Joel Greenblatt, the lesser known Buffett

It is very interesting to see how the seeds have spread out from Benjamin Graham's Net Current Asset Value (NCAV) Strategy. There have been over dozens of very successful and well known investors that reside in the Graham and Doddsville. Joel Greenblatt, a stronger believer in value investing, published a nice and simple book called "The Little Book that Beats the Market". Very similar to Chris Browne's little book of value investing (earlier post) in terms of simplicity, yet filled with amazing insights.

Value Investing Encyclopedia prepared a very nice profile on Joel Greenblatt, and I just want to share the following quotes that both men would agree on what exactly are "value" and "attractive"

The following is from Buffet's letter to shareholders in 1992:

“But how, you will ask, does one decide what's "attractive"? In answering this question, most analysts feel they must choose between two approaches customarily thought to be in opposition: "value" and "growth." Indeed, many investment professionals see any mixing of the two terms as a form of intellectual cross- dressing.”

“We view that as fuzzy thinking (in which, it must be confessed, I myself engaged some years ago). In our opinion, the two approaches are joined at the hip: Growth is always a component in the calculation of value, constituting a variable whose importance can range from negligible to enormous and whose impact can be negative as well as positive.”

“In addition, we think the very term "value investing" is redundant. What is "investing" if it is not the act of seeking value at least sufficient to justify the amount paid? Consciously paying more for a stock than its calculated value - in the hope that it can soon be sold for a still-higher price - should be labeled speculation (which is neither illegal, immoral nor - in our view - financially fattening).”

Finally, I want to share a link I found for another amazing value based blogger David on Joel Greenblatt talks about his magic formula investing at 2006 Columbia Reunion. Click here.