Anderson Griggs Investments | Financial Advisor - Rock Hill, SC
  • Home
  • About
    • Our Story
    • Our Investment Philosophy
    • Our Team
  • Services
    • Services for Individuals & Families
    • Trust Management Services
    • Our Process
    • Our Fees
  • Resources
    • Our Letters to Clients
    • Intelligent Investing Radio Shows
    • Video Series >
      • Investing Basics
      • Differences Between Professionals
      • 10 Steps to Improve Returns
      • Investing Strategies
  • Contact
  • Home
  • About
    • Our Story
    • Our Investment Philosophy
    • Our Team
  • Services
    • Services for Individuals & Families
    • Trust Management Services
    • Our Process
    • Our Fees
  • Resources
    • Our Letters to Clients
    • Intelligent Investing Radio Shows
    • Video Series >
      • Investing Basics
      • Differences Between Professionals
      • 10 Steps to Improve Returns
      • Investing Strategies
  • Contact

Letters to Our Clients

Thank You John Neff: Remembering a Mentor

7/23/2019

 
Many times over the past twenty years we have discussed our mentors, those great investors who have influenced our thoughts, opinions, methods, techniques, stock selection and portfolio construction.  We’ve shared the words and writings of Benjamin Graham, John Templeton, Marty Whitman, Bernard Baruch, Philip Fisher and so many others who deserve our thanks. 
On June 4th of this year, one of our mentors, John Neff, passed away in his adopted state of Pennsylvania.  Neff managed the Vanguard Windsor Fund from 1964 through his retirement in 1995.  I first learned of his existence and the Windsor Fund from an individual I was attempting to solicit as a new client.  I was a relatively newly registered representative, and I did the best I could to find some information about the Fund and its manager.  As a naive young man a bit too trusting of my superiors, I mentioned the Fund to a gentlemen in charge of mutual fund distribution at my firm in hopes that he would share his thoughts.  This wasn’t a very good idea on my part, because his opinion was that the Windsor Fund, and any other fund that was offered at no or reduced commissions, was going to destroy the business.  He followed this comment with a stern reminder that my job was to sell and that the best investments to sell were those recommended by the firm.  Of course this reprimand just encouraged me to further investigate the Fund.

John Neff was born and educated in Ohio.  His first venture into investing was as an analyst at a bank in Cleveland.  This basic training, and I assume some success in stock selection, gave him the desire to apply those skills with a bit more freedom than allowed under the prudent man rules of a bank trust department.  It just so happened that a little mutual fund company was in need of an individual to revive a fund with a not so great record of performance.  That little company was the Wellington Management Company.  The year was 1964, and the fund was the Windsor Fund, with total assets of $75 million.  When Neff retired 31 years later, the fund had total assets of $13.7 billion, one of the largest in the country. 

Over those 31 years, the Windsor fund outperformed the S&P 500 for 23 of the years.  The average rate of return was 13.7% versus the 10.6% average for the index.  If one had invested $10,000 in the Windsor Fund under Mr. Neff’s management and held onto it for those 31 years, he or she would have turned that investment into $537,271.  The same investment in the index would have grown to $227,200.  Those results place Neff into the legend category of money managers.

Good performance created the legend, but his common sense and sincere approach to managing a portfolio for individual investors is what drew him into my circle of influencers.  In an interview conducted by Bill Griffeth on June 15th, 1994, reprinted in Mr. Griffeths’ book, The Mutual Fund Masters, Mr. Neff was asked if he changed his style of management when the Windsor fund switched from load to no-load status.  Here is his reply:
No. No, we’ve always managed the fund for shareholders, and I don’t mean to say that other people don’t.  We’ve always felt we represented a shareholder who obviously wanted to make a nickel, but he also didn’t want to lose his tail or expose himself inordinately.  We try to manage for somebody who wants to stick his neck out a bit and take a risk and kind of grind it out the hard way.  But he also doesn’t want to get killed by an unfortunate turn of events.
These words might just have been our own. 

In the same interview a discussion came up about how he managed his own funds.  This may not be important to everyone, but if you are turning your funds over to someone to make the day to day decisions on your savings, knowing the answer to this question doesn’t hurt.  Here are a few words from Mr. Neff on the subject:
Also, I don’t own anything that’s not owned by the funds.  You might say that sounds kind of crazy, but the thought there is that essentially my time belongs to the fund.  And you know that as cheap as I am I wouldn’t buy anything myself unless I spent some time on it.  And that time belongs to the fund.
As we have said many times, every security we purchase on behalf of our clients, I also purchase for my personal account.  Yes, some may consider this crazy, but just as Mr. Neff said, I am cheap and my time belongs to our clients.  At least it is known that I am going to be paying attention to our security holdings.

John Neff retired from the day to day management of the Windsor in 1995.  A few years later his book, John Neff on Investing, was published.  From the book:
Windsor was never fancy, fad-driven, or resigned to market performance.  We followed one durable investment style whether the market was up, down, or indifferent.  These were its principal elements:
          -Low price-earnings (p/e) ratio.
         -Fundamental growth in excess of 7 percent.
          -Yield protection (and enhancement, in most cases).
          -Superior relationship of total return to p/e paid.
          -No cyclical exposure without compensating p/e multiple.
          -Solid companies in growing fields.
          -Strong fundamental case.
John Neff was known as the ultimate value investor.  His short list of principles stated above guided him towards purchasing beaten down, out of favor, dividend paying companies with growth potential.  We have so often talked about buying “Great Companies at Cheap Prices.”  Although the quantitative factors we use in our selection process are different from Mr. Neff’s, our philosophy is similar.   Placing our clients first at all times.  Investing side by side with our clients.  Owning shares of financially sound, dividend paying companies with solid growth potential.  Buying at a low price.  We are honored to include Mr. Neff as one of our most important mentors.  

Until next time,

Kendall

Comments are closed.
    Kendall J. Anderson

    Kendall J. Anderson, CFA, Founder

    Justin Anderson

    Justin T. Anderson, President

    Categories

    All
    Market Commentary
    Monthly Client Letters

    Archives

    March 2022
    February 2022
    January 2022
    October 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    January 2021
    December 2020
    November 2020
    August 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    November 2019
    September 2019
    July 2019
    June 2019
    April 2019
    February 2019
    January 2019
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    April 2018
    January 2018
    December 2017
    October 2017
    September 2017
    July 2017
    May 2017
    April 2017
    January 2017
    November 2016
    October 2016
    September 2016
    July 2016
    June 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    October 2015
    September 2015
    July 2015
    April 2015
    January 2015
    December 2014
    November 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    December 2013
    October 2013
    August 2013
    July 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    November 2012
    October 2012
    September 2012
    August 2012
    July 2012
    June 2012
    May 2012
    April 2012
    February 2012
    January 2012

    RSS Feed

Disclosures
Privacy Policy

Common Sense Investment Management for Intelligent Investors
113 E. Main Street Ste. 310
Rock Hill, SC 29730
803-324-5044 or 800-254-0874
info@andersongriggs.com