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TIP677: You Can Be a Stock Market Genius w/ Roger Fan

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Nov 22, 2024

Roger Fan, Chief Investment Officer at RF Capital Management, dives deep into Joel Greenblatt's investment strategies. They discuss the lucrative world of spinoffs and how they serve as ripe opportunities for mispricing. Fan highlights the importance of concentration in portfolios and shares his preferred special situations to invest in, including unique bankruptcy deals. They also explore case studies like Host Marriott and L'Occitane, revealing how strategy and market psychology can lead to significant investment success.

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ANECDOTE

Greenblatt's Investing Prowess

Roger Fan admires Joel Greenblatt for his phenomenal long-term track record.
Averaging 40% annually over two decades, Greenblatt outperformed the S&P 500 significantly without using leverage.

INSIGHT

Mispricings in Special Situations

Special situations are attractive due to frequent mispricings, often caused by investors' aversion to complexity.
These mispricings arise from forced selling or non-economic reasons.

ANECDOTE

Host Marriott Case Study

Host Marriott, a spinoff from Marriott Corporation, involved a real estate downturn and unsaleable hotels.
Greenblatt saw value in the "toxic waste" spinoff, not the profitable management business.

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You can be a stock market genius

Uncover the Secret Hiding Places of Stock Market Profits

Joel Greenblatt

This book provides a highly accessible guide to the stock market, focusing on special situations that portfolio managers and investment experts often miss. It includes case studies, important background information, and tools for individual investors to exploit opportunities in areas like spin-offs, restructurings, merger securities, rights offerings, recapitalizations, bankruptcies, and risk arbitrage. Greenblatt, who has been beating the Dow with returns of 50 percent a year for over a decade, shares his expertise to help readers become successful stock market investors.

The Little Book That Beats the Market

Joel Greenblatt

In this book, Joel Greenblatt provides a straightforward and accessible guide to value investing. He introduces a 'magic formula' that helps investors identify and purchase good businesses at below-average prices. The formula, explained using simple math and humor, has been extensively tested and proven to be effective in beating the market and professional managers. The book also explores why success often eludes individual and professional investors and why the formula remains viable even after widespread knowledge of it. Updated editions include data and analysis from the recent financial crisis and model performance through 2009[2][3][4].

Richer, Wiser, Happier

How the World's Greatest Investors Win in Markets and Life

William Green

In Richer, Wiser, Happier, William Green draws on interviews conducted over twenty-five years with many of the world’s greatest investors. The book highlights that the most successful investors are mavericks and iconoclasts who question conventional wisdom and think rationally, rigorously, and objectively. They maximize their odds of long-term success in markets and life by drawing insights from diverse fields such as neuroscience, economic history, psychology, philosophy, and more. Green explains how these investors can teach us not only how to become rich but also how to improve our thinking, decision-making, risk assessment, and resilience, and how to turn uncertainty to our advantage.

TIP677: You Can Be a Stock Market Genius w/ Roger Fan

Greenblatt's Investing Prowess

Mispricings in Special Situations

Host Marriott Case Study

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