The Intrinsic Value Podcast - The Investor’s Podcast Network

MI381: Joel Greenblatt: Behind the Magic Formula w/ Shawn O’Malley

8 snips

Dec 9, 2024

Dive into the world of legendary investor Joel Greenblatt and uncover his unique Magic Formula for stock investing. Learn about the allure of undervalued stocks emerging from bankruptcy and the essential role of management decisions in maximizing shareholder value. Discover why even seasoned investors find potential in microcap stocks and special situations. Explore the power of independent thinking in investing, breaking free from the constraints of groupthink. Each topic reveals valuable insights for thriving in today’s stock market.

Ask episode

AI Snips

Chapters

Books

Transcript

Episode notes

ANECDOTE

NVR Pitch

In 2001, an investor named Charlie479 pitched NVR, a homebuilder, on Value Investors Club.
NVR's unique model involved using options contracts for land and pre-selling homes.

ADVICE

Thesis Distillation

Condense investment theses into 2-3 sentences.
Consider how a company’s business model mitigates risk.

INSIGHT

Cyclical Earnings

Cyclical companies should be evaluated on average earnings, not just peak performance.
NVR's resilience stems from its ability to generate profits consistently over time.

Get the Snipd Podcast app to discover more snips from this episode

Get the app

In today’s episode, Shawn O’Malley (@Shawn_OMalley_) takes you into the classroom of legendary investor Joel Greenblatt, sharing his biggest takeaways from watching Greenblatt’s lectures at Columbia. Greenblatt is a wildly successful investor, professor, founder of the Value Investor’s Club forum, and best-selling author of some of the most popular stock investing books ever written.

You’ll learn how Greenblatt thinks about the upside and downside potential for investments through three case studies, how Joel Greenblatt derived his Magic Formula for investing, why buying cheap stocks still works even though the strategy is well-known, where to look for the rarest but most attractive types of stock investments, what was Joel Greenblatt’s biggest investing mistake, plus so much more!

Prefer to watch? Click here to watch this episode on YouTube.

IN THIS EPISODE, YOU’LL LEARN

00:00 - Intro

02:34 - How to think through stock investments via case studies on the best pitches ever submitted to the Value Investor’s Club forum

03:02 - How Joel Greenblatt derived the Magic Formula for investing

05:12 - Which investments are the rarest but most attractive

07:34 - Why it’s important to condense an investment thesis down to just a few sentences

11:52 - How bankruptcy restructurings can actually generate undervalued and overlooked stocks

19:02 - Why so many great investors get their start with microcap stocks and special situations

30:16 - Why value investing still works and has worked across time

41:29 - How Joel Greenblatt made his biggest investing mistake

And much, much more!

*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.

BOOKS AND RESOURCES

Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Kyle and the other community members.
Joel Greenblatt's book, The Little Book that Beats the Markets.
Watch the Video summary of The Little Book that Beats the Markets.
Joel Greenblatt’s site: MagicFormulaInvesting.com.
Playlist of Joel Greenblatt’s video lectures.
Check out Value Investors Club (VIC).
Norbert Lou interview (Charlie479).
Joel Greenblatt’s 2022 interview on the Richer, Wiser, Happier podcast | YouTube Video.
Joel Greenblatt’s 2021 interview on the We Study Billionaires podcast | YouTube Video.
Check out NVR Pitch on VIC.
Take a look at the NII Pitch on VIC.
See the SGDE Pitch on VIC.
Review the WNMLA Pitch on VIC.
Check out the books mentioned in the podcast here.
Enjoy ad-free episodes when you subscribe to our Premium Feed.

NEW TO THE SHOW?

Follow our official social media accounts: X (Twitter) | LinkedIn | Instagram | Facebook | TikTok.
Check out our Millennial Investing Starter Packs.
Browse through all our episodes (complete with transcripts) here.
Try Kyle's favorite tool for picking stock winners and managing our portfolios: TIP Finance.
Enjoy exclusive perks from our favorite Apps and Services.
Stay up-to-date on financial markets and investing strategies through our daily newsletter, We Study Markets.
Learn how to better start, manage, and grow your business with the best business podcasts.

SPONSORS

Support our free podcast by supporting our sponsors:

Connect with Shawn: Twitter | LinkedIn | Email

HELP US OUT!

Help us reach new listeners by leaving us a rating and review on Spotify! It takes less than 30 seconds and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it!

Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

Learn more about your ad choices. Visit megaphone.fm/adchoices

Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm