In the Kiplinger’s July issue, Whitney Tilson and John Heins of T2 Partners outlined their ways of “Discovering Value”:

1. Buy what is out of favor, not what is popular

2. Focus on intrinsic company value rather than where the herd will go next

3. Understand and profit from reversion to the mean rather than using recent results as the basis for future numbers

4. Beating the market requires a portfolio different from the “market”; invest heavily in the handful of your best ideas

5. Focus on avoiding permanent losses and on absolute returns rather than outperforming a benchmark

6. Invest with a multi-year time horizon

7. Conduct in-depth and proprietary analysis rather than acting on tips and wall st. analysts

8. Read many business publications

9. Spend time analyzing and understanding micro factors (for example, a company’s competitive advantages and growth prospects–visit stores, try the products, see what customers really think, evaluate management).

10. Cast a wide net seeking mispriced securities across different industries and sizes.

11. Don’t let others make your decisions.

12. Learn from mistakes