Manual of Ideas

JOHN MIHALJEVIC, CFA, serves as Managing Editor of Latticework.com and Chairman of MOI Global, which he founded in 2008. Through invitation-only events and member publications, MOI Global fosters a community of intelligent investors united by a passion for lifelong learning. From 2005-2016, John managed a private partnership, Mihaljevic Partners LP. He is a winner of the Value Investors Club’s prize for best investment idea. John is a trained capital allocator, having studied under Yale University Chief Investment Officer David Swensen and served as Research Assistant to Nobel Laureate James Tobin. John holds a BA in Economics, summa cum laude, from Yale and is a CFA charterholder. He resides near Zurich, Switzerland.

• Foreword to the First Edition ixForeword to The Manual of Ideas (Second Edition) xiPreface xvPart One MINDSETChapter 1 Identify as a Capital Allocator: Put Your Capital Where It Is Treated Best 3Passive Versus Active Investing 4Role of Capital Allocator 9Owner Mentality 17Stock Selection Framework 21Key Takeaways 23Notes 25Chapter 2 Invert, Always Invert: To Finish First, First Finish 27Following the Crowd 30If You Don’t Blow Up 37Ergodicity: Win Infinite Games 40Entropy: A Lesson from Thermodynamics 43Key Takeaways 46Notes 48Part Two IDEA GENERATIONChapter 3 Ben Graham Bargains: Deep Discounts to Readily Ascertainable Net Asset Value 51The Approach: Why It Works 52Uses and Misuses of Deep Value Investing 63Screening for Graham-Style Bargains 71Beyond Screening: Working Through a List of Deep Value Candidates 74Asking the Right Questions of Graham-Style Bargains 79Key Takeaways 84Notes 85Chapter 4 Sum of the Parts: Investing in Companies with Multiple Sources of Value 87The Approach: Why It Works 88Uses and Misuses of Investing in Companies with Overlooked Assets 91Screening for Companies with Multiple Assets 94Beyond Screening: Proven Ways of Finding Hidden Assets 100Asking the Right Questions of Companies with Hidden Assets 108Key Takeaways 111Notes 112Chapter 5 Compounders, GARP, and Greenblatt’s Magic Formula 115The Approach: Why It Works 116Uses and Misuses of Investing in Good and Cheap Companies 123Screening for Good and Cheap Companies 131Beyond Screening: Hope for Improvement Springs Eternal 135Asking the Right Questions of Greenblatt-Style Bargains 139Key Takeaways 146Notes 147Chapter 6 Jockeys: Great Managers, Owner-Operators, and “Outsiders”: Making Money Alongside Great CEOs 149The Approach: Why It Works 151Uses and Misuses of Investing in Jockeys 154Screening for Jockey Stocks 164Beyond Screening: Building a Rolodex of Great Managers 174Asking the Right Questions of Management 179Key Takeaways 185Notes 186Chapter 7 The Smart Money: Finding Opportunity in Superinvestor Portfolios 189Superinvestors Are Super for a Reason 190Uses and Misuses of Superinvestor Tracking 193Screening for Companies Owned by Superinvestors 196The Superinvestors of Buffettsville 198Beyond Screening: What Makes a Company Attractive to Superinvestors? 205Key Takeaways 209Notes 211Chapter 8 Diamonds in the Rough: The Opportunity in Underfollowed Small- and Micro-Caps 213The Approach: Why It Works 214Uses and Misuses of Investing in Small Companies 219Screening for Promising Small- and Micro-Caps 223Beyond Screening: Other Ways of Finding Compelling Small- and Micro-Cap Ideas 231Asking the Right Questions of Small-Cap Prospects 241Key Takeaways 246Notes 247Chapter 9 Special Situations: Uncovering Opportunity in Event-Driven Investments 249The Approach: Why It Works 250Uses and Misuses of Investing in Special Situations 254Uncovering Special Situations 262Asking the Right Questions of Special Situations 266Key Takeaways 271Notes 272Chapter 10 Equity Stubs: Investing (or Speculating) in Leveraged Companies 273The Approach: Why It Works 275Uses and Misuses of Investing in Equity Stubs 276Screening for Equity Stubs 285Beyond Screening: An Ambulance-Chasing Approach 288Asking the Right Questions of Equity Stubs 291Key Takeaways 298Notes 299Chapter 11 Global Investing: Searching for Value beyond Home Country Borders 301The Approach: Why It Works 303Uses and Misuses of Investing in International Equities 306Screening for International Equities 314Beyond Screening: Riding the Coattails of Regional Experts 320Asking the Right Questions of International Equities 324Key Takeaways 328Notes 329Bibliography 331About the Author 343Index 345