On Value Investing: A Conversation with Joel Greenblatt W’79 WG’80

Info about the video from YouTube:

Joel Greenblatt W’79 WG’80, Managing Partner and Co-CIO of Gotham Asset Management speaks with Howard Marks, W’67, Chairman, Oaktree Capital Management L.P.

The Howard Marks Investor Series at The Wharton School brings high-profile investors to the Philadelphia campus once per semester to share their real-world, practical investment perspectives with graduate and undergraduate Wharton students and other members of the Penn community.

Greenblatt ROC: Swedish Match, Alfa Laval, Autoliv

Calculating ROC the Greenblatt Way

Today I had a quick look at three Swedish large cap companies, and calculated return on capital and earnings yield using the formulas defined by Joel Greenblatt in the book The Little Books That Beats the Market.

See here for my earlier posts that discuss Greenblatt’s Magic Formula:

The companies looked at and calculations made for are shown in the table below. I picked these companies because they seem to earn pretty solid returns. So, the next step will be to dig a little deeper by doing some further reading. Doing this might provide potential explanations for the returns being made in each of these businesses. Does any company enjoy sustainable competitive advantage?

Swedish Match is currently, and has been also historically, dominating the Swedish Snus market. Potential sources of any sustainable competitive advantage might be made up of a combination of habit coupled with economies of scale in distribution and to some extent in advertising. Except for this, Swedish Match is heavily dependent on the current laws and regulations in Sweden. Sweden is an exception compared to the rest of the EU where the selling of snus is prohibited.

At the moment, I do not know enough about Alfa Laval and Autoliv to be able to mention any likely competitive advantages and the sustainability of them. So, further reading is needed here. Hopefully some great reads for Christmas.


Description: Swedish Match (STO:SWMA)

Swedish Match AB is a Sweden-based tobacco company. The Company’s operations are divided into three reportable segments: Snus and snuff, Other tobacco products and Lights. The Snus and snuff segment comprises smokeless tobacco products that are produced and sold primarily in Sweden, Norway and the United States. The Other tobacco products segment comprises chewing tobacco and mass market cigars manufactured and sold on the United States market. The Lights segment includes the manufacture and distribution of matches and lighters. The Company has production units located in Brazil, the Dominican Republic, the Netherlands, the Philippines, Sweden and the United States. The Company operates through subsidiaries, including the wholly owned Swedish Match North Europe AB, Swedish Match Distribution AB, Swedish Match Cigars Holding AB, Svenskt Snus AB and GC Sweden AB, among others. (Source: Google Finance)

Description: Alfa Laval (STO:ALFA)

Alfa Laval AB (Alfa Laval) is a Sweden-based company engaged in the development, manufacture and marketing of products and solutions for heat transfer, separation and fluid handling. The Company’s products are used in various industries, including production of chemicals, starch, paper, metals, sugar and ethanol. Its solutions are also used onboard vessels and in the engineering sector, mining industry and refinery sector, as well as for treating wastewater and creating a comfortable indoor climate. Alfa Laval’s operations are divided into three business divisions that serve external customers: Equipment, Process Technology and Marine & Diesel. Additionally, it operates one shared division for procurement, production and distribution. In May 2014, the Company completed the acquisition of acquisition of Frank Mohn AS, a supplier of submerged pumping systems to marine and offshore markets. (Source: Google Finance)

Description: Autoliv (STO:ALFA)

Autoliv, Inc. (Autoliv) is a holding company. Autoliv is the supplier of automotive safety systems, with a range of product offerings, including modules and components for passenger and driver-side airbags, side-impact airbag protection systems, seatbelts, steering wheels, safety electronics, whiplash protection systems and child seats, as well as night vision systems, radar and other active safety systems. Autoliv has two main operating segments: airbags/seatbelt (including restraint electronics) products and active safety electronics products. In addition, in April 2010, Autoliv Inc.’s Automotive Holding AS increased its stake in Norma AS from 51% to 93.74%. Additionally, Skandinaviska Enskilda Banken AB and ING Luxembourg SA sold their 6.67% and 10% stake, respectively, held in Norma AS. In November 2011, the Company acquired the airbag cushion cut&sew assets from Milliken. In June 2012, the Company sold its subsidiary Autoliv Mekan AB to Verktygs Allians i Hassleholm AB. (Source: Google Finance)


Disclosure: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company or individual mentioned in this article. I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. This article is informational and is in my own personal opinion. Always do your own due diligence and contact a financial professional before executing any trades or investments.