Joel Greenblatt was born December 13, 1957 in Great Neck, New York.
Joel Greenblatt was born December 13, 1957 in Great Neck, New York. ◦
He graduated from the Wharton School with a B.S. summa cum laude in 1979 and an MBA in 1980, and attended Stanford Law School for one year before pursuing finance. ◦
He founded Gotham Capital in 1985 with $7 million, mostly from Michael Milken. ◦
Between 1985 and 1994 the fund achieved an annualized return of 50% after all expenses but before the general partner's incentive allocation fees, or 30% net of all fees, and he returned all outside capital (about $500 million) in January 1995. ◦
He co-founded the Value Investors Club with John Petry, an invitation-only group whose membership is capped at 250. ◦
He created Gotham Asset Management in 2008 as the successor to the investment advisory business of Gotham Capital. ◦
He has served as an adjunct professor teaching value investing to MBA students at Columbia Business School for over 20 years. ◦
He is the author of You Can Be a Stock Market Genius (1997), The Little Book That Beats the Market (2005), The Big Secret for the Small Investor (2011), and Common Sense: The Investor's Guide to Equality, Opportunity, and Growth (2020). ◦
Greenblatt argues that buying good businesses at bargain prices is the secret to making lots of money. ◦
He believes good and cheap worked best together. ◦
He argues growth and value investing are tied at the hip and that growth is a component of value. ◦
He contends value investing is widely misdefined and that it does not mean low price-to-book-value, low price-to-sales ratio investing, which is how most people define it. ◦
He frames the core discipline as figuring out what a business is worth and paying a lot less. ◦
He teaches that prices fluctuate more than values, and therein lies opportunity. ◦
He believes people invest with their emotions, which is what creates mispricings. ◦
He advises looking down, not up, when making an initial investment decision, noting that if you don't lose money, most of the remaining alternatives are good ones. ◦
He states that if you are going to be a very concentrated investor, you should not use leverage. ◦
He emphasizes knowing what you know and staying within your Circle of Competence. ◦
He notes that even finding one good opportunity a month is far more than an investor should need or want. ◦
He focuses on small caps where the markets are more inefficient because there is less analyst coverage and less information flow, giving the chance to find prices more above or below value. ◦
He cares about the return on capital (ROIC) rather than ROE. ◦
He lists four ways to value a company: DCF or intrinsic value, relative value, break-up value, and acquisition value. ◦
He observes that in 80% or 90% of cases, two or three years is enough time for the market to recognize the value of a business if you've done a good job valuing it. ◦
He believes most people don't have the ability to value a business at a discount and the discipline to hold them. ◦
He views Mr. Market as a partner in a business who sometimes wakes up happy and is willing to pay a lot for your partnership interest, and sometimes wakes up sad and is willing to sell his interest at a very low price. ◦
He believes that if you do good valuation work and you are right, Mr. Market will pay you back, and while the market is inefficient in the short term of one to two years, in the long term it has to get it right and will pay you back in two to three years. ◦
He operates within a Circle of Competence, knowing what he knows. ◦
He sees prices fluctuating more than values as the source of opportunity. ◦
He prioritizes return on capital (ROIC) over ROE as a measure of quality. ◦
He treats patience as a survival trait, stating patience will be the last man standing. ◦
He believes you have to believe that your process makes sense and the market will recognize value eventually, even when it doesn't feel good. ◦
His domain expertise centers on value investing and business valuation. ◦
He has decades of experience in investment management, having founded Gotham Capital in 1985 and later Gotham Asset Management in 2008. ◦
He specializes in identifying inefficiencies in small-cap markets where analyst coverage is sparse. ◦
He utilizes multiple valuation frameworks, including DCF or intrinsic value, relative value, break-up value, and acquisition value. ◦
He has served as an adjunct professor at Columbia Business School for over 20 years, teaching value investing to MBA students. ◦
He frequently employs analogies and pithy maxims to convey investment principles, such as comparing stock picking without criteria to running through a dynamite factory with a burning match. ◦
He also personifies market behavior through the "Mr. Market" metaphor, describing him as a partner who wakes up happy or sad. ◦
He has taught value investing to MBA students at Columbia Business School for over 20 years and authored multiple books on investing. ◦
He generated annualized returns of 50% after all expenses but before the general partner's incentive allocation fees, or 30% net of all fees, between 1985 and 1994, then returned all outside capital in January 1995. ◦
He advocates concentration but explicitly warns against combining concentration with leverage. ◦
He expects the market to recognize value within two to three years in 80% or 90% of cases if you've done a good job valuing it. ◦
At the same time, he insists that patience will be the last man standing and that enduring disagreement is essential. ◦
He co-founded the Value Investors Club, an invitation-only group capped at 250 members where participants exchange investment ideas through an application process. ◦
He has taught value investing as an adjunct professor to MBA students at Columbia Business School for over 20 years. ◦
"Buying good businesses at bargain prices is the secret to making lots of money." ◦
"Look down, not up, when making your initial investment decision. If you don't lose money, most of the remaining alternatives are good ones." ◦
"Choosing individual stocks without any idea of what you're looking for is like running through a dynamite factory with a burning match." ◦
"If you are going to be a very concentrated investor, you should not use leverage." ◦
"You have to know what you know — Your Circle of Competence." ◦
"If you do good valuation work and you are right, Mr. Market will pay you back. In the short term, one to two years, the market is inefficient. But in the long-term, the market has to get it right — it will pay you back in two to three years." ◦
"Prices fluctuate more than values — so therein lies opportunity." ◦
"Focus on small caps where the markets are more inefficient. There is less analyst coverage so less information flow. You have the chance to find prices more above or below value." ◦
"Do I care about the ROE? I care about the return on capital (ROIC)." ◦
"It does not mean low price-to-book-value, low price-to-sales ratio investing, which is how most people define it." ◦
"Most people don't have the ability to value a business at a discount and the discipline to hold them." ◦
"Good and cheap worked best together." ◦
"Mr. Market is your partner in a business. Sometimes he wakes up happy and is willing to pay you a lot for your partnership interest. Sometimes he wakes up sad and is willing to sell his interest at a very low price." ◦
"Patience will be the last man standing." ◦
"It doesn't feel good when the market disagrees with you. You have to believe that your process makes sense and the market will recognize value eventually." ◦
"Figure out what a business is worth, and pay a lot less." ◦