Why an out-of-print investment book gets bootlegged and sells for $3,000

Just for show.
Just for show.
Image: AP Photo/Matt Slocum
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In 1991, billionaire hedge fund manager Seth Klarman published a 250-page book about investing. The publisher, HarperCollins, sold just 5,000 copies. With relatively little fanfare, the $25 book faded into obscurity.

Despite its initial flop, the book steadily built a cult following. As far back as 2007, it was selling for $2,000 on eBay. Today, an original copy of Margin of Safety is selling on Amazon and eBay for as low as $650, and as high as $3,300.

Earlier this week, digital copies appeared on Amazon for just $9.99. But as soon as Klarman’s fund, Baupost, caught wind of this, it announced these copies were illegal, and Amazon removed them. (Free pirated copies are of course available elsewhere on the internet.)

Klarman’s book covers his principles for value investing, the strategy of looking for undervalued stocks advocated by Warren Buffett, among others. He describes the discipline and patience, and the risk-averse mindset focused on long-term fundamentals, required to become a successful value investor.

“You need not to be greedy,” Klarman says of his outlook in a 2011 interview with Charlie Rose. “You need to balance arrogance and humility… When you buy anything, it’s an arrogant act,” he says. “And you need the humility to say, ‘But I might be wrong.'”

Investment consultant Greg Dowling described the appeal of the hard-to-find book to the site Chief Investment Officer in 2015:

There was this mystique, and there were these letters that got passed around the office written by this man named Klarman, and I found out he had a book. One of our analysts’ dad had the book, and he made a bunch of copies. We had it bound, and handed it out. I still have it.

In the Charlie Rose interview, Klarman said he had considered issuing a limited edition of Margin of Safety to raise money for charity, but otherwise didn’t seem interested in reviving the book.

Why won’t the publisher print more copies? Klarman makes no royalties from used copies or from the fervent fandom, but he could profit from new copies. That said, the royalties wouldn’t make much of a difference to his greater wealth: $1.5 billion, according to Forbes. (HarperCollins has not returned a request for comment.)

Klarman tells Rose he doesn’t have any idea why his book has caught on so strongly, though he speculates it may have been the fact that he wrote for lay readers and beginning investors. “Maybe if people can’t get something, they want it even more,” he says, smiling.