It's a formula that Van Den Berg says he's culled by closely studying the writings of value managers he admires, namely Benjamin Graham and Warren Buffett, as well as Philip Fisher, a theoretician whose work Buffett and others have studied assiduously. "I have files on 100 money managers I've followed throughout the last 30 years," he says. "I study their styles and try to learn from them."
Yet he still feels that what he's learned only amounts to "tweaks" to basic value investing. The firm has stuck with that formula for 28 years, despite the calls for change that come with every bear market, every bubble and every year in which another investment style is in vogue, the senior Van Den Berg says.
That's the way it was in 1998, when the firm eked out only a 2.17% return in the face of a 28.57% by the S&P 500. Van Den Berg vividly remembers a phone call that year, in which a longtime client and friend implored him to invest in certain technology stocks. Van Den Berg wouldn't budge, arguing that the prices of these companies were off the charts. The client pointed out that Van Den Berg said the same thing the year before, and the value of the companies went on to double.
"I don't care if the prices quadrupled," he responded. "It was like someone asking you to fly a plane when you can only drive a car."
That client left the firm a short time later, taking $3 million in pension investments with him-missing out on Century Management's 32.14% a year later and 43.62% return in 2000.
"The thing that the rope climbing taught me is the value of discipline, and I think that's one of the things that distinguishes us," Van Den Berg says. "It's the discipline of believing in something and sticking to it. Buying it at a discount with a margin of safety hasn't changed in 70 years and probably will never change."
To underscore that belief, Van Den Berg has implemented an ironclad rule at the firm: All employees must invest in the same stocks as do the firm's clients.
The Family Chips In
When your focus is on steadily building up an advisory business on one unchanging principal, you wouldn't expect there to be big turning points along the way. Yet Van Den Berg says Century Management did hit a milestone-thanks to his daughter Stacie.
Stacie accepted a job offer from her father in 1988, and soon after became the firm's first trader. Around the same time, Van Den Berg was trying to figure out how to use the firm's performance history as a stimulus for growth.
Van Den Berg felt his small firm's record should be solidified with an audit, but he knew it would involve the painstaking process of recording 14 years worth of trading-something that would take years.