Jean-Marie Eveillard, the global value investor

In 1999 a 59-year-old investor sat in an office in Manhattan. Seven of his ten shareholders had just left. A colleague had calculated the exact date the fund would reach zero. He did not buy technology. He changed nothing.

"Everything is in books"

Jean-Marie Eveillard was born on 23 January 1940 in Poitiers, a provincial city in western France, better known for a medieval battle than for finance.

His father worked for SNCF, the French national railway, and was transferred constantly. The family moved from city to city throughout his childhood. Eveillard had no "home town" in the ordinary sense.

What he had was books.

When a teacher said goodbye before the family moved again, he said something Eveillard remembered all his life: "Never forget, everything is in books."

He sat the entrance exam for HEC Paris, France's most prestigious business school. Failed. Sat again. Passed.

The first instinct of a value investor: when the market says no, check whether the market is right.

At HEC most subjects did not interest him. Only one did: securities analysis. He learned to read a balance sheet. Then he interned at La Vie Française, a weekly business magazine he described as "like Barron's crossed with Business Week".

He graduated in 1962 and joined Société Générale as a securities analyst.

The first teacher: numbers mean something

Eveillard's first mentor at Société Générale was Claude Echavidre, who had a simple habit: build comparison tables of companies in the same industry, revenue, cash flow, profit, dividends, across five consecutive years.

Nothing fancy. Nothing complicated.

Just: look at the actual figures. Look continuously. Compare systematically.

"He stressed that the numbers matter and must be studied carefully. I never forgot that."

This is the second foundation of Eveillard's thinking: look at reality, not at the story.

Benjamin Graham: like light entering a dark room

In 1968, aged 28, Eveillard moved to Société Générale's New York office.

He lived in the West Village. He did not know many people. At weekends he cycled in Central Park with two French students at Columbia Business School.

They were not studying finance. They were studying marketing. But they mentioned a name: Benjamin Graham.

Eveillard went to a bookshop. Bought The Intelligent Investor and Security Analysis.

He later described reading Graham in language no fund manager has used: he compared it to the moment the poet Paul Claudel stood beside a pillar in a cathedral in 1886 and suddenly found faith.

"In a sense I was enlightened, not by faith, but suddenly I felt Ben Graham was simply right."

Graham gave him four ideas that function as a worldview:

One: the future cannot be known. Anyone claiming otherwise is selling something.

Two: margin of safety. Because the future is uncertain, buy below intrinsic value so you have a cushion when wrong.

Three: intrinsic value. A stock is not a betting slip but ownership of a real business with measurable worth.

Four: Mr Market. The market is not a god but an emotional partner, sometimes rational, sometimes panicked, always optional.

He had found his philosophy.

But for the next ten years he was not allowed to use it.

Ten years in prison

Eveillard had the answer. He knew how he wanted to invest. But Société Générale's investment committee would not permit it.

They liked "familiar names". They wanted large, popular stocks. Short-term trading. Momentum.

He tried to persuade head office in Paris. It did not work.

Years later he looked back on this period without forgiveness:

"The first fifteen years at the bank were wasted. Five years not knowing how to invest, then ten years knowing how but not being allowed to."

But that "prison" taught him a lesson no school teaches: institutional consensus has nothing to do with being right.

What is popular, familiar and widely accepted is not what is correct.

Career risk and investment risk are two completely different things.

1979: $15 million and freedom

Eventually Paris handed him something small, obscure and unnoticed: a New York fund with $15 million of assets.

"Because the fund was small and I was on the other side of the ocean, they basically let me run it the way I wanted."

He ran it alone for the first seven years. No analysts. No committee.

One person, one set of principles from Graham, and a global mandate.

His first holdings: small, obscure, forgotten companies trading below tangible asset value. Pure Graham cigar butts.

Then in 1978 a note from Leon Cooperman introduced him to Warren Buffett. He read the Berkshire Hathaway shareholder letters.

It was his first exposure to an upgraded Graham: not only buy cheap, but buy good businesses at reasonable prices. Gradually, over years, he shifted the portfolio from the Graham pole toward the Buffett pole, but never completely.

"I don't have Buffett's extraordinary skill," he said, with characteristic honesty.

The first five years' result: the fund rose 188% against 78% for the MSCI World Index.

Eveillard's investing formula

He buys when three conditions converge: he understands the business, he likes the business, and the market is mispricing it.

Valuation: his preferred tool is EV/EBIT because it brings the balance sheet, including debt, into the picture. Willing to pay 6–8x EV/EBIT for a good company, 8–10x for an attractive one, 10–12x for an exceptional one. Not more.

Margin of safety: look for stocks trading 30–40% below the intrinsic value he calculates. Read more on the margin of safety in practice.

Analysis: start from the annual report, the 10-K, and especially the notes. "The numbers may not be reliable": inventory may be overvalued, receivables from certain customers may be doubtful, machinery may be fully depreciated but actually obsolete.

Look for hidden assets: assets carried at historical cost whose current market value is far higher. A "double discount": buying a company where both the stock and the assets inside it are undervalued.

A diversified portfolio: "Unless you are as smart as Buffett, you put yourself and your clients at great risk with a portfolio of only 20–25 stocks." He typically held 50–100 positions.

Gold as insurance: not a speculative commodity but insurance against extreme outcomes, the tail scenarios conventional models ignore. Usually 5–10% of the portfolio in gold.

Cash as a residual: "Cash for us is genuinely a residual. Either we find enough opportunities and cash is low, or we do not and cash accumulates."

No sell-side research: "Sell-side research is almost useless to us. Which means we have to do it ourselves."

The 1990s: 70% of shareholders left

This is the story that defines Eveillard.

From early 1997 to the end of 1999, the S&P 500 more than doubled. Eveillard's fund rose 29%.

In 1998 the fund lost 0.26% while the MSCI World rose 24.3%.

He refused to buy the technology, media and telecom stocks he considered absurdly priced. Instead he held his familiar portfolio: undervalued global stocks, cash, and gold.

The consequence: from late 1997 to early 2000 the fund lost seven of every ten shareholders. Assets fell from roughly $6 billion to $2 billion.

The press said he had "lost his touch". A senior executive at Société Générale called him "half senile". A colleague calculated the exact date the fund would reach zero at the current withdrawal rate, and showed him the number.

He changed nothing.

"I always said I would rather lose half my shareholders, which happened, and more, at the end of the 1990s, than lose half their money. Which did not happen, when the technology, media and telecom bubble burst."

2001: Morningstar named him International Manager of the Year. 2003: Morningstar gave him its Lifetime Achievement Award, recognising managers "willing to differ from the crowd".

Twenty-six years running the fund: 15.8% a year against 11.3% for the MSCI World Index. From $15 million to $50 billion under management.

What Eveillard believed beyond the numbers

He grew up Catholic in Poitiers, attending mass weekly.

Asked what helped him keep his discipline through the years the market turned on him, he answered:

"I grew up going to mass every week, and the priest would talk about how this earth is a vale of tears, and anything good would come in the next life. I think that is why I was willing to suffer."

A willingness to suffer is not emptiness. It is anchored in a deeper belief that good outcomes arrive later, not immediately. That nothing is guaranteed in the short run. That discipline and reward need not coincide in time.

He read widely outside finance: Jim Grant, Dylan Grice, James Montier. He believed a good investor must understand macroeconomics, behavioural psychology and history, not just company figures.

And one line of his I cannot forget: "The life of an investor, like the life of an art collector, is a life of regret." A man who compounded at 15.8% a year for 26 years, avoiding the three biggest bubbles of his era, still looked back through the lens of what he had missed.

Real skin in the game

Eveillard kept the investments he made in his own funds from the 1970s onward.

That money grew into tens of millions of dollars.

This is not the story of someone selling investment advice. This is someone who did exactly what he said, for more than 40 years.

Lessons for Vietnamese investors

Career risk and investment risk are completely different things.

This is Eveillard's most important lesson, and it is extremely relevant in Vietnam.

When the VN-Index is surging, when everyone around you is making money on speculative stocks, when friends ask "why aren't you in X, Y, Z", the pressure is not financial. It is social.

A professional fund manager fears losing clients. An individual investor fears "being left behind", fears having nothing to say over Friday night drinks.

Eveillard lived an extreme version of that pressure: 70% of shareholders gone, people calculating the date the fund hit zero, a senior executive calling him half senile.

He did not change.

Because he could distinguish: pressure from the crowd is not evidence your analysis is wrong. It is only evidence you are swimming against the current, which is the necessary condition for alpha.

In Vietnam this means: when the market is euphoric, when the average P/E passes 20x, when everyone is winning, that is not the signal to jump in. It may be the signal to patiently hold cash, as Eveillard did. See also five psychological mistakes that cost Vietnamese investors money and Walter Schloss, who kept the same discipline for 47 years.

The result of 26 years of that discipline: 15.8% a year. A fund from $15 million to $50 billion.

Not by keeping up with the crowd. By steadily refusing to follow it.

Silent discipline. Compound value.