Morningstar - Conversation: Jean-Marie Eveillard and Marty Whitman

Jean-Marie Eveillard and Marty Whitman met in 1990 shortly after Whitman launched what would become his signature fund, Third Avenue Value TAVFX. They were two kindred spirits on a conference panel with a third portfolio manager, who was speaking about financial theories and hypotheses.

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"He was talking in a language that was completely different from ours," Eveillard says. "Martin and I chatted afterwards about the fact that it was good that the other was there, because we simply didn't speak the same language as the third guy."

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To Eveillard and Whitman, such academic speak only applied to conventional money managers, whose goal was to keep up with a benchmark in the short term. Eveillard and Whitman, on the other hand, didn't give a whit about benchmarks nor the short term; they were buy-and-hold investors who bought companies they knew from the bottom up at ridiculously cheap prices.

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MW: Agreed. But I think a big point is, that is really irrelevant to us. We buy and hold long term. Markets go down, we take advantage. We sort of operate under the implicit assumption that if we don't know more about the situation than the market, we wouldn't be there. They operate under the assumption that the market is sending me messages; the market knows more than any individual. It's just the opposite.

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JME: That's right. I think it's Seth Klarman who said, "The biggest edge that value investors have is their long-term orientation," which I think jives as well with Ben Graham saying, "Short term, the market's a voting machine; long term, it's a weighing machine."

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MW: We like to say at Third Avenue that we do rather well, but when it comes to information, we're always the last to know. [laughs] But it's just not important. It's not that we get superior information, but rather, that we use the available information in a superior manner.

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JME: That's right.

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MW: That's where we come from, you and I.

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JME: So many investors are always looking for the information that the others don't have. And as you said, we have the same information, which is readily available. We try to use it better than the others. It's in the interpretation, in a sense, and the reading of the available information.