[2025–2026] Week 13: You Can Be a Stock Market Genius by Joel Greenblatt
Reading assignment and questions for week 13 of the Value Investing Seminar
(Note: If you are just joining the seminar, please start by reading the Introduction)
Human nature doesn’t change much, and yet it’s so important to investing and the markets. That’s what The Money Game teaches us.
It’s not about the specifics of the markets being the same. They usually change. However, the behavioral drivers that cause irrationality to reoccur are a permanent feature of markets.
Two specific ideas that I found useful to my development as an investor, and hope that you will too:
If you don’t know who you are, the market is an expensive place to find out. You need to come to the market with a very entrenched process as your true north, or you will pay a hefty tuition to the market for learning as you go.
Identity. Anxiety. Money. In that order. So many of our actions are driven not by money per se or by some cold-blooded calculation of expected value. Instead we encounter a reality that challenges our self-image, our identity. That causes us anxiety and affects our actions. The money comes last.
Note: For those who want to read ahead, our next reading will be One Up On Wall Street by Peter Lynch.
Week 13 assignment is to read You Can Be a Stock Market Genius by Joel Greenblatt and answer the following questions:
Question 1: Please “map” Joel as an investor on as many dimensions of an investment style as possible.
Question 2: What are the different kinds of special situations that he describes? Which of these areas do you think are likely to be more efficient (less prone to mis-pricings) today? Which ones less?
Question 3: Find as many current “special situations” from the categories provided by Joel as you can. These do not have to be undervalued, just candidates to look at further that fit the templates that he describes in his book.
Question 4: If you can, see if you can find one of these special situations that you found in question 3 that you think Joel Greenblatt would consider to be attractive for purchase today. Support your answer with valuation and qualitative analysis as appropriate.
Question 5: Come up with an AI prompt based on Joel Greenblatt’s approach
Now it’s your turn:
Submit your answers in the comments below this article with all your answers in a single comment. I will engage with some of the answers each week and highlight some of the ones I find most insightful in next week’s seminar assignment article.
Engage with the answers of some of your fellow seminar members in the comments below. Remember – the goal is to learn together. Be kind, be respectful and try to add to our learning as a community.
Feel free to ask any questions about the reading in your comment.
Until next week,
Gary
About the author
Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.
Question 1:
Joel Greenblatt, is a highly specialized, opportunistic investor. He thrives in “special situations” (spinoffs, restructurings, bankruptcies, mergers), blending deep fundamental analysis with contrarian patience. His style maps across dimensions as opportunistic, research-intensive, event-driven, and risk-aware, rather than broad market or momentum-driven.
Source of Edge : Information inefficiency: Finds value in overlooked, complex corporate events
Research depth: Gains edge by reading filings others ignore.
Time Horizon : long enough for special situations to resolve.
Risk Orientation : Asymmetric bets: Looks for limited downside with large upside., focuses on event-specific catalysts.
Breadth vs. Focus : Concentrated: Prefers a handful of high-conviction special situations.
Analytical Style : Forensic detail: Reads proxy statements, spin-off docs, bankruptcy filings.
Flexibility : Adaptive opportunist: Moves across spinoffs, mergers, distressed debt, rights offerings.
Question 2:
1) Spinoffs
a) Parent companies distribute shares of a subsidiary to existing shareholders.
b) Often neglected because institutions sell off small or “non-core” spinoffs. Forced buying v Forced selling concepts
c) Greenblatt shows how insiders’ incentives and hidden gems can create value.
2) Mergers & Risk Arbitrage
a) Buying target companies at discounts to deal price.
b) Profiting if the merger closes successfully.
c) Requires assessing deal certainty, regulatory risk, and financing.
3) Restructurings & Recapitalizations
a) Companies changing capital structure (e.g., issuing debt, buybacks, asset sales).
b) Can unlock hidden value or create mispricings.
4) Bankruptcies & Distressed Securities
a) Buying debt or equity of companies emerging from bankruptcy.
b) Potential for huge upside if assets are mispriced during distress.
5) Rights Offerings & Warrants
a) Opportunities when companies issue rights to existing shareholders.
b) Warrants/options tied to restructurings can be mispriced.
6) LEAPS (Long-Term Equity Anticipation Securities)
a) Using long-dated options to capture value in special situations with limited downside.
7) Stub Stocks
a) Residual equity left after partial spin-offs or recapitalizations.
b) Often overlooked and mispriced
Question 3 & 4:
The Lemon Tree–Fleur Hotels restructuring is a textbook Greenblatt-style case: an asset-light vs. asset-heavy split with private equity involvement, creating two distinct vehicles that investors can analyze separately. Below is a structured list of recent candidates across Joel Greenblatt’s categories.
Lemon Tree Hotels (asset-light) → management, brand, loyalty, distribution.
• Fleur Hotels (asset-heavy) → property ownership and development.
• Catalyst: Warburg Pincus acquired APG’s 41% stake in Fleur and committed ₹960 crore in new equity.
