Tweedy, Browne Company LLC is an American investment advisory and

fund Fund may refer to: * Funding is the act of providing resources, usually in form of money, or other values such as effort or time, for a project, a person, a business, or any other private or public institution ** The process of soliciting and gathe ...

management firm founded in 1920 and headquartered in

Stamford, CT Stamford () is a city in Fairfield County, Connecticut, United States, outside of New York City. It is the sixth-most populous city in New England. Stamford is also the largest city in the Western Connecticut Planning Region, Connecticut, Weste ...

. As of December 2012, it managed approximately 13 billion dollars in separate accounts and four mutual funds. The firm specialized in value investing influenced by

Benjamin Graham Benjamin Graham (; Given name, né Grossbaum; May 9, 1894 – September 21, 1976) was a British-born American financial analyst, economist, accountant, investor and professor. He is widely known as the "father of value investing", and wrote two ...

, and is also known for their association with

Warren Buffett Warren Edward Buffett ( ; born August 30, 1930) is an American investor and philanthropist who currently serves as the chairman and CEO of the conglomerate holding company Berkshire Hathaway. As a result of his investment success, Buffett is ...

during the early phase of his career. Tweedy, Browne has been described as "the oldest value investing firm on Wall Street".

History

The company was started in 1920 by Forest Berwind "Bill" Tweedy, who initially focused on shares of smaller companies, often family owned, that traded in lower numbers and lower volume than larger company stocks. This niche allowed him to buy stocks at a significant discount to estimated

book value In accounting, book value (or carrying value) is the value of an asset according to its balance sheet account balance. For assets, the value is based on the original cost of the asset less any depreciation, amortization or impairment costs made ...

due to the limited options for sellers.Eli Rabinowich (February 12, 2004
Profiles in Investing: A Legacy of Value
(interview with Christopher H. Browne, from the ''Graham & Doddsville Newsletter'' published by Columbia Business School) Tweedy's focus on buying shares at a discount caught the attention of

, the father of value investing who was in the 1920s and '30s formalizing his theories. Tweedy and Graham eventually became friends and worked out of the same

New York City New York, often called New York City (NYC), is the most populous city in the United States, located at the southern tip of New York State on one of the world's largest natural harbors. The city comprises five boroughs, each coextensive w ...

office building at 52 Broadway. After decades working solo, Tweedy was joined by Howard Browne and Joe Reilly in 1945. Walter Schloss had a close friendship with Tweedy and used a desk in their office, but Schloss never officially works at Tweedy, Browne. Bill Tweedy retired in 1957, and Howard Browne became president of the company. They still focused on being a

market maker A market maker or liquidity provider is a company or an individual that quotes both a buy and a sell price in a tradable asset held in inventory, hoping to make a profit on the difference, which is called the ''bid–ask spread'' or ''turn.'' Thi ...

broker-dealer In financial services, a broker-dealer is a natural person, company or other organization that engages in the business of trading securities for its own account or on behalf of its customers. Broker-dealers are at the heart of the securities and ...

for smaller companies at this point, and became known as "buyers of last resort" for stocks neglected by larger trading firms.

, a protege of Graham, was closely linked with Tweedy, Browne in the early stages of his investing career. He used Tweedy, Browne as his preferred brokerage for Buffet Partnership, Ltd. (1956-1966), and bought his first shares of

Berkshire Hathaway Berkshire Hathaway Inc. () is an American multinational conglomerate holding company headquartered in Omaha, Nebraska. Originally a textile manufacturer, the company transitioned into a conglomerate starting in 1965 under the management of c ...

through the firm. By the 1960s, Tweedy, Browne had expanded from a brokerage and

to managing money for outside investors. Buffett singled out Tweedy, Browne as superior investors in his 1984 article "

The Superinvestors of Graham-and-Doddsville "The Superinvestors of Graham-and-Doddsville" is an article by Warren Buffett promoting value investing, published in the Fall, 1984 issue of ''Hermes'', Columbia Business School magazine. It was based on a speech given on May 17, 1984, at the Col ...

," noting they outperformed both the

Dow Jones Industrial Average The Dow Jones Industrial Average (DJIA), Dow Jones, or simply the Dow (), is a stock market index of 30 prominent companies listed on stock exchanges in the United States. The DJIA is one of the oldest and most commonly followed equity indice ...

and

S&P 500 The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 leading companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices and in ...

by substantial margins from 1966 to 1982. Their first

mutual fund A mutual fund is an investment fund that pools money from many investors to purchase Security (finance), securities. The term is typically used in the United States, Canada, and India, while similar structures across the globe include the SICAV in ...

open to the general public was created in 1993. In 1997 the

holding company A holding company is a company whose primary business is holding a controlling interest in the Security (finance), securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own Share ...

Affiliated Managers Group bought 70% of Tweedy, Browne for $300 million. The firm's managing directors included well-known value investor Christopher H. Browne, Howard Browne's son and author of '' The Little Book of Value Investing'' (2007). Christoper Browne died on December 13, 2009. During Christopher Browne's tenure, two of the firm's mutual funds outperformed market averages between 1993 and 2009. The managers of Tweedy, Browne also published a number of freely available papers about investment strategies.

Investing philosophy

All of the firm's funds are managed in accordance to the principles of Value Investing as popularized by

. Tweedy became acquainted with Graham in the early 1930s. In a 1992 paper, Tweedy, Browne outlined the five characteristics they use to identify stocks for possible investment.Christoper Browne, et al
What Has Worked in Investing: Studies of Investment Approaches and Characteristics Associated with Exceptional Returns
Columbia Business School, accessed 10 February 2021 (1) Low price to book value; (2) low

price to earnings ratio A price is the (usually not negative) quantity of payment or Financial compensation, compensation expected, required, or given by one Party (law), party to another in return for Good (economics), goods or Service (economics), services. In so ...

; (3) significant stock purchases by executive officers at a company, particularly when stock price drops, indicating insiders have confidence in long-term company prospects; (4) significant drop in stock price; (5) small market capitalization. While these traits do not guarantee a positive outcome, the firm cites academic research from around the world to indicate these traits may increase the odds of investing success when consistently applied over time.

References

External links

* , Tweedy, Browne official website American companies established in 1920 Financial services companies established in 1920 Investment management companies of the United States Companies based in Stamford, Connecticut {{US-finance-company-stub