With more than a century of expertise in piloting value strategies in the market, Tweedy, Browne draws on its longstanding heritage to offer a disciplined approach to value investing. Recently, Tweedy, Browne Managing Directors Jay Hill, CFA, and Jason Minard, CFP, sat down with the VettaFi team to discuss the firm’s history, the advantages of value investing, and more.100+ Years of Investing HeritageNicholas Wodeshick: Let’s start by taking a step back and looking at Tweedy, Browne’s history. Your firm has well over 100 years of experience navigating markets with a deep, value-driven approach. How do you go about leveraging over a century of investing history when providing services to potential clients today?
Jason Minard: As you point out, the firm’s roots go way way back to 1920. Everything we’ve ever done here at Tweedy, Browne is entrenched in value investing — first as a broker. An important part of our history is that we were Ben Graham’s broker. Our offices were literally in the same building as Graham in those days. Because stock certificates were handed off and checks were delivered physically, if you were next to your biggest client you would get some business. That relationship with Graham was important.
We got to meet Graham. We got to meet his star employee, which was Warren Buffett. But most importantly, we began to understand how he thought about investing. And so this decades of experience we have here is sort of entrenched in what at Tweedy we call the “Ben Graham big idea,” right?
Stocks are interests in businesses. They’re not pieces of paper that trade around. And the ‘Ben Graham big idea’ is that there’s two prices for every share of stock — the publicly available price that we see on the market in any given day, and what Graham referred to as the intrinsic value, the common sense, real world value of the business and buying in with what he called a “margin of safety,” or a big discount from intrinsic value. This framework — this “big idea”—is what lives and eats and breathes inside the firm.
And when we enter those securities, we’re entering at a price that represents a big discount from a common-sense intrinsic value. And I think what we’ve learned here over the decades is how important it is to stick to a discipline, through thick or thin, through fads, through crises. The elegance of this “Ben Graham big idea” is that it leads us into securities when they’re trading at big discounts. It also leads us out of them when that stock price reflects a more common sense value.
Jay Hill: Value investing tends to work over time because human nature doesn’t change. The human nature that I’m talking about is that humans tend to overreact to negative news, right? That’s always going to exist, and it’s often our job to determine what’s a clear overreaction versus what’s a real risk that really is a change that could threaten the business. So, a big part of our job is understanding what the risks or threats are to a company and making a judgment on whether we think those risks are temporary in nature, i.e., cyclical, that will pass with time. Or are they more secular in nature or more permanent in time? If we think they’re more cyclical then that’s a good candidate to perhaps buy the stock and just wait.
One thing that we’ve always done is we have emphasized balance sheet strength. If a company doesn’t have a strong balance sheet, even if it’s in a cyclical decline, there’s a chance this cycle won’t turn before the company goes bankrupt. So if you know the business will eventually turn, but you’re not at all sure of the timing, you want to make sure you’re in a business with a strong balance sheet that can generate free cash flow and survive the negative part of the cycle.
I would also just say, look, all great investments begin in discomfort. We have a saying: “Fear breeds bargains.” You’re unlikely to ever have a true bargain in the absence of fear. I always think of Warren Buffett’s famous phrase: “To be greedy when others are fearful and fearful when others are greedy.”The Misconceptions of Value InvestingNicholas Wodeshick: On the topic of value investing, for some time now, investors have tended to favor growth funds over value strategies. Given your extensive expertise in the field, what do you think investors are misunderstanding about what value funds can bring to a portfolio?Jay Hill: J.P. Morgan Asset Management put together this chart, and it really looks at two variables. One is what is the initial price for somebody buying the S&P 500? What is the initial P/E that they paid, and what were the subsequent 10-year returns? What it clearly shows you is that historically, when an investor has paid, let’s say, 14 or 15 times a going in purchase price P/E multiple for the S&P 500, the subsequent 10-year returns have been in the mid- teens, all the way up to 20%.
So, high returns. But every time in the last 26 years when an investor has paid 22x or higher for the S&P 500, their subsequent 10-year returns have been between -2% and positive 2%. So, effectively zero, right? This clearly shows that higher valuations lead to lower returns, and lower initial valuations lead to higher returns. Today, the S&P 500 trades at 25x earnings. The historical data would suggest if you’re paying 25x earnings over the next 10 years, you’re not going to generate a great return. It wouldn’t shock me at all if in 2036 that the S&P 500 on a 10-year compounded annual basis generates zero.
The other thing I think about a lot is that value investing tends to gain the most ground versus indices when stock markets are declining. In the last 10 or 15 years, markets have, generally around the world, been up and up. Our history suggests that in up markets, we tend to participate, but we tend to lag. I think this is true of Tweedy. I think it’s true that all value managers tend to lag index returns in very bullish periods.
When value tends to gain the most ground versus indices is when overall index returns are negative and value investors lose less. So, it’s outperformance by losing less. If you have a stock that falls 50%, it’s got to increase 100% to get back to par. So, in my mind, the reason that value investing has tended to outperform over very long periods of time is largely attributable to the fact that it tends to lose less in down markets and the make-up math is easier.
