Greenblatt: Strategy Change

It isn’t often that a very successful hedge fund manager with a winning strategy closes up shop, but that is exactly what this week’s Great Investor guest did in 1995. It’s equally unusual to get back in the business more than a decade later with a dramatically altered strategy. Joel Greenblatt of the Gotham Funds will explain his big change in portfolio strategy, from a very concentrated approach to broad diversification.
WEALTHTRACK #1121. November 14, 2014

[@AlexanderCooper1]

I'm a big fan of Greenblatt.

[@valicourt]

TW has doubled since 2014. That one certainly payed off :)

[@ThomasKpdp]

My favorite investor of all time. Excellent interview!

[@lidiatirado8679]

+James Winz He's consistently beat the market and he's beat investors such as Ken Fisher, and others, and has matched or beat the roi of many super successful investors over time. Greenblatts return rivals that of Buffett, Soros, Steinheardt, Ichan, etc. I've used his ranking systems and tailored them to my specifications, and its been working wonderfully for me, and plenty of others have benefited as well. So why not follow his philosophy? Joel Greenblatt is a great investment role model, especially because of his Graham-Buffett philosophy. Maybe his ROI isn't the number one highest in history, but noone's roi is the highest, except for one person. But he is definitely in the 99.9th percentile. Great role model.

[@jacquescousteauful2397]

+Iam Tamir Rice 50% gross annual returns for 10 years straight is laughable?

[@2011blueman]

All of Greenblatt’s mutual funds have suffered losses in the last year, with his biggest funds down between 6%-to-10%, and since he returned to taking public money in his funds none of his funds have outperformed the S&P 500 Index’s total return since their inception. That's not to say his new strategy won't work (I believe it will), but the strategy is likely to do it's best when we move into a bear market rather than the market conditions from the time he came back. Moreover, you're better off imitating his simple strategy yourself rather than using his funds because his funds have management fees that will heavily eat away at your returns.

[@peterbradshaw8018]

Imitating someone mindlessly is a very dangerous strategy my friend. You dont know what special favors he has received. I remember reading somewhere where some investors followed Peter Lynch into some drug company and got badly burnt.

[@BibinBCherian]

Very good questions and Joel is lucid as always. Thanks.

[@nivagnoswal]

good interview with a great investor...his first book is an investing classic for me.

[@alexanderworkchannel]

Thanks - very interesting

[@octhx]

6:38 Cheap over quality

[@cageybee777]

ROIC = EBIT * (1 − Tax Rate) / (Operating Current Assets + Operating Long-term Assets − Operating Current Liabilities) *Operating Current Assets:* Cash and equivalents Accounts receivable Inventories Prepaid expenses Deferred taxes *Operating Long-term Assets:* Land Buildings Machinery Vehicles Eequipment Intangible assets Goodwill Natural Resources Patents Copyrights R&D *Operating Current Liabilities:* Income taxes Accounts payable Compensation and benefits (wages & benefits) payable Deferred income Accrued expenses

[@EmmMacken]

That's a good way to set things up.

[@cr1138]

Great interview Consuelo! Thanks, Joel!

[@peterbradshaw8018]

+cr1138 I enjoyed reading his books. Certainly the books are a much, much, much easier version of Security Analysis.

[@peterbradshaw8018]

If Micheal Lewis is correct, and that is a big if. he was not too patient with Dr. Micheal Burry of Scion Capital.

[@matthorton9716]

Greenblatt was dealing with redemptions and needed his investment back from Burry to satisfy those redemptions. At least that's how I understand it. I'm sure he wasn't 100% confident in Burry's CDS play but the clients pulling money was the primary reason for the pressure he put on Burry.

[@peterbradshaw8018]

If Greenblatt had taken the time to research Burry's strategy he would have seen the wisdom of it. The banks were more than interested in the CDS at that time. It had all the hall marks of a value situation. Greenblatt though a very good investor strikes me as a bit flaky at times.

[@jimjackson4256]

Of course you all realize that this is just a sales pitch don’t you.Of course you don’t .