Customer Reviews

Value Investing: A Balanced Approach (Frontiers in Finance Series)

5 star:		(8)
4 star:		(1)
3 star:		(5)
2 star:		(4)
1 star:		(0)

 

 

Whitman is brilliant, but as a writer he suffers from some serious defects. Chief among them is his obsession with proving academics wrong. Rather than write much on how he thinks through and makes real-world investments, he spends most of his ink distinguishing value investing from Efficient Market Theory and Graham-and-Doddism. It gets old, and dull. And he constantly qualifies his statements with "probably", "would seem", and so on, and undermines himself. The writing also utterly lacks any sense of humor. Finally, I was disappointed that Whitman--who is an astute and detail-oriented investor--did not include more case examples, with financials, to show his reasoning and method at work.

His first outing, The Aggressive Conservative Investor, is better in many ways, but is still turgidly written.

Given Whitman's talents, track record and reputation for smarts, this is a real let-down.

This is a fair book written by an outstanding investor. Marty Whitman has practiced value investing successfully for many years, and his writings draw on his vast experience. However, unlike Buffett, he isn't the most clear author in the world. His writing is a little obtuse, and devoid of examples that would illustrate his points. Nevertheless, if you can make your way through the writing, you will find a lot of extremely useful and interesting information. I would recommend this book, but to understand it the reader should have a good working knowledge of financial terminology and an understanding of other value investing techniques and perspectives. If you read (and understand) some other books on value investing, plus maybe a few of Mr. Whitman's Third Avenue Value Fund shareholder letters, I think you will find this book invaluable.

Couple of odd things about this book. First is Whitman's invention of acronyms to refer to simple concepts (such as minority investors) which makes the book more confusing to read than it needs to be. Bigger problem however is it is unclear to me who is supposed to read it. The first 200 pages are a rant against the efficient market hypothesis, investment banker fees and a couple of other topics interspersed with a basic overview of markets. Last 30 pages are an advanced discussion on distressed security investing (one of the author's many talents) and dividend policy.

I was bored for 200 pages & interested for 30. Others would be the other way round. Very odd.

I eagerly anticipated reading this so-called successor to Graham & Dodd's Security Analysis after Marty Whitman pronounced it as such last December in an interview with Outstanding Investor Digest. To the serious value investor counting on Whitman to deliver on a standard set by Graham & Dodd, this book is as satisfying as a completed sneeze.

Hmmm, a latter-day Graham & Dodd, written in less than half the writing space...How does he pull it off?! The reason Whitman's book is so brief is the author devotes most of his effort to delivering platitudes; there are few examples, and fewer satisfying ones. It is disturbing that a value investor-professor touting a 'balanced approach' would skimp on text-balancing details like examples, especially since this book is written by a seasoned analyst presumed to be sensitive to the complexity --and thus the potential for confusion-- in the practice of his craft.

This is one field where less is not more. While I would dearly love to find a replacement to my increasingly dated Graham & Dodd, Whitman's book is a displacement. It is a strangely assuming, hugely disappointing work in a field terribly in need of a successor to the less and less approachable standard text, Graham & Dodd's Security Analysis.

This book has many good insights, but the writing isn't great, and it gets pretty technical at times. A better choice, especially for less sophisticated investors, is Kirk Kazanjian's "Value Investing with the Masters," which features Whitman among a panel of 20 value gurus.

As someone who has read the works of Ben Graham and the letters of Warren Buffett, I can honestly say this book offers some new ideas you are unlikely to find anywhere else. Unlike most investing books that only argue against the efficient market, this book also points out many of the flaws of Graham and Dodd and offers a different method of value investing. It is not intended to be an update of Security Analysis, despite what previous reviews on Amazon may say. The author has over 40 years of Wall Street experience and has also taught at Yale and Columbia. If you want to be exposed to new ideas buy the book. If you just want positive reinforcement of your belief in Ben Graham then this book might leave you shell shocked.

Whitman's book offers a good introduction and overview of the issues and topics to pay attention to for value investors. He does a fairly good job explaining and clarifying his points. However, sometimes that is overdone and things seem quite repetitive. New value investors should definitely read it. My main disappointment is that there are not too many illustrations, in-depth examples or stories that would have made the book a more interesting and valuable read. This book has its place in today's "pay anything for growth" mentality.

Parts of this book are good. Whitman does say a few important ideas clearly, but a lot of what he writes is difficult for the lay reader to understand. Maybe you need to be a business major or have an MBA. Whitman does not clearly define alot of the basic terms he uses through the book. When he does give a definition, often the definition is obtuse, wordy and confusing. The tables of financial data and examples are pretty much impossible to follow. Some good ideas here, but I really had to force myself to finish it...

Martin Whitman's books are major disappointments. They are marketed to retail investors, but they are really meant for the exceptionally large investors seeking to make money by buying control positions in companies. In fact, Whitman belabors the point page after page that the type of investing he is talking about rarely involves making money by capital appreciation in the stock market.

I gave the book three stars because he did share some insights into how the quality of a balance sheet can translate into either poorer or richer profits for a company. This is very important analysis, since it cannot be found and explained anywhere else, yet makes a lot sense when you are trying to value a company, and it is highly relevant information regardless of whether you are a retail investor or a hedge fund manager. Those insights, unfortunately, are a small part of the book.

Equally unfortunate are two other items: the writing style and misclassification of Ben Graham's role in investing history. His style is painfully dry, and I suspect he is still a recovering lawyer :) .

In addition, he makes it a point not to classify Graham and Dodd as value investors. I know his point is that much of their success came from capital appreciation, not from taking control positions in a business (a point made over and over and over again), but this kind explanation can miseducate the uninitiated. For anyone reading: Ben Graham is considered the FATHER of value investing, and literature from all other reliable sources will correctly name him as such.

Whitman has a lot to offer the student curious to learn more about value investing. Though the book is far from an easy read, but the lessons are valuable.
1. Valuation is more than projecting earnings or cash flows a few years forward. Many companies are valuable because of the assets they hold. A serious value investor should attempt to understand the marketability of those assets irrespective of the price at which they are recorded on the balance sheet.
2.GAAP tells you what the numbers are not what the numbers mean.
3.Investors should learn to move up the balance sheet. There are opportunities to be found in debt as well as in equity.
4.Any serious investor should understand deals that seek to unlock corporate value. Who the players are and what there incentives are. Understanding regulations, and taxation is as essential as understanding accounting.
5. Graham and Dodd margin of safety is both a quantitative and a qualitative measure.

All in all, Whitman has written a wonderful book that does not claim that investing is easy, but instead lays out the different avenues we can explore to become better investors.

Only caveat - Definitely not a fast read <maybe I was lazy and you can get through it in a few hours>