How do we know Midway is really a "value" style manager?

In our view, value investing is nothing more than buying a security for less than it is worth. The distinguishing trait of our investing style is that we are not willing to pay up for a security and will sell if we think it is too pricey even if we like the business and the managers.

Even a fantastic business can prove a poor investment if the price paid is too high. And a bad business could prove a fantastic investment if the purchase price is low enough. There are no hard and fast rules to use as a guide. In general we compare the quality and prices of various business that we think we understand hoping to maximize the quality of business and bargain prices.

The easiest comparison available to us is government bonds. In our opinion, a security can be determined a bargain to the extent that it can produce a return larger than the yield on government bonds. The larger the spread, the more interested we will be. Under current circumstances we would not own a stock if its market price were more than 20 times its durable earning power (a 5% earnings yield).