Investment tycoon Évrard: A steadfast believer in value investing principles

Source: Buffett Reading Club

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Jean-Marie Eveillard is a Wall Street investment titan who has remained prominent over the long term. From 1979 to 2004, the Sogen International Fund (later renamed First Eagle Global Fund), which he managed, achieved an average annual return of 15.8%, outperforming the S&P 500 Index by 13.7 percentage points. In 2003, Morningstar awarded Eveillard its Lifetime Achievement Award.

Successful investing does not require exceptional intelligence, extraordinary insight, or insider information; it only requires rational thinking, a solid knowledge framework, and the ability to avoid being swayed by herd sentiment.

In 1968, while working as an investment analyst at Société Générale in Paris, Jean-Marie Eveillard often felt adrift in his role, following investment strategies dictated by 'instructions.' That year, he was assigned to New York, where he began to shift his stock selection approach. During the summer, while cycling through Central Park with two French students from Columbia Business School, he first heard about Benjamin Graham. Following this lead, Eveillard devoured both 'Security Analysis' and 'The Intelligent Investor.' Graham’s investment philosophy illuminated his thinking like a beacon in the dark. 'Graham’s masterpieces opened my eyes,' he said. 'I had wasted the previous fifteen years of my career.'

His practical transformation occurred when Eveillard was 39 years old. That year, he was appointed by headquarters as manager of the Sogen International Fund—a small, relatively unknown mutual fund. When he assumed the role in 1979, the fund had only $15 million in assets under management. Based in Manhattan, he worked alone for many years, enjoying the freedom of operating without interference from the French parent company.

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Because the future is uncertain, investments should aim to minimize risk.

The secret to successful investing: margin of safety. This means that when purchasing stocks or bonds, investors can achieve a margin of safety by acquiring them at a favorable discount to their intrinsic value. The gap between price and value provides a buffer that mitigates the impact of misjudgments, adverse luck, and unforeseen future conditions.

Base decisions not on optimism, but on rational, data-driven analysis.

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Graham’s philosophical principles profoundly influenced Eveillard, who emulated Graham by seeking stocks trading at least 30%–40% below their estimated intrinsic value.

His strategy worked, earning him a reputation for delivering high returns with low risk. As a result, the assets under his management grew steadily larger.

By 1997, the SoGen International Fund had gone 18 consecutive years without suffering significant losses and had consistently outperformed the broader market. The assets managed by Evrard had surged from $15 million to $6 billion. This made him feel an even greater sense of responsibility, as the funds represented retirement savings or education money painstakingly accumulated by hundreds of thousands of investors. “They can’t afford to lose,” he said. To safeguard investors’ capital, Evrard remained intensely focused on valuation.

Nevertheless, Evrard soon encountered his own moment of crisis.

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In 1997, the market was swept up in the internet boom. From January 1997 to March 2000, fueled by enthusiasm for internet and telecommunications stocks, the tech-heavy Nasdaq Composite Index rose by 290%.

Given the absurd valuations and the difficulty of forecasting sustained growth for these companies, he decided to avoid any internet or technology stocks altogether. For a fund manager, deviating so completely from the market benchmark required real courage—because if his judgment proved wrong, his career could be ruined.

Evrard’s unwavering commitment to the margin-of-safety principle and his so-called “stubborn” temperament caused him to lag the market for three consecutive years. In 1998, the Nasdaq Composite rose 39.6%, and the Morgan Stanley Capital International (MSCI) Index gained 24.3%, while the SoGen International Fund posted a loss of 0.3%. In 1999, the SoGen International Fund delivered strong performance with a return of 19.6%. Impressive, right? Wrong. That year, the Nasdaq soared by 85.6%. In an era when even novice investors could seemingly pick random tickers and strike it rich, Evrard’s returns looked pitiful, drawing criticism from investors. After one year, investors were dissatisfied; after two years, they were furious; and by the third year, they had abandoned the fund en masse. Within less than three years, the SoGen International Fund lost 70% of its investor base, and assets under management plummeted from over $6 billion to $2 billion.

“Why can’t you see the opportunity in the popular internet and tech stocks? You have to hold technology, media, and telecom stocks! Your investment style is outdated—you’re no longer suited for this fast-changing industry!” … One can imagine investors’ angry, trembling fingers nearly jabbing Evrard in the nose.

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One executive complained that he was “getting a bit old,” while another, after analyzing SoGen Fund’s alarming redemption rate, had already “calculated the exact date when all assets would be fully redeemed—and that date wasn’t far off. By then, we’ll have nothing left to manage.” Evrard felt utterly besieged.

In the past, he had lagged behind the market by as much as a few months, but this time it was three years. He admitted frankly: 'I’ve been behind for so long that sometimes I thought I was a fool—in fact, I began to doubt myself… Everyone else seemed to see the light, but why couldn’t I?'

Nevertheless, Évrard continued to persevere tenaciously, refusing to alter his strategy or retire.

