[2025–2026] Week 15: John Neff on Investing
Reading assignment and questions for week 15 of the Value Investing Seminar
(Note: If you are just joining the seminar, please start by reading the Introduction)
A quick announcement before we get to Peter Lynch: I am launching what I wish I had along my 25-year journey as an investor: a way for you to systematically study and improve. The Behavioral Value Investor is starting a paid tier here on Substack aimed at serious investors who want to take their investment process to the next level.
The core of the new paid tier will be the 10-Minute Investment Autopsy series – a weekly case study dissecting real investment decisions with a discussion thread for additional learning and Q&A. It’s a time-efficient (think 30 minutes per week) way to be systematic about improving your investing process. You can find more details here, and the first case study comes out next Thursday, February 5th.
Onto Peter Lynch. A superficial reading of Peter Lynch’s investing approach is “buy what you know.” You read stories about going to the mall, seeing where the line is biggest, checking out the product and buying the stock.
That’s a dangerous oversimplification. I think Peter’s point is that all individual investors have an area of knowledge where they have an edge, and that area is the first place they should look to for investing opportunities.
However, there is much more to Peter Lynch than that. One thing that should strike you as you read the book is the breadth of investing patterns that Peter chose to pursue. Stalwarts. Cyclicals. Turnarounds. Long-term growers. They were all there in Magellan’s portfolio.
That kind of breadth is rare and speaks to Peter’s greatness as an investor. My personal favorite investment of his was La Quinta Inn. I love the simplicity:
It’s a good offering
It works in a few states
It should work in a lot more states
Valuation doesn’t reflect that growth opportunity
No 500-line Excel spreadsheets or 30-page initiation reports. Just a simple thesis that strikes at the heart of the issue and cleanly identifies the mispricing. You can read more about Peter Lynch, including my lunch with him when I was a young analyst at Fidelity, here.
Note: For those who want to read ahead, our next reading will be Investing Against the Tide by Anthony Bolton.
Week 15 assignment is to read John Neff on Investing by John Neff and answer the following questions:
Question 1: Please “map” Neff as an investor on as many dimensions of an investment style as possible.
Question 2: What about Neff’s background and circumstances made his approach the right one for him?
Question 3: What are your favorite Neff investments? Why?
Question 4: What are your least favorite Neff investments? Why?
Question 5: What are 1 or 2 stocks that John Neff might find attractive in the current environment?
Question 6: Come up with an AI prompt based on John Neff’s approach
Now it’s your turn:
Submit your answers in the comments below this article with all your answers in a single comment. I will engage with some of the answers each week and highlight some of the ones I find most insightful in next week’s seminar assignment article.
Engage with the answers of some of your fellow seminar members in the comments below. Remember – the goal is to learn together. Be kind, be respectful and try to add to our learning as a community.
Feel free to ask any questions about the reading in your comment.
Until next week,
Gary
About the author
Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.
Question 1:
“observers call me a contrarian, a rather vague label that suggests a stubborn nature. Personally, I prefer a different label: low price-earnings investor.”
John Neff can be mapped as a contrarian, value-driven investor who relied on low P/E ratios, strong fundamentals, and long-term compounding, while avoiding glamour stocks and emphasizing dividends. His style was disciplined, conservative, and focused on finding “unloved” companies with real earnings power.
Question 2:
From Caddying, paper delivery, soda fountain work, Neff learned the value of hard work and small, steady earnings rather than chasing glamour.
This struck me : “Working for my father at least taught me that you don’t need glamour to make a buck. Indeed, if you can find a dull business that makes money, it is less likely to attract competition. Also, merchandise well bought was merchandise well sold. “
Question 3:
“Ford, our largest holding at one time, which had increased its dividend by al- most 60 percent in just 6 months.”
Ford Motor Company as a clear example of his style. At the time, most investors avoided Ford because they worried about ups and downs in the car business, labor problems, and competition from overseas. Neff, however, noticed that Ford still had strong cash flow, paid good dividends, and had solid earnings that others were overlooking. He bought the stock when its P/E ratio was much lower than the market average, which gave him both safety and value. When the auto industry recovered, Ford’s strong business showed through, and the stock gave big returns to the Windsor Fund. Neff used this case to prove that even in industries with cycles, buying simple but profitable companies at the right price can lead to excellent long term results.
I also like buying an industrial name like “Borg Warner and the principal reason it was selling for 4.4 times 1979 earnings”
Question 4:
John Neff’s investment in Kmart turned out to be one of his least successful cases. He bought the stock because it looked cheap and fit his contrarian style, but probably he underestimated how quickly the biggies like Walmart and Target were taking over the retail market. stayed “cheap for a reason,” showing that even low P/E stocks can be value traps if the business itself is weak.
Question 5:
NSE: Ganesh Benzoplast John Neff liked companies that looked “dull but profitable,” with steady earnings and undervalued prices. Ganesh Benzoplast fits that idea because it runs a storage and logistics business for oil and chemicals—an industry that is not glamorous but has steady demand. Its valuation is still low compared to bigger logistics players. (Current PE:7)
NSE : Sigachi Industries Sigachi makes cellulose-based products used in pharmaceuticals and food , Neff liked companies with moderate and Sigachi has shown consistent expansion in demand for its products. The stock trades at reasonable valuations compared to high-growth pharma names, and its business model is simple and cash-generating. This kind of moderate growth, low valuation, and essential product line . (Current PE 14)
Question 6:
Search the Indian equity market (NSE + BSE listed companies, including midcaps and select smallcaps) for John Neff–style opportunities: single-digit P/E ratios, dividend yield ≥ 2%, earnings growth rates ≥ 7% annually, and double-digit historical earnings growth over the past 5–10 years. Focus on companies that are cash generative, not obviously impaired, and show evidence of capital discipline (progressive dividends, buybacks, or consistent special dividends). Include recently out-of-favor names (price down vs. 1–3 years), but verify that fundamentals remain intact via annual reports, investor presentations, or exchange filings
Question…
Neff’s sell strategy is different than Fisher. Neff buys wares to sell and “harvests” when the market has strong demand and the price is fair or higher. Neff is okay buying the same stock later on down the road and doing the same thing all over again. Fisher buys forever and counts on compounding for many years; he cautioned against buying and reentering later. Assuming there is not a “right way” to do it, why should an investor choose one method vs another? It appears that all work.