The Portability of Value: How Diverse Portfolios Yield Consistent High Returns Using Graham’s Philosophy

The Investing for Beginners Podcast recently explored one of the most enduring concepts in modern finance: Benjamin Graham’s principle of the “margin of safety.” According to host Andrew Sather, Graham’s former students at Columbia University demonstrated the versatility of this approach by compounding capital at extraordinary rates, despite maintaining wildly different portfolios.

The results speak for themselves: Walter Schloss earned 21% annually, Tweedy Brown achieved 20%, Warren Buffett averaged nearly 30%, the Sequoia Fund saw 18%, and Charlie Munger earned 20%. Rick Guerin’s record was even more striking, with a 33% annual return over 18 years. The primary lesson for the individual investor is that while specific stock picks may vary, the underlying philosophy remains effective regardless of the asset selection.

Buffett’s Strategy of Quality Compounders

Berkshire Hathaway (NYSE: BRK-B) continues to serve as a primary example of this model. Trading at approximately 14 times trailing earnings with a 1.4 price-to-book ratio, the company maintains a 10.5% return on equity and a 19.3% profit margin. Over the last decade, the stock has compounded 236.81%, despite a slight year-to-date pullback of 5.43%.

Berkshire’s equity portfolio reads like a masterclass in consumer franchises. Coca-Cola (NYSE: KO) recently reported Q1 2026 EPS of $0.86, beating the $0.81 estimate, with 12.1% revenue growth and a 43.4% return on equity. American Express (NYSE: AXP) also outperformed, delivering EPS of $4.28 against an expected $3.99, with billed business rising 10% year-over-year to $428 billion. Meanwhile, Johnson & Johnson (NYSE: JNJ) extended its 64-year dividend streak with a 3.1% increase to $1.34 per quarter, reporting Q1 2026 revenue of $24.06 billion.

These holdings are characterized by durable cash flow, strong pricing power, and decades of compounded returns. During a recent call, American Express CEO Stephen Squeri highlighted this strength, noting 10% FX-adjusted revenue growth and 18% EPS growth, with card member spending reaching its highest quarterly growth in three years.

Tom Gayner’s Parallel Approach at Markel

Markel Group (NYSE: MKL) utilizes a similar structural playbook, employing insurance float to fund equity investments and wholly owned operations. In his 2025 commentary, CEO Tom Gayner reaffirmed this compounding framework, reporting operating income of $3.2 billion and adjusted operating income exceeding $2.3 billion.

Markel’s Q4 2025 EPS of $48.75 significantly beat the $25.73 estimate. The company’s combined ratio improved to 94.6% from 95.5%, and Markel executed $429.5 million in share repurchases, bringing shareholders’ equity to $18.6 billion. Trading at roughly 13 times trailing earnings and a 1.23 price-to-book ratio, the stock saw a three-year return of 32.54% through early June.

Applying the Principles to Individual Investing

As co-host Stephen Morris noted during the podcast, “Munger didn’t have the same portfolio as Buffett. He still did pretty good for himself.” The “Superinvestors” who followed the teachings of Graham and Dodd shared a rigorous methodology, but their specific holdings rarely overlapped.

For the individual investor, the implication is clear: while studying the records of Berkshire Hathaway or Markel Group provides a useful model for patient capital allocation, simply replicating their holdings misses the core lesson. As Sather emphasized, these investors all adhered to the value investing school of thought started by Benjamin Graham. The philosophy is portable, but the research must be conducted independently.

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