Moats Versus Boats

Veteran investor Chetan Parikh shares his insights on the value investing approach

Soumik Kar

“Most value investors take their inspiration from Ben Graham. The most famous of them all is Warren Buffett. He started off as what we call a boat type of investor and then went on to became a moat type of investor. But what does value investing really mean? When evaluating fixed-income securities, there is no disagreement over what value is; it is very easy to define. In equities, you have a notion of what short-horizon value is — what we categorise as relative value. The next big category is what is called deep value, and for the purpose of our discussion, we will call it boats. This is primarily the Graham-and-Dodd way of looking at things: in an extraordinarily cheap way. These guys made no distinction about the quality of the business.
They were just looking for cheap businesses,
which were very often very poor businesses.