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Questions and Answers with Prof. Bruce Greenwald

January 26, 2011
10qk

gurufocus

346 followers
GuruFocus users can now ask questions to Prof. Bruce Greenwald, the so-called “Gurus of Wall Street Gurus”.

On February 8th, De La Salle academy will host a conversation between Michael Fascitelli, the CEO of Vornado Realty Trust, and Bruce Greenwald, Professor of Finance and Asset Management at Columbia Business School. The two will be discussing the current state of the economy and their outlook for economic growth in the U.S.

The talk is being hosted as a benefit for the De La Salle Academy, (http://www.delasalleacademy.com) the only private, independent school in New York City for academically talented, economically disadvantaged students, providing needs-based scholarships for nearly all students. Prof. Bruce Greenwald and his wife Ava have a long-standing relationship with De La Salle academy, as does Michael.

Before this event, Prof. Bruce Greenwald is kind enough to take some questions from GuruFocus users. If you have questions, please ask below.

Bruce Greenwald is the Robert Heilbrunn Professor of Finance and Asset Management at the Columbia Business School and academic director of the Heilbrunn Center for Graham & Dodd Investing. He is considered an authority on value investing with additional expertise in productivity and the economics of information.

You can purchase the ticket here.

Our columnist CanadianValue had an article on Prof. Greenwald regarding to his comment on Berkshire’s purchase of Burlington Northern. Maybe this is a good occasion to ask him. Please post your questions below.

About the author:

gurufocus
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 3.1/5 (24 votes)

Comments

texasmama
Texasmama - 3 years ago
Is there anything that you would disagree with Marty Whitman on regarding his critique of your book,

Value Investing: From Graham to Buffett and Beyond?
halis
Halis - 3 years ago
I think Martin was just hurt that he wasn't mentioned in Bruce's book as one of the great ones.
batbeer2
Batbeer2 premium member - 3 years ago
Professor Greenwald,

As a teacher, you will have watched some promising students fail to reach their full potential.

What (if any) mistakes did they make ?

Thank you for taking these questions.
CanadianValue
CanadianValue - 3 years ago


Bruce,

Do you have an investment track record of your own ? Your entire life is dedicated to value investing so it would be interesting to know how that transfers into investment decisions.

http://valueinvestorcanada.blogspot.com/
yswolinsky
Yswolinsky - 3 years ago
Could you comment now your thoughts on the Berkshire Acquisition of BNI? Is the profitability due to the rapid rise in oil prices that perhaps you did not foresee, do you see this as being temporary, or do you think you erred with your calculations?
h_bodduna
H_bodduna - 3 years ago


Mr.Greenwald,

I am a big fan of yours. I wish i could take a value investing class with you.

My question is in regards to your lecture about buying stocks that are Ugly,Cheap and Out of favor.

A stock may look ugly and cheap based on P/BV ratio but when you look at debt ratios it is highly levered and interest coverage ratio is not good either.

If a company's earnings yield(even after adjustments) is less that required return on equity, a company islosing money for shareholders and companie's stock should be cheap,and out of favor on absolute price basis in the short term.

I mean a company losing shareholder wealth means it is not a well run company. Why bother investing in the ugly, cheap and money losing companie's stock.

I would appreciate your thoughts.

Thank you.

Hari
vaneetchadha
Vaneetchadha - 3 years ago


Professor, I am reading your Value Investing book these days. I wonder why did you use fictious companies to make your case. Was there a dearth of real companies which you could have used in your analysis or you just did not want to make some stocks popular/unpopular based on your analysis ?

Thanks
richcourt1
Richcourt1 - 3 years ago


Mr. Greenwald,

I recently got involved in a discussion surrounding the use of forecasting (and the inherent folly) in determining the value of a business using forecasts. My view is that there is a difference between arriving at the Earnings Power Value (EPV) of a business versus having a view on what the earnings of the business will be 1 or 2 years into the future. The argument is that a value investor can not claim that they stay clear of forecasting as in calculating an EPV one is in essence capitalising future adjusted earnings back the present using an applicable hurdle rate.

My understanding is that this is fundamentally different to analysts or investment houses that attempt to predict earnings in the near future. In determining the EPV, one is arriving at their best estimate of what the business should be earning under normal operating conditions, or through the cycle, given the fundamentals of the business. This adjusted earnings eliminates any head- or tailwinds and a multiple is placed on it to arrive at the EPV. This multiple reflects my required return on the investment.

I was hoping that you would be able to add some value to this discussion and provide us with your thoughts on the use of forecasts in determining the value of a business.

Many Thanks!

Please leave your comment:


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