Time Value of Money
Kinds of Interest Rates
Future Value of an Uneven Cash flow
Probability Distribution
Standard Deviation
Security Market Line
Bond Valuation
Stock Valuation
Cost of Capital
The Balance Sheet
Capital Budgeting
Hall of Fame
Credit Report
Financial Terms
Financial Charts
Fuel Mileage
Energy Efficiency

John Neff

John Neff was born in 1931 in Wauseon, Ohio. He attended the University of Toledo and graduated suma cum laude in 1955 with a Bachelor of Arts. He went to work for the National City Bank of Cleveland as a securities analyst. While working in this position he earned a MBA from Case Western Reserve University. In 1964 he worked with Wellington Management Co. and became the portfolio manager for the Gemini, Windsor and Qualified Dividend funds. Neff was very successful at beating the market for more than three decades before retiring in 1995.

Neff achieved excellent results for the Windsor Fund during the 31 years that he acted as the fund’s portfolio manager (from 1964 until 1995). During this period the average annual total return was 13.7% beating the 10.6% of the S&P 500 Index. Neff was very consistent in beating the market and was frequently ranked as one of the top money managers. Many other fund managers trusted Neff so much that they turned their own money over to him and he became known as the “professional’s professional”.

Neff didn’t classify himself as a value or a contrarian investor. He described his style of investing as purchasing "good companies, in good industries, at low price-to-earnings prices." A good look at Neff’s investment style shows that he did frequently employ the value-contrarian strategy. He preferred portfolio concentration to diversification and was interested in all different sized stocks as long as they had a good P/E ratio. He described this as "low P/E investing."

Neff was particularly fond of buying stock after there had been bad news regarding the company which made the prices plunge. He is quoted as saying, "It's not always easy to do what's not popular, but that's where you make your money. Buy stocks that look bad to less careful investors and hang on until their real value is recognized." He also said "I've never bought a stock unless, in my view, it was on sale." He would also take “indirect paths” to purchasing stocks in popular industries. An example of this would be purchasing the manufacturing company that sold drilling pipe to oil companies that had the higher stock that was too expensive.

Neff warned against taking part in the momentum driven “adrenalin markets”. His preferred approach was to meet directly with the management of a company to get a feel of its integrity and potential effectiveness. This degree of contact is generally impossible for most investors and the best alternative is to apply the fundamental analysis techniques that Neff developed to the financial reports of the company. This should give a clear indication of the performance indicators of the company and its management. When it comes to selling, Neff says, "Successful stocks don't tell you when to sell. When you feel like bragging, it's probably time to sell."

When Ryan Furman from the Motley Fool interviewed Neff in July 2006 he noted that "most great investors are serious bookworms" and this definitely applies to John Neff. Furman says, "He gained notoriety for taking his entire weekly Wall Street Journal copies home for a second read during the weekend." This interview also stated that Neff reads Value Line regularly. These two publications are great sources of investing advice and should be given a lot of attention by stock investors.

Neff wrote an autobiography about his investment experience title “John Neff on Investing” which was published in 2001.

John Neff’s publications include:

John Neff on Investing

About the author

Mark McCracken

Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English".

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