Tobias E. Carlisle Releases DEEP VALUE
"Deep Value: Why Activists Investors and Other Contrarians Battle for Control of Losing Corporations" (WILEY; August 2014: Hardcover & e-book; $85; ISBN: 978-1-118-74796-4) is a must-read exploration of the philosophy of deep value investment. Written by Tobias Carlisle-an active deep value investor and the well-known blogger at greenbackd.com - this important resource describes the evolution of the various theories of intrinsic value and activist investment from Benjamin Graham to Warren Buffett to Carl Icahn and beyond. Filled with engaging anecdotes, penetrating statistical analysis and meticulous research, the book illustrates the principles and strategies of deep value investing and examines the counterintuitive idea behind its extraordinary performance.
"Deep value is investment triumph disguised as business disaster. It is a simple, but counterintuitive idea: Under the right conditions, losing stocks - those in crisis, with apparently failing businesses, and uncertain futures - offer unusually favorable investment prospects," explains Carlisle. "This book is an investigation of the evidence, and the conditions under which losing stocks become asymmetric opportunities, with limited downside and enormous upside."
Carlisle presents an insider's perspective on valuation and activism in a format that is accessible to both professional and general investors. The value investment philosophy as first described by Benjamin Graham identified targets by their discount to liquidation value: the most conservative estimate of value. This approach has proven extremely effective; however, those opportunities have all but disappeared from the modern stock market. To succeed, today's deep value investors have adapted Graham's philosophy, embracing its spirit while pushing beyond its confines. Carlisle examines Graham's 80-year-old intellectual legacy using modern statistical techniques to offer a penetrating and highly original perspective: That losing stocks-those in crisis, with apparently failing businesses, and uncertain futures-offer unusually favorable investment prospects.
Each chapter tells a different story about a characteristic of deep value investing, seeking to demonstrate a genuinely counterintuitive insight. Through these stories, it explores several ideas demonstrating that deeply undervalued stocks provide an enormous tail wind to investors, generating outsized returns whether they are subject to activist attention or not. It begins with former arbitrageur, and option trader Carl Icahn. An avowed Graham-and-Dodd investor, Icahn understood early the advantage of owning equities as apparently appetizing as poison. He took Benjamin Graham's investment philosophy and used it to pursue deeply undervalued positions where he could control his own destiny.