GuruFocus Book Review – Deep Value – Tobias Carlisle

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Here at The Acquirer’s Multiple, we don’t like to ‘blow our own trumpets”. We like to let others do it for us!

Our Founder, Tobias Carlisle, wrote an Amazon best-seller called Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations which describes the process of finding companies with a low rank based on The Acquirer’s Multiple®, which may be undervalued, and good targets for acquisition.

Using this research, Tobias built the best Deep Value Stock Screener on the planet, which we use here at The Acquirer’s Multiple.

GurusFocus have just written a nice little review on Tobias’ book.

Let’s see what they had to say…

Following is an excerpt from the Deep Value book review on GuruFocus. You can find the original article here:

With “Deep Value,” Tobias Carlisle, founder of Carbon Beach Asset Management LLC, makes the most compelling case for value investing since Graham and Dodd.

Using captivating case studies and strong academic research, he promotes a strategy which seeks stocks ripe for activist takeovers. The idea is that one catalyst or another will eventually close the gap on the discount between market price and intrinsic value.

A contrarian stategy

Carlisle advocates for a counter-intuitive style of investing – one that buys losing corporations whose stock prices are suffering for any number of reasons.

His is a contrarian strategy to the core: claiming that “even in value portfolios, high growth leads to under performance and low or no growth leads to out performance.” While arguing that “deeply undervalued companies offer very attractive returns,” Carlisle states, “the uglier the stock, the better the return.”

Mean Reversion

What makes this phenomenon so prevalent is the concept of mean reversion.

Using the ancient Roman myth of King Servius and the Goddess Fortuna to set the scene, Carlisle lays out historical and statistical facts showing that mean reversion is inevitable, not only in market valuations but also in business operations.

Knowing that “Fortuna’s wheel is more likely to lift [undervalued] stocks than crush them” gives deep value investors an advantage over investors looking to buy wonderful companies with strong earnings growth and high returns on capital.

Deep Value

In addition to heavily quoting Ben Graham, the book carefully analyzes specific investments made by some of the world’s greatest investors – Carl Icahn, T. Boone Pickens,Warren Buffett and more.

These examples give individual investors valuable insight into how the most experienced investors find and profit from deep value stocks. This clear, concise, and sophisticated manuscript is worth a read for investors of any level.

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