[2025–2026] Week 17: Big Money Thinks Small by Joel Tillinghast
Reading assignment and questions for week 17 of the Value Investing Seminar
(Note: If you are just joining the seminar, please start by reading the Introduction)
I met Anthony when I was a young analyst at Fidelity in the Boston office over 20 years ago and he came to visit us and gave a talk to all of the analysts and PMs. The story that stuck with me was when he put up his track record in the beginning of the talk and pointed out the 3 consecutive years of underperformance in the early 1990s.
Anthony then told us that had those been his first years as opposed to being preceded by a decade of good returns, Mr. Johnson would quite likely have fired him and he would not be standing in front of us that day. This made me think about how much randomness there is in investing, even if there is still quite a bit of skill involved.
Anthony’s style to me has some elements of both Peter Lynch and John Neff. His emphasis on visiting undiscovered companies reminds me of Peter’s “turning over rocks” analogy. On the other hand, he frequently seemed to look for inexpensive stocks based on current profits and cash flows, similarly to John Neff.
Note: For those who want to read ahead, our next reading will be The Investment Checklist by Michael Shearn.
Week 17 assignment is to read Big Money Thinks Small by Joel Tillinghast 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 about Joel’s background and circumstances made his approach the right one for him?
Question 3: What are your favorite Joel investments? Why?
Question 4: What are your least favorite Joel investments? Why?
Question 5: What are 1 or 2 stocks that Joel might find attractive in the current environment?
Question 6: Come up with an AI prompt based on Joel’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.
Q1:
https://docs.google.com/document/d/e/2PACX-1vS0kQQ29QN0O-yL3MfYCS6FFTHTOJ8eq894FNe0jzNSh1AH3aWU8aQ4VkbK_3ZeyTPkzDQZSss5DJoO/pub
Q2:
I didn't pick up on much here, but I did notice that he emphasized company lifecycle and the risk of obsolescence more than the other investors. Maybe this came from seeing the performance of the amazing stocks of the prior decades and recognizing that not all of the survived. It may have made him more willing to accept that failure actually was an option, even for great companies. "Is the company built to last, or is it at risk from competition, fads, obsolescence, or excessive debt?"
Q3:
Hansen's Natural (Monster)--This was good example of the importance of understanding where growth is coming from. He was originally interested in the small growing company because of fruit juices but eventually found that the real driver of growth in sales was in their energy drink that tasted better the currently dominating drink. They had a 'superior product in a niche market'.
Q4:
I didn't like the 2 oil investments in Russia and Brazil (Yukos and Petrobras). Seemed very risky to 'work with' governments with the track record they had.
Q5:
I found a few that looked interesting, but I'm not comfortable saying these are Tillinghast style picks. I would want to put more research into them and, as he noted in some cases, possibly conduct a DCF. That said, this one looked interesting to look into: UHS
UHS checks many of the qualitative boxes and some of the quantitative:
• Hospitals are essential infrastructure, durable, hard to substitute
• Demand is noncyclical, TAM is enormous and slow‑growing.
• 10‑yr earnings are positive and stable
• High earnings yield relative to quality.
• ROE >10% for last 5years
• Balance sheet debt might be a concern
• Founder/Executive Chairman of the Board has largest ownership of public shares at around 12%
• High earnings yield ~9%
Q6:
---Research help---
He mentioned footnotes to 10k's being important. AI might help with heavy lifting, particularly Notebook LLM would be useful for this task.
Task: Read through all the footnotes in the 10k's from the last 10 years for TIKR. Are the footnotes easy to follow or are the overly complex (indication that company might be trying to do some 'hand waving'). Special areas to focus on include pension and retirement plans, capital and operating leases, forward commitments, derivatives, and joint ventures.
Output: Summarize the important patterns. What picture do the footnotes paint about the character of the company? Are the red flags about how the finances are being managed?
---Idea prompt---
Use below to find a list of stocks Joel Tillinghast would be interested in. Output: list of stock tickers with and how they 'score' on each item.
• Quantitative Filter:
○ Uses long-term normalized 10-year earnings
○ high earnings yield that supports plausible growth rate not a heroic one
○ ROE >10% in nearly all of the last 10 years
○ Stable, predictable financials
○ healthy balance sheet
○ Not loss-making
• Qualitative Filter:
○ Real, durable competitive advantage
○ does something unique
○ slow-evolving industry where lifecycle decay is minimal
○ Will it be missed it goes away?
○ Durable, hard to substitute, a reason for profits to survive
○ Noncyclical, not commodity
○ 'High growth' comes from enabling users to do things they have never done before
○ TAM is meaningful.
Q1. Small v large cap, value v momentum, low volatility v high, casts a wide net - 800 securities held in portfolio, stays withing circle of competency , deep financial research, uses qualitative measures evaluating a stock, uses second level thinking to un-bias decision making as much as possible.
Q2. Friends with Peter Lynch, John Templeton, and followed Buffett- all practicing their own versions of value investing. He is a student of history and combines both qualitative and deep financial research also including qualitative factors when making investment decisions.
Q3. Petrobas - he was able to get out in time. International investing adds levels of risk which must be considered in making investment decisions, especially those related to government stability.
Q4. Sino-Forest - there were hidden relationships and financial information. He probably wouldn't have made the investment had he been aware of them. This is where being able to change your mind when new information becomes available is as essential skill to have.
Q5. Cullen Frost Bank - a bank in South Texas which is a rapidly growing part of the country. This is a difficult area to find investment opportunities at the present moment.
Q6. I would incorporate his set of criteria including: what are the profits as a whole over time, will capital be secure, will there be an adequate return, evaluate risks, where are the costs and incentives, is the data accurate, is the industry understandable, are the financial statements accurate, is the management honest, do they create a quality corporate culture, is the company profitable, does it have a long life, is it growing, are the chances of maintaining these qualities fairly certain, is the profit stream durable, does the stock have a high earnings yield - low PE, does the company do something unique or have a moat which protects it as it grows