Tuesday, November 22, 2011

Tweedy Browne on Johnson & Johnson

Tweedy Browne is an old school value investing shop that goes way back.  I really do respect them even though their performance recently hasn't been the best.  They are a low turnover fund investing with old-fashioned value investing principles and they are very fad-proof; they don't jump on the latest investment fads.  That alone may keep many out of trouble over the long term. 

At the very least, it is very educational and informative to read the annual and semi-annual reports of good fund managers. 

Here's is a snippet from their latest annual report that takes a look at Johnson and Johnson (JNJ) that illustrates the sort of opportunities there are in the market today:

Here is some of the text that goes with that:

Tweedy Browne doesn't mention some of the problems that J&J had over the past few years, from McNeil Consumer products (Children's Tylenol etc.), hip replacement recalls.  They have managed to grow earnings despite all of that, and yet the stock is trading much cheaper than ever.  It is amazing that JNJ stock still managed a positive return since 1999, but again that just goes to show you that you want to own good, solid businesses that will grow over time and it can do well even during bad times.

Anyway, as usual I don't want to put too many links on this blog as I tend to think it's a pain in the butt to read blogs that put too many links; it takes too much time to go from one link to the next.  I personally prefer original thought/content right on the blog instead of being directed to all sorts of ideas all over the internet.

But Tweedy Browne letters are defintely worth the read so here's the link to the latest letter:

Letter to Shareholders

Since there are a few managers and companies that I think the annual reports/letter to shareholders is "must" reading for any investor, maybe I should collect them in a "links" section or in a post one of these days.

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