VALUE INVESTING
Less Is More

By Stephen Bland (TMFPyad)
January 23, 2004

I have always lacked that quality, possessed seemingly in limitless quantity by some others of my acquaintance, of what I term "bar presence."  This is the highly desirable personality trait of those who are able to go up to a crowded bar to buy drinks whereupon the staff notice that individual immediately, picking them out from the ocean of faces and rushing over to deal with the order like their life depended on it.

Have you noticed how some people manage instantly to achieve this trick whilst the losers at this game, at which I consider myself amongst the world's foremost experts, just cannot get served? Never mind a crowded bar, I can be the sole customer against a whole team of staff behind the counter and I still have to wait half an hour before they'll even notice I'm there.

Why is this? I've tried desperately over several decades to analyse just what goes to make up bar presence so that maybe I can learn but I just can't see what it is. Those bar customers over whom the staff fawn, even when the crowd is several people deep and the customer is right at the back, just seem to have that certain something that is not transferable to those like me without it. I decided a long time ago that it is genetic and, consequently, have given up trying to discover the trick.

Not that it matters much because spending a lot of money regularly on drinks, to me, is an utter waste of money. Not that I don't spend money on wholly unnecessary things in other ways though. Over recent years, I have changed motorcycles with a frequency that is the envy of my underpants.

Having no interest in booze though does not stop me from finding their shares, as distinct from their products, positively tasty. Hardys & Hansons (LSE: HDYS) for example, a nice little value share and one that I have written up in more detail in the first edition of my new value newsletter.

In fact, thinking about it there have been a number of good value shares over the years producing products for which I have a positive distaste yet found their equity to be completely wholesome. Some may find this odd but not my style of value players. For us, the business nature of the company is very much secondary, almost unimportant. Analysing it in detail is close to irrelevant, possibly even to the point of being counterproductive, because it may lead you to start speculating on the future of that business, about which you very likely know nothing. Yet you can fool yourself that you do, leading to false conclusions. You see this all the time.

Take one of my shares at the moment, Lloyds TSB (LSE: LLOY), in which I have a serious stake. Even here on the Fool alone, quite apart from all the other financial media, ponderous, pleonastic, prolix messages are written about the quality of the bank's service to customers, analysis of the kinds of business in which it operates and their potential and so on in an attempt to justify the share as good or bad. None of which is of the slightest worth in considering the share as a value play. Lloyds is cheaper than the other banks for no reason other than market irrationality. They are all the same. Therefore this situation cannot continue. End of story.

In general, you should be able to convince yourself that any value share is a good play in a very few words plus the usual fundamental data. Beginners frequently desire too much input in making a decision about a share. I used to do this. Learn to discard most of it, primarily anything which attempts to analyse the future direction of the business particularly from "experts" in the field. In most cases, and I mean the great majority, these people will be wrong.

With value shares, as with minimalism, less is more.

> Sign up for a 30-day free trial for Stephen's new value investing newsletter.