Value Investing: A Balanced Approach (Frontiers in Finance Series)
by Martin J. Whitman
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Book Summary Information
Author: Martin J. WhitmanEdition: Paperback
Audio: English (Original Language); English (Unknown); English (Published)
Published: 2000-09-22
ISBN: 0471398101
Number of pages: 288
Publisher: Wiley
Book Reviews of Value Investing: A Balanced Approach (Frontiers in Finance Series)
Book Review: No insights on Whitman's experience with value investing; a lot on his obsession with academic finance
Summary: 2 Stars
I have only read the introduction and Chapter 14--Restructuring Troubled Companies. My review is based on these two chapters.
I agree with the previous reviewers that the author is obsessed with attacking academic finance. He is aware of this: on page (xiii) he starts the book by saying "Many may view this book as a direct attack on academic finance; there is somehing direct to this view." Unfortunately, his attacks are based on issues that are at best irrelevant to value investing. Who cares if algebrea is needed read Brealey and Myers, but "for reading THIS (emphasis by the author) book" it is "useless." If anything, Brealey and Myers make it clear that understanding finance requires strong analytical skills.
On the other hand, more serious attacks are groundless. On page 215, author states "Scholars are way off base in four areas." He goes on to describe these four areas as follows. "They misdefine markets ... In attempting to ascertain the social value inherent in rehabilitating troubled companies, scholars tend strongly to think only in terms of value as measured by immediate market prices for outstanding securities...In thinking about values in reorganization, scholars tend to think in terms of cash values, not present values...Scholars seem to think that the costs of bankruptcy are huge, precluding many management from seeking Chapter 11 relief."
With respect to the first three issues, there is no scholar at a respectable academic instituiton and/or published at a respectable journal making these arguments. With respect to the fourth issue, the author continues by saying " The costs ARE (emphasis bby the author) huge, but they are borne by companies, not managements." So what the scholars "seem to think" (i.e. that the costs are huge) is not "off base" after all, as the author also agrees. On the other hand, the last sentence quoted above by Whitman also suggests as if some scholars are arguing that the costs are borne by management. Again, no scholar at a respectable academic instituiton and/or published at a respectable journal making these arguments. Perhaps the author is exposed to third tier journals and third tier academics only.
I am disappointed that despite his limited exposure to academic finance, Whitman is convinced that academics are of one mind. As with many professions and many issues, there is disagreement among academics on many issues as well. Sadly, the areas he quotes above are not even among those issues. I challenge Whitman to back up his statements above by citing the scholars he is talking about so that we can all know what study he has in mind.
Practioners have much to learn from the knowledge of academics and the academics have much to learn from the experience of practitioners. Unfortunately, the author's obsession with academics makes him both deaf and mute.
Summary of Value Investing: A Balanced Approach (Frontiers in Finance Series)
"Essential reading for anyone in today's turbulent markets." -Jeffrey E. Garten, Dean, Yale School of ManagementPraise for MARTIN J. WHITMAN and VALUE INVESTING
"An excellent book on investments. But, more importantly, this volume is a primer explaining to Main Street, especially Main Street businesspeople, how Wall Street really operates." -Eugene M. Isenberg, Chairman of the Board, Nabors Industries, Inc.
"A must read for all thoughtful investors interested in a rational, disciplined, risk-averse template for successful long-term compounding." -O. Mason Hawkins, CFA, Chairman and CEO, Southeastern Asset Management, Inc. and The Longleaf Partners Funds
"This author knows whereof he speaks. His many years of extremely successful experience as a professional manager of investments, his academic training, and his period of teaching at a major university all make their mark on this illuminating volume. It reveals how a bright, analytically minded person with extensive practical experience studies and evaluates investments." -William J. Baumol, Professor and Director, C.V. Starr Center, NYU Professor Emeritus, Princeton University
"This book by an experienced and practicing master, Martin Whitman, is a treasure and a reference book on how to think and feel like an owner of a business without the headache of running it day to day." -Papkens Der Torossian, Chairman and CEO, Silicon Valley Group, Inc.
"Marty Whitman is renowned for his uncanny instincts and insights in picking bargains in stocks and bonds. His book is a real bargain. To benefit from decades of Marty's experience is invaluable and to have such a commonsense and realistic approach is an extra dividend." -Milton Cooper, Chairman, Kimco Realty Corporation
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