Gary Jonas

Gary Jonas is an American value investor and the founder of the investment firm Jonas Asset Management. He is a purist who practices a “deep value” investment style, drawing his inspiration directly from the teachings of Benjamin Graham and David Dodd. Jonas is renowned for his patient, disciplined approach, which involves buying shares in statistically cheap, often obscure, and overlooked companies. His method is a modern-day application of what Warren Buffett once famously described as cigar butt investing: finding a discarded company with one last “puff” of value left in it, which can be acquired for next to nothing. Jonas focuses on what a business's assets are worth right now, rather than speculating on future growth, making him a quintessential figure in the classic value investing camp.

Gary Jonas's strategy isn't about finding the next big tech disruptor; it's about buying a dollar's worth of assets for 50 cents. His approach can be broken down into a few core principles that offer timeless lessons for any investor.

Jonas typically hunts in the less-glamorous corners of the market, such as the small-cap and micro-cap spaces. Why? Because these areas are often “fly-over country” for Wall Street.

• Less Competition: Large institutional funds often can't invest in tiny companies, and Wall Street analysts rarely cover them. This lack of attention creates opportunities for diligent individuals to find mispriced gems.
• Simplicity: Smaller companies tend to have simpler business models and cleaner financial statements, making them easier to analyze and understand for someone willing to do the homework.

At the heart of the Jonas method is a relentless focus on the balance sheet. He looks for companies trading at a significant discount to their tangible asset value. Key metrics he might consider include:

• Low Price-to-Book Value (P/B): Buying a company for less than the stated value of its assets on the books.
• Net-Net Working Capital: A Graham-specialty, this involves finding companies trading for less than their net current asset value (NCAV). In this scenario, you are essentially getting the business's long-term assets, like factories and real estate, for free.

Unlike many managers who diversify across hundreds of stocks, Jonas often runs a concentrated portfolio. He prefers to make large bets on his very best ideas. This approach requires two critical ingredients:

• Deep Conviction: You must have done thorough research to be confident in your picks.
• Long Holding Period: It can take years for the market to recognize the value in a beaten-down stock. Jonas is known for his extreme patience, willing to wait as long as it takes for his investment thesis to play out.

While you may not be running a fund, the principles that guide Gary Jonas are universally applicable for building long-term wealth.

Don't just follow the herd into popular, high-flying stocks. The greatest opportunities are often found in boring, neglected, or even feared sectors of the market. The less Wall Street talks about a company, the more likely you are to find a bargain.

Jonas's success is built on a foundation of rigorous analysis. Strive to operate within your circle of competence. If you can't understand a company's business model or read its financial reports, you shouldn't own its stock. The goal is to buy a piece of a business, not just a flickering ticker symbol.

This famous quote perfectly encapsulates the deep value mindset. The most critical decision you make is the price you pay for an asset. By insisting on a deep discount to a company's intrinsic value, you create a powerful margin of safety. This buffer protects your downside if things go wrong and provides your upside when the market eventually recognizes the company's true worth.

The deep value path championed by Gary Jonas is not for the faint of heart. This style can underperform the broader market for years on end, testing an investor's patience and psychological fortitude. The stocks are often cheap for a reason—they may be facing real business challenges. This strategy demands discipline, an iron stomach to handle volatility, and an unwavering belief in the principle of buying assets for far less than they are worth.