You Can Be a Stock Market Genius

Joel Greenblatt 1985-2006 40% . special situations

edge . 2000 magic formula investing
quantitative investing . 2009
. GARIX 120% long / 60% short, GENIX 170% long / 70% short 1:1
.

GARIX All-cap L/S

GENIX Mid-cap L/S

AUM
$2.6B
$1.1B

Annualized %
9.80%
9.84%

YTD %
-10.22%
-13.08%

* S&P, GENIX, GARIX

underperformance
. 5 back testing long biotech
? . back testing
.
.
1997 copyright.
. . Inductive
.


Joel Greenblatt rule .
.
.
:
/
edge Back testing Forward testing

Spin-Off (pg. 56)

a. Institutional selling
b. Inside ownership
c. Relative value
d. Catalyst
e. Price under $10
f. Debt transfer
Host Marriott / Marriott International
10/1993 split Host Marriott (NYSE: HST) .
1/1996 Host Marriott Host Marriott Host Marriott Services Corporation .
4/1996 34 divest.
6/1997 Forum Group .
12/1998 Crest Capital Corporation spin-off, Host Marriott REIT .
1993 split $6.75
Spin-off $13.75 5
Spin-off 104%
1996 split $12.00
Spin-off $14.50 5
Spin-off 21%
1998 split $14.63
Spin-off $10.44 4
Spin-off -29%
Strattec Security / Briggs & Stratton
5/1994 Strattec spin-off
3/1995 Strattec spin-off
4/1995 Passive Anti-Theft System (PATS)
8/1995 Break-away lock head
1/2000 Witte JV
5/1994 Briggs & Stratton $21.19 3/1995 $15.25 .
1996 split $13.25
Spin-off $18.75 10
Spin-off 42% , spin-off -23%
Spin-off .
Tribune Publishing Company (NYSE: TPUB) spin-off 7/2014 10/2015 -58% . TPUB
LA Times Chicago Tribune 8 . TV Tribune Media
Company (NYSE: TRCO) spin-off . TRCO -43% .
New York Times (NYSE: NYT) -26% .

1. Spin-off spin-off relative value . value

convergence .
2. Buy parent before spin-off, institutional investors will bid it up post spin-off . IPO

subscribe flip . .
3. Joel Greenblatt radar .
radar informational advantage special situations
radar .

1. spin-off distribution date business/market risk, spin-off

risk, spin-off .
2. market cap . spin-off
(small cap funds) (mid/large cap funds)
.
3. TPUB spin-off beta
thesis . fold. spin-off
valuation ? Greenblatt .
Spin-off :
1.
2. spin-off
3. EV/EBITDA, P/E
4. Distribution date
5.

10/4/2012
10/19/2012
4/8/2013
9/16/2013
11/6/2013
8/8/2014
10/6/2014

Partial Spin-off (pg. 99)

Ex. Sell off 20% of subsidiary while retaining 80% ownership to raise capital., Highlight true value of
division to marketplace. Allows incentive compensation. Happens through an IPO so indiscriminate
selling doesnt happen. We can glean valuation information from the partially spun-off division and use
that for the parent company. Liquidity premium? Spin-off and list. If you have the ability to spin off a
portion of your business and sell it higher, then your business is worth more than before.
Insiders (pg. 107)

Pg. 19
Bob $12B S&P 500 2-3% outperform
. AUM .
S&P 500
consensus .
? arbitrage
.
Pg. 20
risk risk .
Top-down . Bottom-up .
. thesis
. ?
? beta
.
fold ?
Pg. 21
20-80 .
S&P ? S&P
ETF . 20
180 ?
, P/E , thesis
.
.
Pg. 22
.
.
Bob . ? Calvin
Klein Uniqlo . Uniqlo .
Calvin Klein .
? Calvin
Klein . high beta
? 1997 tech bubble
.
Pg. 28
Do your own work.
. , front run .
.
.
. / radar
. : M&A, ,

turnaround, .
Pg. 29
.
.
.
Pg. 32
Pick your spots.
niche . edge
.
Pg. 36
.
Kelly criterion . 10 , 10
5 2 . expected return , variance
, volatility .
Pg. 39
.
. risk/reward ? -100% /
300% -20% / 40% .
downside upside .
Pg. 42
Theres more than one road to investment heaven.
.
. Value Line Group 1 2000 S&P 500 outperform .
Pg. 48
Secret Hiding Places of Stock Market Profits
.
. .
Pg. 56
Spinoffs
. 1988 spinoff / S&P 500 outperform .
:
1. spinoff
. A spinoff
. S&P delisting Russell 2000
?
2. ? vertical integration

 .
. controlling interest spin off ?
3. Guggenheim Spin-Off ETF (CSD) 2007-2011 underperform
outperform . SPUN ETF 6 underperform . Bloomberg
Spin Index . outperformance high beta
. allocate
substitution ?
Pg. 89
Spinoff may be a prelude to takeover of the parent company.
spin-off .
Pg. 95
Institutional investors had no idea what its earnings were going to be for any given period.