Jason Minard: I think also there’s a misperception about value that, you know, value investing is owning the hospice patients of the corporate world. It’s not the case. We own good, sometimes great businesses that grow over time, but the price you pay matters. History will show you that when you pay a cheaper price for a security, you’re probably doing a better job at lining up probabilities in your favor of a good term experience, as opposed to what we’ve seen time and time throughout history. When the world corrects, it’s the most expensive, speculative stuff that comes crashing down to Earth, and as Jay’s describing, that makeup math can be tremendous.Leveraging Corporate Insider Buys Within the ETF WrapperNicholas Wodeshick: Over the last two years, Tweedy, Browne has launched two exchange-traded funds: the Tweedy Browne Insider + Value ETF (COPY ) and the Tweedy Browne International Insider + Value ETF (ICPY ), which both target companies where corporate insiders are actively purchasing shares. What drove your decision to offer this strategy in the form of ETFs, and what have you found the main benefits of the ETF wrapper to be?
Jason Minard: We don’t have a product creation department at Tweedy. We’re lean and we’re value investors. That’s all that we do. And the topic of insider buying is something that this firm has always been interested in. We love it when we find a cheap stock and we see the CEO or a board member take money out of his or her pocket to buy the stock.
Jason Minard: There’s been some academic work out there. There’s a professor at t who did one of the original insider-buying, who did one of the original insider buying studies coupled with value. He looked at low P/E, low price-to-book-value stocks. When he did that, you know, his conclusion is that when you combined cheapness based on P/E or price to book and material insider buying, the resulting numbers were really compelling. They were index beating on an absolute basis.
One of our colleagues, interested in this data, put together our own proprietary value study, looked back over 26 years, over 12,000 individual trades of insiders, material insider buying, and our study produced a very similar conclusion.
The data just hit you in the face. Interestingly, when you looked at the cheapest two deciles of stocks based on our criteria and you coupled that with material insider buying by C-suite executives, that combination was compelling. I think there were people around here who thought we could probably make some money investing in this stuff. So, originally it was “let’s build a portfolio and do this”, and we started with an individual here at Tweedy who started his own investment portfolio. Then, we thought, “This is a little bit of a different flavor of value investing,” and maybe there would be an audience for what we are seeing as an evidence-supported approach
And look, for the ETF wrapper, I think the big difference is the tax efficiency. We work with high net worth investors and financial advisors, and when you have the ability to deliver a more tax-efficient return, we think the ETF wrapper is very appropriately designed to do that.
Jay Hill: We’re [also] making sure that the insider didn’t purchase the shares to meet a minimum ownership requirement. They’re actually buying it not because they have to, but because they think their stock is cheap and they think the stock is going to go up. And we have a saying around here: There’s only one reason why an insider buys his own stock. They think it’s going up, and insiders have insight information that the rest of the market doesn’t have.
It’s indisputable that the insiders of a company know more about it than Wall Street or sell-side research analysts or buy-side research analysts like me. They are the most informed, and they also have the ability to create change and become their own catalyst. Plus, they have the ability to introduce new products, to implement a cost savings plan, to sell a division, or in some instances to sell the whole company.Navigating 2026's Markets With a Value ApproachNicholas Wodeshick: Looking broadly, the 2026 macroeconomic picture is already shaping up to be a relatively uncertain one, both on a domestic and international level. How do you see your approach to value investing positioned amid all this uncertainty?
Jay Hill: We’re finding that international stocks as a whole are significantly cheaper than U.S. stocks. So, we go where the bargains are and we’re finding more bargains internationally. This could be in Japan, it could be in South Korea, it could be in Europe or in the United Kingdom. But the valuation gap between U.S. stocks and international stocks is about as wide as it’s ever been. One way to answer your question is, we own more international stocks. Secondly, I would say we found more value in small- and mid-caps than in large-caps worldwide.
Jason Minard: We’re an all-cap manager. [About] 60% of our portfolios are held in stocks with less than a $10 billion market cap. We have some very respected peers out there, people that are household names. We think they’re great. But some of these guys are slogging around $50 billion and their opportunity set for them to go down and own a $300 or 400 million market cap… It’s really difficult for them to do that and have it make a difference in client portfolios. [For us], the smaller and midcap component, the ability to go anywhere where value shows up, I think is a huge advantage to what we do.
Jay Hill: I would say over the last — it’s at least two months, and it may go back as far as five or six months – there are whole industries that are now under a cloud or are perceived as being an AI loser. Software is the best example. I heard somebody say earlier this week that the software sector within the S&P 500, year to date, is down 20%. There are other industries every day that seem to come under the cloud of “they could be an AI loser.”
I’m thinking of insurance brokers, wealth management companies. some logistics companies now are under this perceived threat of being AI losers. To a large extent, we don’t own those stocks. There are very few companies that we own that, at least today, that it’s at all obvious that there’s this at least potential concern that AI could disrupt the business. Only time will tell if that’s an overreaction or not. And we’re actually looking at some of these companies that we’ve never been able to own before because the valuations have been too high. Now that there’s real fear, there’s a reason for us to look.
Tweedy, Browne Company LLC (“Tweedy, Browne”) is an independent company unaffiliated with VettaFi LLC (“VettaFi”). These articles do not create, and should not be construed as creating, any legal partnership, agency relationship, affiliation, or similar relationship between VettaFi and Tweedy, Browne. VettaFi LLC is the author and owner of these articles.
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