Joel Greenblatt’s investing legacy is built on finding opportunities where most investors aren’t looking. In his own words, “You Can Be a Stock Market Genius” wasn’t just a catchy title — it was a compilation of “war stories” from a decade of discovering overlooked value in special situations.
Greenblatt’s approach wasn’t about complexity. It was about diligence, concentration, and having the courage to go where others wouldn’t. “A special situation could just be as really cheap, and it’s cheap for a reason,” he said in a interview with The Investor’s Podcast.
That simple insight drove him to build a concentrated portfolio of high-conviction ideas, with each new idea fighting to earn its place. “You’re always waiting, what do I own? And do I like this other thing better?”
His method was intuitive but aggressive. Greenblatt didn’t use leverage, but he remained “pretty fully invested most of the time.”
His style was about ruthless efficiency — if a new idea promised a 50% annual return, even a holding earning 15-20% could get knocked out.
“If you force rank your positions, you’re going to be knocking things out of the portfolio that maybe if you ran a larger or more diverse portfolio, you would keep.”
This relentless pursuit of value echoes Warren Buffett’s early years, which Greenblatt sees as a spiritual predecessor to his own style.
“That period of time… really was closer to the way Buffet probably ran his partnership from the mid ’50s to when he gave his money back in 1969.”
Like Buffett, Greenblatt found success in market inefficiencies, often arising from events like recapitalizations, spinoffs, or restructurings — the so-called “nooks and crannies” of the market.
Crucially, Greenblatt believes those opportunities still exist — just not for everyone. As Buffett once said (and Greenblatt proudly quoted), “I could earn 50% a year if I had a million dollars at any time.”
The catch? Scale. “A fat wallet is the enemy of investment returns,” Buffett noted — a sentiment Greenblatt literally felt when Buffett handed him his famously thick wallet during a student visit to Omaha.
That moment, equal parts humor and humility, captures the essence of Greenblatt’s philosophy: great returns come not from size, but from skill, focus, and a willingness to search where others don’t bother looking. For individual investors willing to do the work, the hidden corners of the market still offer genius-level returns.
You can watch the entire interview here:
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