence and amplitude of market gyrations, due primarily to the unsteady nature of the current U.S. administration, have investors on the back foot. They must now include the “moron risk premium” in their investing decisions.

However, as ever, time and behavioural arbitrage provide an edge for value investors, says Tim McElvaine, founder and president of McElvaine Investment Management in Vancouver. Bonus for D.I.Y investors: No career risk—we can’t fire ourselves.

According to McElvaine, there are 5 key ways not to be a value investor:

Buy from thoughtful, smart sellers
Hope the company is okay
Ignore the company balance sheet
Focus on price predictions
Ignore insider ownership

Opportunities can be found in companies that are experiencing bad news, dividend cuts, or special situations, are underfollowed by analysts and have a “yuck” factor. These types of companies can offer outsize returns over the long term. “A double after three years is better than 20% a year,” says McElvaine.

Speakers also shared some of their favourite books and stock picks:

Book Recommendations

Value Investing from Theory to Practice by George Athanassakos

Simple But Not Easy by Richard Oldfield

Investing the Templeton Way: The Market-Beating Strategies of Value Investing’s Legendary Bargain Hunter by Lauren C. Templeton, Scott Phillips

The Investment Value of Good Will by Lawrence N. Bloomberg

Capitalism Without Capital by Stian Westlake, Jonathan Haskel

Companies mentioned:

Fairfax Financial (ticker: FFH-T), CN Rail (ticker: CNR-T), Knight Therapeutics (ticker: GUD-T), Canfor (ticker: CFP-T), Jardine Matheson Holding Ltd., (ticker: JMHLY-otc), Microsoft (ticker: MSFT-Q), Terravest (ticker: TVK-T), Boyd Service Group (ticker: BYD-T), Constellation Software (ticker: SCU-T), Snowflake (ticker: SNOW-N), Amazon (ticker: AMZN-N), Alimentation Couche-Tard (ticker: ADT-T), Allstate (ticker: ALL-N), Royal Bank of Canada (RY-T), Fairfax Financial India (ticker: FIH-U.T)

Rita Silvan, CIM is a finance journalist specializing in women and investing. She is the former editor-in-chief of ELLE Canada and Golden Girl Finance. Rita produces content for leading financial institutions and wealth advisors and has appeared on BNN Bloomberg, CBC Newsworld, and other media outlets. She can be reached at rita@ellesworth.ca.

https://www.morningstar.com/columns/rekenthaler-report/archives-praise-dead-investors

The Magnificent 7 stocks : Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla.