NEW YORK — Irving Kahn is preaching again about the bible of investing.
"Have you read 'The Intelligent Investor'?" Before a visitor has a chance to respond, 97-year-old Kahn fishes out the guide to picking cheap stocks, written a half-century ago by his mentor Benjamin Graham.
"You can have it on one condition — that you read it," he says. There are more than a dozen extra copies of the bright yellow book in the corner office of his Manhattan investment firm. Adorning the room are photos of Kahn's 101-year-old sister, his deceased wife — and a fading black-and-white of Graham.
There are plenty of Graham devotees in the investing world, including his most famous follower, Warren Buffett. More than a million copies of "The Intelligent Investor" have sold since it was republished in 1973, three years before the "father of securities analysis" died. But Kahn is the eldest of a tiny group of remaining Graham proteges. Indeed, Kahn is one of the Street's oldest active stock analysts.
"I don't know anyone else on Wall Street who has been around as long as Irving Kahn," says 86-year-old Walter J. Schloss, who runs a New York investment firm and is another Graham disciple.
As such, Kahn has a unique perspective on the scandal currently enveloping his profession. "If there were more value investors, we wouldn't be in this mess," he says. "The changes that Wall Street is facing as a result of all this greed is as big as 1929."
He was working as assistant for a stockbroker that year. Sensing that the market was flying too high, he bet his $300 savings that Magma Copper would drop. His father, a Polish immigrant who sold lighting fixtures, insisted that the market was going to keep climbing and needled his son for a stock tip.
Kahn says he got so irritated he finally bought his dad 25 shares of AT&T Corp., adding: "It took him over 14 years to get his money back." (Kahn's own investment doubled during the 1929 crash.)
Now, five days a week — and sometimes on weekends — Kahn puts on a crisp button-down shirt, bow tie and jacket, and walks a mile from his tony Madison Avenue apartment building where neighbors include Jack Dreyfus, the retired founder of the mutual-fund family that bears his name.
In his office one recent day, Kahn checks his stocks. Kahn Brothers, which manages $600 million in assets for wealthy individuals and institutions, has shares in dozens of mortgage companies, including big stakes in North Fork Bancorp Inc. and New York Community Bancorp Inc. He reads scientific journals and annual reports, continuing a quest to find obscure stocks that trade at or close to book value (assets minus liabilities) or have a low price-to-earnings ratio. (Kahn is chairman and two of his sons have senior roles.)
"The firm's principals have well over 100 years' aggregate experience in applying the 'value investing'
philosophy espoused by Benjamin Graham in Security Analysis (1934)," the company's Web site says, referring to the textbook that Graham wrote with David Dodd. Kahn compiled the book's tables, while working as a teaching assistant for Graham at Columbia Business School for $25 a week.
"When the Depression set in, my salary at the brokerage firm was cut from $100 to $60 a week," he says. "So he asked me out of sympathy to work part time."
He also helped write Graham's influential lectures. And when Graham began an investment partnership, Kahn not only invested, but hunted for values. "There were fewer tricks companies could play," he recalls. They had fewer subsidiaries and product lines, for example, and no stock options. "Heinz made ketchup," he says. "It was that simple."
The toughest part was a lack of information. "Corporations treated you the way a family would treat a reporter wanting to know about a scandal — it's none of your business," Kahn says.
So Graham in 1937 helped form the New York Society of Security Analysts, which arranged one-on-one meetings between stock analysts and corporate executives.
"We had to talk top executives of places like DuPont and Texas Instruments to come to a cheap restaurant in New York," Kahn says. "We coaxed them into seeing the advantage of speaking to a small, unknown group of men who would promote their companies." The lunches grew to three times a week, but were eventually supplanted by what Kahn describes as "these useless conference calls."
Skiing together in New Hampshire before ski lifts, Graham taught Kahn to put snakeskin on the bottom of his skis to climb back up the hill. The two men lunched soon after Kahn's third son was born in 1942. "Name him Graham," his mentor urged him. But Kahn's wife had already named the baby Thomas and wouldn't change it. So Graham became his middle name.
In the early 1960s, as ethics questions swirled around securities analysts, Graham helped devise a way to help legitimize the industry. He helped shape the Chartered Financial Analyst test, which, like a CPA, would give a grueling test and a badge of honor to securities sleuths.
In 1963, Kahn was in the group that took the first test — one that now is administered by the Association for Investment Management and Research, an umbrella organization of securities societies around the world. Some 55,000 people have the designation.
"Jack Grubman never had the CFA stamp," Kahn sniffs, referring to the former Salomon Smith Barney telecommunications analyst who was recently barred from the securities industry for mixing stock analysis and investment banking. "What he had was much more valuable at the time — rich and greedy people who gave him money."
Kahn says the value-investing model was further vindicated by this year's $1.4 billion stock-research settlement between 10 Wall Street securities firms and the government over analysts' conflicts, negotiated in part by New York State Attorney General Eliot Spitzer. "He's a national hero, and he deserves it," Kahn says. "I haven't met him — but I will one day."
He has reason to be optimistic. He, two older sisters and a younger brother are in such excellent health that they are the subject of a Harvard University study on the genetic roots of longevity.
"Age doesn't matter," he says. "As long as you have all your marbles."