Shelby Davis

Epitome of a value investor

I recently came across a relatively unknown value investor by the name of Shelby Davis. Shelby Davis started investing at 37 in 1947 with $50,000 and by the time of his death in 1994 at age 85 had amassed a wealth of $900 million. He had a narrow focus and specialised primarily in insurance companies and used leverage to buy into positions. His compound annual return over 48 years of investing was 23%!

The main reason I posted this is to highlight a story told by his grandson which I think is the epitome of a value investor (I also found it hilarious). While taking a walk in Manhattan with his grandfather, Chris asked his grandfather to buy him a $1 hotdog and Shelby’s response was:

“Do you realise if you invest that dollar wisely it will double every five years? By the time you reach my age, in 50 years, your dollar will be worth $1,024. Are you so hungry you need to eat a $1,000 hot dog?”

Delayed gratification and frugality is a virtue shared by all the great value investors that I have come across.

If you are interested in his story, there is a book called “The Davis Dynasty” by John Rothchild.