The relatively few people who shelled out $25 for a copy of Seth Klarman's investment book Margin of Safety in 1991 were actually making a wise investment at the time—they just didn't know it. As the Wall Street Journal reports, the book flopped, with only 5,000 copies printed. One friend remembers handing them out for free at a conference the following year. But a funny thing has happened since, thanks largely to the wildly successful performance of Klarman's Baupost Group hedge fund in the subsequent years: The book has become a hard-to-find cult classic, and a pricey one at that. Signed copies (only about 100 exist) can go for several thousand dollars, and unsigned ones for about $2,000.
The book is out of print, and Klarman has said he has no intention of changing that. The Journal notes that libraries with a copy tend to treat it with the same precautions as other rare books, not allowing patrons to leave the premises with it. None other than Warren Buffett is said to keep a copy on his desk, and there's a connection there—Klarman took his title from Benjamin Graham, who not only coined the phrase "margin of safety" in regard to investing but was a mentor to Buffett.
So what's actually in the book? Quartz had this summary in an earlier story on the book's latent popularity:
- "Klarman’s book covers his principles for value investing, the strategy of looking for undervalued stocks advocated by Warren Buffett, among others. He describes the discipline and patience, and the risk-averse mindset focused on long-term fundamentals, required to become a successful value investor."
Klarman doesn't give many interviews, but he spoke to Charlie Rose back to 2011 about his principles: “You need not to be greedy. You need to balance arrogance and humility. ... When you buy anything, it’s an arrogant act,” he said. “And you need the humility to say, ‘But I might be wrong.'" (More
rare books stories.)
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