Thursday, February 26, 2015

Irving Kahn

*** [2/26/15]

(Bloomberg) -- Irving Kahn, the Manhattan money manager whose astounding longevity enabled him to carry firsthand lessons from the Great Depression well into the 21st century, has died. He was 109.

He died on Feb. 24 at his apartment in Manhattan, his grandson, Andrew Kahn, said Thursday.

A studious, patient investor from a family whose durability drew the attention of scientists, Kahn was co-founder and chairman of Kahn Brothers Group Inc., a broker-dealer and investment adviser with about $1 billion under management.

Last year, at 108, he was still working three days a week, commuting one mile from his Upper East Side apartment to the firm’s midtown office. There, he shared his thoughts on investment positions with his son, Thomas Kahn, the firm’s president, and grandson Andrew, vice president and research analyst. The cold New York City winter kept Kahn away from the office the past several months, his grandson said.

“I prefer to be slow and steady,” Kahn said in a 2014 interview with the U.K. Telegraph. “I study companies and think about what they might return over, say, four or five years. If a stock goes down, I have time to weather the storm, maybe buy more at the lower price. If my arguments for the investment haven’t changed, then I should like the stock even more when it goes down.”

Kahn worked to stay mentally agile, reading three newspapers daily and watching C-SPAN, according to a 2011 article in New York magazine.

Among the memories he filed away was his work with Benjamin Graham, the stock picker and Columbia Business School professor whose belief in value investing influenced a generation of traders including Warren Buffett. Graham, who died in 1976, distinguished between investors, to whom he addressed his advice, with mere “speculators.”

Kahn assisted Graham and his co-author, David Dodd, in the research for “Security Analysis,” their seminal work on finding undervalued stocks and bonds, which was first published in 1934. In the book’s second edition, published in 1940, the authors credited Kahn for guiding a study on the significance of a stock’s relative price and earnings.

Irving Kahn was born in Manhattan on Dec. 19, 1905, to Saul Kahn, a salesman of electric fixtures, and his wife, Mamie. He graduated from DeWitt Clinton High School in the Bronx and attended City College for two years before dropping out to go into business.

In 1928, working as a clerk at the Wall Street brokerage Kuhn, Loeb & Co., Kahn heard about a trader named Graham who seemed to know how to outperform the market. Kahn visited Graham’s office at the New York Cotton Exchange, and an alliance was born.

“I learned from Ben Graham that one could study financial statements to find stocks that were a ‘dollar selling for 50 cents,’” Kahn told the Telegraph. “He called this the ‘margin of safety’ and it’s still the most important concept related to risk.”

In June 1929, Kahn sold short 50 shares of Magma Copper, betting $300 -- more than $4,000 in today’s dollars -- that the price would fall. Four months later, on Oct. 29, 1929, the market crashed. Kahn’s $300 investment would triple in value.

He had counted on a downturn, he later explained, because he was watching traders bid the price of stocks higher and higher.

“I wasn’t smart,” he said in a 2006 interview with National Public Radio, now known as NPR. “But even a dumb young kid could see these guys were gambling. They were all borrowing money and having a good time and being right for a few months, and after that, you know what happened.”

After trading closed for the day, he would ride the subway with Graham to Columbia and sit in on Graham’s investing classes. He became Graham’s part-time teaching assistant.

He scouted potential investments for Graham’s partnership, Graham-Newman, and worked on Graham’s “The Intelligent Investor” (1949).

When Graham retired from his investment partnership in 1956, he recommended Kahn to clients seeking a new adviser. By then Kahn was a partner at Abraham & Co., which was later bought by Lehman Brothers. With sons Alan and Thomas, he parted with Lehman in 1978 to open Kahn Brothers.

*** [12/17/05]

Who's Irving Kahn?

Irving Kahn works 8 hours a day, 5 days a week, at his Madison Avenue investment advisory firm. This would hardly be noteworthy, except for his age: 99 [now 100]. When scientists gave him a mental fitness exam two years ago, Kahn showed no signs of cognitive decline. "I don't seem to have that problem," Kahn says.

Kahn, the chairman of Kahn Brothers, a low-profile New York investment firm, might be Wall Street's oldest active investor. He's in the office every business day, reading scientific periodicals, annual reports and newspapers in search of undervalued stocks in the tradition of his friend and mentor, Benjamin Graham, widely considered the father of value investing.

***

[11/24/11] Except for the occasional doctor’s appointment or bad cold, Irving Kahn hasn’t skipped a day of work in more years than he can remember. And he can remember plenty of them: He’s 105.

