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Article by dailystock_admin    (10-02-07 09:13 AM)

Joel Greenblatt is the founder of Gotham Capital, a private investment partnership. In 1994, he became chairman of the board of a Fortune 500 company with over $1 billion in annual sales. Greenblatt holds a B.S. and an M.B.A. from the Wharton School.

From 1985 to 1994, his annualized returns were over 50%. In January 1995, he returned all capital to outside limited partners.

His track record Investment Returns
1985 (9 months) + 70.4%
1986 + 53.6%
1987 + 29.4%
1988 + 64.4%
1989 + 31.9%
1990 + 31.6%
1991 + 28.5%
1992 + 30.6%
1993 + 115.2%
1994 + 48.9%
Annualized Return since inception over 50%

Joel got his undergraduate degree in University of Pennsylvania. While an undergrad, he authored a study called "HOW THE SMALL INVESTOR CAN BEAT THE MARKET SUMMER 1981 15 July 1981". It is a re-examination of Benjamin Graham's system of stock market investing and reached similar conclusion as Benjamin Graham's earlier studies: investing in stocks that meet the value criteria of Benjamin Graham's formula beat the market hands down.

In 1985, Greenblatt started a hedge fund, Gotham Capital, with 7 million dollars, most of which was provided by junk-bond king Michael Milken. After turning $1 to almost $52, he returned all capital to outside partners. He continues to manage Gotham Capital these days.

He started a website called the Value Investors Club, where approved investors (through an application process) exchange value and special situation investment ideas. He pursues a focused value and special situation investment strategy. The website has received very favorable reviews for the company write-ups contributed by its club.

Greenblatt is also an early investor in Pzena Investments, the money management company founded by Rich Pzena, his friend at Wharton. In fact, Pzena was the co-author of Greenblatt's study aforementioned above.

In 2005, Joel Greenblatt surprised the investing world with a very simple book, "The Little Book that Beats the Market". The concept of the book was so simple yet so powerful that many regard this book as a great sequel to Benjamin Graham's classic, "The Intelligent Investor".

Greenblatt is also famous for his contributions to education in New York City. In 2002, he donated $2.5 million to P.S. 65Q, a public elementary school in the borough of Queens, whose students come largely from the neighborhood's South American and South Asian immigrant communities. This investment, equal to about $1,000 per student per year over five years, helped P.S. 65Q to go from a struggling school to an urban success story almost overnight. In 2006, Greenblatt also helped start the Harlem Success Charter School, an elementary school in the city's historically African American neighborhood. He is also a board member of the Institute for Student Achievement, a national leader in developing new small high schools and transforming large comprehensive public high schools into small learning communities.

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Username Comments
blattwonder 
newbie
Posts: 1

Reg: 03-26-08

03-26-08 10:04 AM - Post#249    
    In response to dailystock_admin

Great story but the only thing that bothers me is that no matter how much I search, I cannot find any independent verification or corroboration of these returns and how much leverage, if any, was employed. Do you know of any other than Greenblatt's own personal claims? And, also, where did you get these annual numbers?

He has a better track record than anyone I have ever heard of, IF true, and has beat every investor whose track records are public (such as Warren Buffet and all other public mutual funds or investment companies), which tends to make me a bit skeptical.

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Edited by blattwonder on 03-26-08 10:05 AM. Reason for edit: No reason given.

 
dailystock_admin 
Administrator
Posts: 249

Reg: 09-24-07

03-30-08 12:54 PM - Post#256    
    In response to blattwonder

I got the record from the book, "You Can Be A Stock Market Genius", written by Greenblatt.

His style of investing is very concentrated (3 to 9 stocks). Given that level of concentration, it is plausible to have better numbers than most fund managers. At the same time, it is hard to run money for outside investors with that much concentration so I am not surpised not many funds imitate that level of concentration.

You can view his holdings on the sec.gov under Gotham Asset Management.

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dailystock_admin 
Administrator
Posts: 249

Reg: 09-24-07

03-30-08 01:00 PM - Post#257    
    In response to blattwonder

Here's the link to amazon.

http://www.amazon.com/gp/reader/0684840073/ ref=sib...


You can use search inside and search for "1992 1994" and you will see a link to the page.

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dailystock_admin 
Administrator
Posts: 249

Reg: 09-24-07

04-09-08 02:05 PM - Post#309    
    In response to dailystock_admin

Link to Joel Greenblatt Interview with NAREIT


Excerpts:
"Barron's tested the formula using a different database. One researcher came up with a 28 percent per year return in the article. The other used a database that does not take out one-time gains. The stocks selected by that database may look like they're earning the most, but the testing was not accurate because of one-time gains. If you use those higher earnings numbers, of course you get returns that are not as good. The database I used stripped out one-time gains so we got an accurate group of companies based on normal earnings."



http://www.nareit.com/portfoliomag/06julaug /capita...

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