The Manual of Ideas: The Proven Framework for Finding the Best Value Investments

Praise for The Manual of Ideas "Smart investors will read this book carefully and hope that few others do." —Bryan Lawrence, founder, Oakcliff Capital "This is a fantastic book chock-full of investing wisdom fit for both amateur and pro. John has produced an investment gem that's wide-ranging in scope yet packaged in concise form." —Allan Mecham, founder, Arlington Value Capital "A great read and very useful. The strategies in The Manual of Ideas give investors tangible and solid opportunities to maximize any portfolio." —Dave Sather, President, Sather Financial Group, Inc. "John Mihaljevic publishes what I regard as the very best investing newsletter on the planet. Actually, it is more of a frequently updated investing manual. This fantastic book is chock-full of exceptional value investing wisdom gleaned from the best and curated by perhaps the best value investing curator out there. Reading it can only lead to better investing results for everyone. Thank you, John, for your exceptional service to the value investing community." —Mohnish Pabrai, Managing Partner, Pabrai Investment Funds " The Manual of Ideas is a comprehensive investing book that clearly outlines a variety of ways to successfully navigate the complex global investment landscape. There are many excellent insights, describing specific tools, strategies, and approaches to becoming an outstanding investor. The book includes approaches used by some of the best investors in the world to generate ideas, evaluate business models, and assess management teams. While successful investing requires flexibility and originality, it must always be grounded in a disciplined analytical approach, focusing first on assessing and managing risk. I highly recommend The Manual of Ideas to all prospective investors from beginners to experienced practitioners." —Paul Lountzis, President, Lountzis Asset Management, LLC "Informed by countless hours interviewing the world's greatest investors and John's rich experience and insights, The Manual of Ideas arms the reader with a powerful set of idea-generation tools. The book efficiently covers the spectrum of value investing approaches, each brought to life with outstanding real-world examples. The book's combination of effective tools and instruction offers a high return on investment!" —Jason Dunn, CFA, founder/Portfolio Manager, White Bison Capital

Preface xiii CHAPTER 1 A Highly Personal Endeavor: What Do You Want to Own? 1 Give Your Money to Warren Buffett, or Invest It Yourself? 2 Cast Yourself in the Role of Capital Allocator 7 Owner Mentality 14 Stock Selection Framework 17 Key Takeaways 18 Notes 20 CHAPTER 2 Deep Value: Ben Graham–Style Bargains Inelegant but Profi table Strategy of Cigar Butt Investing 23 The Approach: Why It Works 24 Uses and Misuses of Ben Graham–Style Investing 34 Screening for Graham–Style Bargains 41 Beyond Screening: Working through a List of Deep Value Candidates 44 Asking the Right Questions of Graham–Style Bargains 49 Key Takeaways 53 Notes 54 CHAPTER 3 Sum–of–the–Parts Value: Investing in Companies with Excess or Hidden Assets 57 The Approach: Why It Works 58 Uses and Misuses of Investing in Companies with Overlooked Assets 60 Screening for Companies with Multiple Assets 64 Beyond Screening: Proven Ways of Finding Hidden Assets 69 Asking the Right Questions of Companies with Hidden Assets 78 Key Takeaways 81 Notes 82 CHAPTER 4 Greenblatt’s Magic Search for Good and Cheap Stocks 83 The Approach: Why It Works 84 Uses and Misuses of Investing in Good and Cheap Companies 91 Screening for Good and Cheap Companies 98 Beyond Screening: Hope for Improvement Springs Eternal 102 Asking the Right Questions of Greenblatt–Style Bargains 106 Key Takeaways 113 Notes 114 CHAPTER 5 Jockey Stocks: Making Money alongside Great Managers 117 The Approach: Why It Works 118 Uses and Misuses of Investing in Jockeys 121 Screening for Jockey Stocks 131 Beyond Screening: Building a Rolodex of Great Managers 141 Asking the Right Questions of Management 146 Key Takeaways 150 Notes 151 CHAPTER 6 Follow the Leaders: Finding Opportunity in Superinvestor Portfolios 153 Superinvestors Are Super for a Reason 154 Uses and Misuses of Superinvestor Tracking 157 Screening for Companies Owned by Superinvestors 160 The Superinvestors of Buffettsville 163 Beyond Screening: What Makes a Company Attractive to Superinvestors? 171 Key Takeaways 175 Notes 177 CHAPTER 7 Small Stocks, Big Returns? The Opportunity in Underfollowed Small– and Micro–Caps 179 The Approach: Why It Works 180 Uses and Misuses of Investing in Small Companies 185 Screening for Promising Small– and Micro–Caps 189 Beyond Screening: Other Ways of Finding Compelling Small– and Micro–Cap Ideas 197 Asking the Right Questions of Small–Cap Prospects 207 Key Takeaways 212 Notes 214 CHAPTER 8 Special Situations: Uncovering Opportunity in Event–Driven Investments 215 The Approach: Why It Works 216 Uses and Misuses of Investing in Special Situations 220 Uncovering Special Situations 227 Asking the Right Questions of Special Situations 231 Key Takeaways 236 Notes 237 CHAPTER 9 Equity Stubs: Investing (or Speculating?) in Leveraged Companies 239 The Approach: Why It Works 241 Uses and Misuses of Investing in Equity Stubs 242 Screening for Equity Stubs 251 Beyond Screening: An Ambulance–Chasing Approach 253 Asking the Right Questions of Equity Stubs 257 Key Takeaways 264 Notes 265 CHAPTER 10 International Value Investments: Searching for Value beyond Home Country   Borders 267 The Approach: Why It Works 269 Uses and Misuses of Investing in International Equities 272 Screening for International Equities 280 Beyond Screening: Riding the Coattails of Regional Experts 283 Asking the Right Questions of International Equities 285 Key Takeaways 291 Notes 292 References 295 About the Author 303 Index 305

John Mihaljevic, CFA, is a Managing Editor of The Manual of Ideas , the monthly idea-oriented research publication for value-oriented investors, and a Managing Director of ValueConferences, a series of fully online investment conferences for value-oriented investors. He has also served as Managing Partner of the investment firm Mihaljevic Capital Management LLC since 2005. He is a member of Value Investors Club, an exclusive community of top money managers, and has won the club's prize for best investment idea. John is a trained capital allocator, having studied under Yale University Chief Investment Officer David Swensen and served as research assistant to Nobel laureate James Tobin. John holds a BA in economics, summa cum laude , from Yale and is a CFA charterholder. He resides in Zurich, Switzerland, with his wife, two sons, and a daughter.