• Why it fits Greenblatt’s playbook: Clear separation of business models, private equity capital infusion, and potential listing of Fleur within 12–15 months. This creates a “special situation” where investors can value each platform differently
Question 5:
1) "For [COMPANY] spinoff, apply Joel Greenblatt’s framework from You Can Be a Stock Market Genius and create a comprehensive report. Use SEC filings (10-K, 10-Q, Form 10, Schedule 14A), analyst commentary, and industry comparables. The report should include the following sections:"
2) Business & Operating Results (10-Ks / 10-Qs)
a) Extract segment-level operating results tied to the spinoff.
b) Highlight revenue, margins, growth trends, and capital intensity.
c) Provide a one-sentence definition of the spinoff’s business model.
3) Form 10 Analysis
a) Summarize the spinoff’s structure, debt allocation, and unusual disclosures.
b) Explain why the spinoff is happening—read between the lines (e.g., regulatory pressure, unlocking hidden value, shedding low-growth assets).
c) Clarify complicated items (tax treatment, contingent liabilities, separation agreements).
4) Management Incentives (Schedule 14A)
a) Detail executive stock ownership, options, restricted stock units, and compensation.
b) Identify who is “all in” on the spinoff and who is not participating.
c) Discuss alignment (or misalignment) between management incentives and shareholder value creation.
5) Business Outlook
a) Assess the spinoff as a standalone company:
i) Promising factors (market tailwinds, niche dominance, cost advantages).
ii) Concerning factors (customer concentration, leverage, regulatory risk).
b) Compare to parent company’s historical positioning.
6) Index & Institutional Dynamics
a) Evaluate whether the spinoff will be excluded from major indices (S&P, Russell).
b) Assess market cap relative to institutional mandates—will forced selling occur?
c) Discuss potential mispricing opportunities due to mechanical selling.
Q1:
https://docs.google.com/document/d/e/2PACX-1vS8wnXKPg2eqZ4XAM2dSAi7rIm7u7EDjRZ64jI4tQdWdHAXXOnhOWkP60SlnlB8_G4tMg4iZOStUcJx/pub
Q2:
Special situations included Spinoffs, Partial Spinoffs, Rights Offerings, Risk Arbitrage, Merger Securities, Bankruptcy, Restructuring, Recapitalizations, Stub Stocks, LEAPS, and Warrants
I'm guessing that today, the increase in the ease of computers/AI to gather and synthesize this information probably has reduce the mispricing opportunities of some situations. Reading through chapter 7, I kept thinking how one could use AI to assist in the research of the SEC filings and look for the scenarios he described and how that would surely make the field far more competitive. That said, some 'unwanted' probably still looks like 'unwanted', ie Bankruptcy, Merger Securities. Mispricing could still take place where human choice (not math) is still a driver (Spinoffs, Rights Offerings). His original argument of how the small size of some of these situations is a limitation for institutional portfolios is probably still true.
Q3:
I focused on looking at spinoff as those seem more beginner friendly. Here are a few spinoff that look interesting to me:
-- FedEx Freight (probably will be 'efficient' since highly followed)
-- Honeywell (upcoming splits TBD?)
-- Middleby (food processing spinoff
-- KBR (Mission Technology Solutions (MTS))
-- Corteva (parent chemical side, more likely to get dumped than the seed side)
Q4:
FedEx Freight looks interesting to watch.
- Forced selling: Possible, given FedEx Corp's ~80% institutional ownership.
- Insiders/Incentives: John Smith made a career decision to leave his broader Chief Operating Officer role at FedEx Corp to return as CEO of the spinoff. Some indications that leadership is going to be compensated with stock. Demonstrates possible alignment with the new company's performance rather than the just the parent's success. Insiders are not major shareholders in FedEx (this seems like a negative).
- Hidden asset/earnings revealed: It is a profitable business unit within FedEx Corp (~10% of revenue). Despite near-term challenges, FedEx Freight’s scale, margins, and cash flow look to provide a solid foundation for growth.
Q5:
For COMPANY spinoff, use the framework of Joel Greenblatt's 'You Can Be a Stock Market Genius.' and create a report of the following:
- Reading the company's business and operating results from the 10Ks and 10Qs. Report on relevant information specifically related to the operating results of the spinoff segments. Output should include a definition of the spinoff business in one sentence.
- Form 10 for information about a spinoff (be very thorough here, explain uncommon/complicated items). Why is the spinoff happening (read between the lines)?
- Executive stock ownership, stop options and overall compensation from schedule 14A for the spinoff. Who from management wants 'in' and who isn't playing?
- Gather information about the spinoff's business outlook from the prospective of a new business. What's promising and what's concerning?
- Identify if the spinoff will be excluded from indices or if its market cap will be too small for the parent's current institutional holders. Will forced selling be likely?
- Valuation: find the PE of 5 similar businesses in the spinoff industry.