He'd rather wait for prices to come back to him. "I'm used to buying on distortions or bad news," he said.
The bull market that began in October 2002 has lifted stocks across the board, but it has been particularly good for shares that historically have sold for low prices relative to earnings and other measures, which is the classic definition of value. Many energy, utility and machinery stocks are in this category.
By contrast, many growth stocks -- shares of companies whose earnings growth rates are supposed to be above average over time -- have lagged. Look no further than the technology and healthcare sectors.
This decade has reversed the trend of the late 1990s, when growth stocks ruled and value issues were all but ignored.
I fully concede that the problem with any discussion of growth and value is that it lends itself to gross generalizations. Here are two more: Do value investors wish stocks were cheaper? You bet. Does that mean there's no value anywhere in the market? Unlikely.
The question, of course, is how you define value. Many of the money managers who spoke at the conference kept returning to a central tenet of the value school since the 1930s: the idea of having a "margin of safety" in a security, so that your downside risk is much less than your upside potential.
Boil it down and that simply means: Don't overpay. And the only way to be confident you aren't overpaying is to have a well-grounded sense of what the underlying business is worth.
That, in turn, requires doing the math. A lot of math. Serious number-crunching is what separates true value investors from the pretenders.
The math is what led Mark Sellers, the 38-year-old head of Sellers Capital in Chicago, to Contango Oil & Gas.
The company is beginning to pump significant natural gas from a find in the Gulf of Mexico. Its revenue jumped to $5.4 million in the first quarter from just $123,199 a year earlier.
Investors besides Sellers have noticed, which is why the stock has surged in recent weeks, to $34.90 on Friday.
But by Sellers' calculations of the value of Contango's energy properties and its stake in a partnership that is building a liquefied natural gas delivery terminal in Freeport, Texas, the stock could be worth $50 to $60, he says.
And yes, if you buy now, you would be benefiting Sellers and his clients, who own 10% of Contango.
