Max Heine was one of the great underappreciated value investors. After emigrating to New York during 1934, he immediately entered the securities business, and 15 years later he founded the Mutual Shares Corporation, one of the world's first open-ended mutual funds.
Heine's strategy was simple; buy undervalued stocks targeting a 15% annual return, despite market fluctuations. But his activities weren't just limited to stocks. Mutual Shares Corporation was more of a hedge fund by today’s standards.
Through a blend of arbitrage, shareholder activism, distressed investing, spinoffs, Mutual Shares was the only funds to earn a positive return during the 1973/74 bear market. Max Heine had correctly calculate that bonds in the bankrupt Penn Central Railroad were trading below liquidation value -- he figured out that...
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