It helps that he is wealthy enough to have full-time attendants. Also, perhaps, that he has always been a “low liver,” without flamboyant tastes, as his brown, pointy-collared shirt and brown patterned tie attest. He goes to bed at eight, gets up at seven, takes vitamins because his attendants tell him to. (He drew the line at Lipitor, though, when a doctor suggested it a few years back.) He wastes few gestures; as we speak, his hands remain elegantly folded on his desk.

Still, a man who at 105—he’ll be 106 on December 19—has never had a life-threatening disease, who takes no cholesterol or blood-pressure medications and can give himself a clean shave each morning (not to mention a “serious sponge bath with vigorous rubbing all around”), invites certain questions. Is there something about his habits that predisposed a long and healthy life? (He smoked for years.) Is there something about his attitude? (He thinks maybe.) Is there something about his genes? (He thinks not.) And here he cuts me off. He’s not interested in his longevity.

But scientists are.

*** [9/2/14 via trbaby]

Three days a week, Irving Kahn takes a taxi from his flat in Manhattan for the short ride to the offices of his investment firm, Kahn Brothers.

Nothing surprising about that, you might think. But Mr Kahn is 108 years old.

Many professional investors stress the importance of a long-term approach but few are in a position to speak about it with as much authority as Mr Kahn.

“One of my clearest memories is of my first trade, a short sale in a mining company, Magma Copper,” he remembered. “I borrowed money from an in-law who was certain I would lose it but was still kind enough to lend it. He said only a fool would bet against the bull market.” But by the time the Wall Street crash took hold in the autumn, Mr Kahn had nearly doubled his money. “This is a good example of how great enthusiasm in a company or industry is usually a sign of great risk,” he said.

But after Mr Kahn’s early success in the risky business of short-selling, his approach changed to one of finding solid companies that were undervalued by the stock market and then holding on to them. He also turned his back on borrowing money to invest (leverage). “I invested conservatively and tried to avoid leverage. Living a modest lifestyle didn’t hurt, either,” he said.

The catalyst for the change was his collaboration with Benjamin Graham, the inventor of “value investing”.

Mr Kahn said: “In the Thirties Ben Graham and others developed security analysis and the concept of value investing, which has been the focus of my life ever since. Value investing was the blueprint for analytical investing, as opposed to speculation.”

Graham was a lecturer at Columbia University in New York, where his pupils included Warren Buffett, and Mr Kahn was his teaching assistant. “They’d take the subway to Columbia together,” said Tom Kahn, Irving Kahn’s son, who also works for the family investment firm.

He added: “There are always good companies that are overpriced. A disciplined investor avoids them. As Warren Buffett has correctly said, a good investor has the opposite temperament to that prevailing in the market. Throughout all the crashes, sticking to value investing helped me to preserve and grow my capital.

“Investors must remember that their first job is to preserve their capital. After they’ve dealt with that, they can approach the second job, seeking a return on that capital.”

The market today
Mr Kahn said he was finding few bargains in today’s markets, in which America’s benchmark S&P 500 index has hit repeated record highs.

“I try not to pontificate about the market, but I can say that my son and I find very few instances of value when we look at the market today. That is usually a sign of widespread speculation,” he said.

“But no one knows when the tide will turn. Those who are leveraged, trade short-term and have bought at a high prices will be exposed to permanent loss of capital. I prefer to be slow and steady. I study companies and think about what they might return over, say, four or five years. If a stock goes down, I have time to weather the storm, maybe buy more at the lower price. If my arguments for the investment haven’t changed, then I should like the stock even more when it goes down.”

He explained how investment decisions are reached at Kahn Brothers. “Tom runs the firm and my grandson Andrew is one of our analysts. The three of us and our team enjoy debating the merits of companies. Sometimes we have different opinions, which makes it interesting.

“We basically look for value where others have missed it. Our ideas have to be different from the prevailing views of the market. When investors flee, we look for reasonable purchases that will be fruitful over many years. Our goal has always been to seek reasonable returns over a very long period of time. I don’t know why anyone would look at a short time horizon. In my life, I invested over decades. Looking for short-term gains doesn’t aid this process.”

“You must have the discipline and temperament to resist your impulses. Human beings have precisely the wrong instincts when it comes to the markets. If you recognise this, you can resist the urge to buy into a rally and sell into a decline. It’s also helpful to remember the power of compounding. You don’t need to stretch for returns to grow your capital over the course of your life.”

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