GuruFocus Interviews Tom Gayner
How did you get started with value investing?
TG: Well, I started out life as an accountant, from the University of Virginia. Then a CPA, working at PriceWaterhouseCoopers. I found as I got into accounting that I was more interested in dollars than numbers, so investing seemed to be a little more in tune with business itself and the world of finance. Now, I think accounting is a phenomenally good way to begin to be an investor because accounting is the language of business, and you need to understand the language and what accounting entries mean in economic sense. But once I had that language down, I found the craft of investing was just very attractive to me. So that was sort of my mental switch. There was a local investment firm in town called Davenport and Company of Virginia, which was a small group here in Richmond. They had an interesting practice where they were brokers, and they did research on regional companies in Virginia and North Carolina. I had the opportunity to go there and work as a stock broker, and as a research analyst covering companies in Virginia and North Carolina, to be exposed to a lot of different industries, a lot of different companies, and I enjoyed it thoroughly. One of the companies that I covered starting in 1986 when they went public was Markel. I got to meet Steve Markel, and from 1986 through 1990, I covered the company. He was doing acquisitions for Markel, then Markel did the second half of the Shand acquisition, which more than doubled the size of the company and the investment portfolio. Steve was managing things himself and decided that he would like a wingman to help him out. He mentioned something to me about coming out here, and I said, "Great," because I saw an insurance company that I liked and respected, that made underwriting profits, and was willing to invest underwriting profits for the long term. I knew that that was the formula that Buffett, at Berkshire practiced. And I got to stay right here in Richmond, Virginia. That sounded great, sign me up. That is the short story of how it happened.
So you made it all the way up to the Chief Investment Officer and President. But, we know that accounting is different from value investing, right. Over the process, were there any persons or books that influenced you?
TG: Yes, there are two levels of reading that I would suggest to people. The first would be the traditional stuff that most people are probably aware of, and that starts with Graham and Dodd, Security Analysis, and The Intelligent Investor. I also always thought John Train was a great financial writer, I'm looking in my bookcases here, I like Peter Lynch's book, Beating the Street, A Hundred to One on the Stock Market that was recommended to me by Chuck Akre, so a lot of financial books that a lot of people have already read. The next tier of books are much broader and they're not really financial books, but I would call them human nature books. What makes people tick? Why do people do the things they do? My favorite author is Mark Twain, and I tell people that if you've already studied accounting, and if you've already read the first set of financial books, then the next thing you should read is a lot of Mark Twain kind of stuff. And you should read it with the sense that Mark Twain was broke and rich, and broke and rich, several times in his life, so there's sort of a subtext of money, and finance, and investing, and behavior that underlies much of Mark Twain's work. And if you read and study Mark Twain, I think you get a good sense of the qualitative factors that affect investing as opposed to just the pure numbers. And then the last thing after that is that I like reading a lot of biographies, people of accomplishment, military figures, leaders, athletes, and coaches. Reading how these people did what they did is worth studying.
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