Joel Greenblatt is a value investor, and adjunct professor at the Columbia UniversityGraduate School of Business. He is the former chairman of the board of Alliant Techsystems and founder of the New York Securities Auction Corporation.
In 1985, Greenblatt started a hedge fund, Gotham Capital, with $7 million, most of which was provided by junk-bond king Michael Milken. Greenblatt co-founded a website with John Petry called the Value Investors Club, where investors approved through an application process exchange value and special situation investment ideas. Membership is capped at 250 members and considered highly prestigious. The club awards $5000 to the member who submits the best idea each week.
His latest book refers to an investment strategy of “Magic Formula Investing”, which is a fancy name for a simple formula for determining which stocks to buy: “cheap and good companies” with a high earnings yield and a high return on invested capital. His strategy is featured in “The Guru Investor” by John P. Reese.
In October 2009 he launched Formula Investing, an online money management firm that follows the investment strategy described in his New York Times bestselling book “The Little Book That Beats the Market”. Formula Investing is a money management firm that uses a unique, proprietary stock-screening system and a disciplined approach to manage portfolios of value stocks. The firm offers its services to individual investors and institutions and to registered investment advisors, who can use Formula Investing as a sub-advisor.
Formula Investing uses a system that determines portfolio selections through a simple, logical and proprietary quantitative model that chooses stocks based on a combination of their relative cheapness and quality, as measured by earnings yield and return on capital. Formula Investing allows money to be managed in a disciplined manner that removes factors, like excess emotion and future projections, that often lead to bad investment results. Formula Investing is managed by K. Blake Darcy, a pioneer in online commerce who served as the Founder and CEO of DLJdirect, one of the first online brokerage firms.
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. He continues to aid the school in Ozone Park currently as they have continued to rise. Recently the school and principal Rafael Morales received a progress report score of A, scoring 98 out of a possible 100 points. In 2006, Greenblatt also helped start the Harlem Success Academy 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.
