After legendary American investor John Neff joined the Wellington Management Co. in 1964, he became the portfolio manager of the Windsor, Gemini and Qualified Dividend funds. He retired in 1995 after 31 years (1964-1995) of market-beating investment results while the Vanguard Windsor Fund during his tenure as portfolio manager averaged +13.7% against the S&P 500 Index of +10.6%.
Good Company, Good Industry, Good Investment
John Neff characterizes his investing approach of buying “good companies, in good industries, at low price-to-earnings prices.” Neff practiced portfolio concentration over diversification. He pursued stocks of all sizes – large, small, and medium – as long as they showed evidence of low P/E ratios, which he described as “low P/E investing.”
Two of Neff’s favourite investing tactics were:
1. To buy on bad news after a stock had taken a substantial plunge and
2. To take “indirect paths” to buying in to popular industries.
If You Can’t Meet the Management, Do the Research
Neff opposed participating in momentum driven markets and preferred face-to-face meetings with a company’s management to assess its integrity and effectiveness. For most individual investors, this type of contact is not a realistic possibility. However, using Neff’s rigorous fundamental analysis techniques as applied to a company’s financials will turn up enough management performance indicators to compensate for the inability to directly interact with a company’s managers.
Neff’s Background and Credentials
Neff graduated summa cum laude with a Bachelor of Arts degree from the University of Toledo in 1955. While working as a securities analyst with the National City Bank of Cleveland, he obtained his Master of Business Administration from Case Western Reserve University in 1958. Neff’s book, entitled “John Neff on Investing” discusses his value investing principles.
→ Read more about this new strategy on meetinvest and see how a portfolio would have performed using his strategy.