Review of The Little Book of Value Investing by Christopher H. Browne

If The New Buffettology is like Omaha Steaks (everyone knows that is supposed to be good and it is but nothing more), The Little Book of Value Investing is like a steak from Costco (pleasantly surprised as it is way better than what you expect from a place like Costco). A discipline of Benjamin Graham and highly influenced by Warren Buffett, Browne shares his investment philosophy in an easy-to-understand way without coming across as heavy-handed or a pompous jerk. As I understood, he uses Graham's definitions of intrinsic value and margin of safety for investing in value stocks. Here are some main points:

• Margin of safety is defined as stocks offered at 2/3rd (preferably 50%) of intrinsic value, company has a low debt to net worth (1:2 is ideal), and diversify your portfolio with a minimum of 10 non-correlating stocks.
• You want a low P/E ratio as earnings drive stock price.
• You can define intrinsic value using advanced statistical methods (such as discounted cash flow analysis) or by determining what the company would be sold at in a leverage buyout.
• You want a share price that is lower than the book value per share. Even better is a price below the net cash balance.
• Look for companies with consistent profit margins, high liquidity and a high return on capital.
• Get stock ideas by looking at what the top 10% of mutual fund managers are investing in.
• Be sure to invest globally but watch out for differences in accounting practices.
• Look for insider buying (as opposed to selling) as it is a more consistent way to tell if the executives think things are looking up for their company.

Next up The Only Three Questions That Count: Investing by Knowing What Others Don't by Ken Fisher (with a foreward by Jim 'Darth' Cramer).

What do you think of these methods? Have you read the book and have a differing opinion?