Joel Greenblatt's 1985-1994 investing style

[Guest Grey512]

In 1985-1994, during Joel Greenblatt's first period of managing outside money, Greenblatt compounded capital at an annualized rate of +50% (before fees) using a rather concentrated portfolio approach (up to 8 stocks).

 

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%

 

Questions:

- Where I can find 13Fs? SEC filings for his vehicle, which I think was called Gotham Capital Inc, only go back as far as 1997

- His holding periods or portfolio turnover?

 

Any info would much appreciated..

 

 

[jawn619]

I remember him mentioning in a few videos some of his holdings.

One was a net net that generated consistent earnings, I think another was a Sears arb. Michael Price mentioned that Sears sum of the parts left the actual "Sears" retailer at 1/5 the sales of JCP. The other pieces were already publicly traded and about to be spun off I remember him saying they both stink, but he didn't think Sears was 1/5th the value of JCP. When asked why he hedged it and didn't just hold the individual pieces and wait for them to be spun off, he said that Sears was such a big portion of his portfolio that he had to hedge it.

 

One thing I learned from him is that like other great investors, Greenblatt looked down before he looked up. He made sure he wasn't going to lose money before looking at upside

[JAllen]

His investment strategy was basically how he wrote about in You Can Be A Stock Market Genius.  Those were highlights from his OPM career.

 

 

And yes, you can't find early Gotham Capital 13Fs.  Why, I don't know.  I have looked extensively; it makes no sense.  Perhaps he requested them to be taken down or something.  No idea.  I believe the actual fund was called Gotham Capital, but there may have been another entity, similar to RBS partners for Eddie Lampert.

 

 

I've written a couple of case studies about late 90s investments of his here: http://jallencapitalmanagement.com/writing.html

 

 

Also, if I recall correctly Sears was at 5% of revenue with JCP at 50%, so not 1/5, but 1/10.  Correction: 6% versus 56%, so 9.3x higher.  That was the oft-hated relative valuation plus EV/revenues.  Many investors don't approve of these approaches.  I will, however, side with the investor with the best audited track record ever.

 

 

One additional stock he owned at the tail end of his OPM career, since that is the period you asked about, is the one he was chairman of, Alliant.