Imagine a business that earns a ~12% return on equity, sells for less than the cash-and-bonds value of its own balance sheet (about 0.9x book, roughly 8% below book value), trades at a P/E of 8, and spends its spare change repurchasing its own stock only when it's cheap. Now imagine the market has decided this is boring. It is boring. That's the whole point.
Imagine a business that grew its book value per share by roughly 24% last year, earns a 30% return on equity, buys back its own stock by the truckload, and just mailed shareholders a $2 special dividend on top of it all. Now imagine the market hands you that business
Because it purchased every stock when it becomes large (for only 0.01% position) and held on to it forever. Very few people purchased Nvidia in 2001 despite dotcom bubble and never bought or sold any shares. The so-called "rebalance" doesn't really buy any existing shares
A London-listed insurance private equity firm trades at £240M market cap against £350M book value — a 31% discount to NAV. The same NAV has compounded at 18.5% per year for the last nine years (11% per year since 2005). Of 23 current investments, exactly one is marked below cost.
A federally-chartered savings bank in the American Midwest carries $39M of book value, sits on roughly $20M of excess capital above what regulators require, and trades at a $24M market cap. The math, before we even get to the buybacks, is $0.62 on the dollar of book — and management