Eventually, his former employer, Société Générale, quietly transferred him and his fund to a small investment bank—Évrard was effectively traded like a benched athlete to another team.

After the darkest hour comes dawn. Periods of 'extreme pain' are often followed by 'new beginnings' and 'exceptionally favorable opportunities.'

The turnaround—and an intriguing twist—occurred right after this 'transfer' deal.

The transaction was announced in October 1999 and finalized in January 2000. Just two months later, on March 10, the tech bubble burst, causing investors who had chased internet and technology stocks to suffer heavy losses. The Nasdaq index plummeted from its all-time high of 5,048 points in 2000 to just 1,114 points by 2002.

Fifty-two percent of the internet companies once favored by the market went bankrupt during this crisis. Most internet firms lost 75% of their market value, while heavily weighted communications and hardware companies in various funds—including Cisco and Sun Microsystems—saw nearly 90% of their market capitalization wiped out.

Netscape, the pioneer of the free software model, also lost most of its market share in its battle against Microsoft, and over 400,000 IT professionals lost their jobs and were forced to switch careers. The millennial investing frenzy that once thrilled investors ultimately ended in utter chaos.

Following his 'transfer,' Évrard’s investment portfolio quickly rebounded and delivered outstanding performance, finally earning market recognition for his disciplined value approach. In 2000, his fund outperformed the Nasdaq by 49 percentage points; in 2001, by 31 percentage points; and in 2002, by 42 percentage points.

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In 2003, Morningstar awarded him its inaugural Lifetime Achievement Award in recognition of his 'outstanding long-term performance,' his commitment to investors’ best interests, and his 'courage to deviate from consensus.'

Markets are fickle: one moment Evrard was seen as a fool and a stubborn rock; the next, he was hailed as a saint, earning universal respect. A flood of capital poured in, and the assets he managed eventually grew to $100 billion.

Those who shine brightly today will inevitably fall into the abyss tomorrow; those who appear decayed today will surely regain their luster in the future.

Evrard’s former employer now deeply regrets letting him go.

Evrard has endured as a globally prominent investor precisely because he knew what to do—and, more importantly, what not to do. He resisted the allure of seemingly brilliant but margin-of-safety-deficient popular stocks. His steadfast adherence to the value investing philosophy—specifically Graham’s principle of the 'margin of safety'—enabled his portfolio to repeatedly avoid fatal pitfalls along the way and thus sidestep losses. Reflecting on his career at Sogen International and First Eagle Capital, he said: 'Our success over several decades stems largely from the stocks we did *not* hold. At the end of the 1980s, we held no Japanese equities; at the end of the 1990s, no technology stocks; and between 2000 and 2008, we held no financial sector stocks whatsoever.' As Charlie Munger once noted, simply making fewer mistakes can enable one to outperform others. Over 30 years, Evrard avoided three major disasters—and that defined his success or failure.

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Looking back today on Evrard’s painful experience, we should also recognize the following factors that influenced his investment success:

1. Maintain unwavering faith in value investing principles and control emotions to overcome the impact of external pressure. Portfolio managers are at the core of fund decision-making. Remaining calm under pressure and helping investors preserve high-quality assets constitute an essential part of a fund manager’s professional value.

Successful investing requires not only exceptional insight but also resilient discipline and long-term patience. No matter how sharply external pressures sting, one must not lose composure; no matter how alluring the outside world appears, one must never cross the line. Yet portfolio managers do not operate in a vacuum—investor sentiment and capriciousness, flawed market strategies, and ill-intentioned successors can all threaten a manager’s resolve and patience.

Amid severe underperformance relative to the market, many portfolio managers face not only performance pressure but also pressure from investors (distribution channels) and superiors. In contrast, the 'stubborn' Evrard was fortunate: his deep understanding of value investing enabled him to resist the tech-stock frenzy; being located 6,000 kilometers away from corporate headquarters shielded him from direct pressure from bosses and colleagues; and his personal stake in the fund gave him the confidence to forgo retirement, aligning his interests with those of the fund and reinforcing his resolve to stay the course.

2. Stick to sound investment strategies, avoid herd behavior and emotional contagion, and dare to diverge from market consensus. While others stampeded into internet and technology stocks, Evrard refused to follow the crowd.

3. Maintain a margin of safety—it is the key to navigating any market cycle.

4. The future is full of uncertainty; avoid using leverage at all times.

Postscript: At the moment Jean-Marie Eveillard received his award, it wasn't just his former employer, Société Générale, that deeply regretted letting him go—so did investors who had walked away only to chase dot-com dreams at market peaks. Consider this: 1 × 0.2 = ?

A friend once bought into a value-oriented fund and saw its net asset value decline further as the market hit bottom. He asked me what to do. After reviewing the fund manager’s long-term track record and the fund’s major holdings, my response was: 'Just hold on.' If held long enough, returns won’t disappoint. However, frequent trading or selling at the bottom will inevitably lead to regret.

Editor/Jayden