JOEL GREENBLATT

Joel Greenblatt grew up in Great Neck, New York, and was a finance nerd from early on. He went to Wharton for undergrad and then got his JD/MBA from Wharton as well — staying in the same place twice in a row, which tells you something about how much he liked it.

He started Gotham Capital in 1985 with a $7 million seed investment from Michael Milken (yes, that Michael Milken), which is either a great origin story or an awkward one depending on your view of junk bond history.

Gotham's results were absurd. From 1985 to 1994, the fund returned approximately 50% annualized gross returns before returning outside capital to investors.

He made himself and his partners wealthy, then essentially closed the fund to outside money because he didn't need it. He then spent the next decade teaching at Columbia Business School and writing books that made his investing approach accessible to ordinary people.

In 2009 he started Gotham Asset Management, a new vehicle that runs quantitative value strategies.

Gotham Capital, his original hedge fund from 1985, is the thing the legend is built on. 50% annualized gross returns for a decade is one of the best long-duration track records in investment history.

He returned outside capital in 1994 because managing too much money would have crushed his returns — which is a sign of someone who actually understands investing, not just fundraising.

Gotham Asset Management, launched in 2009, runs quantitative value strategies using his "Magic Formula" approach. It manages several billion dollars across multiple funds.

The track record since 2009 has been solid but not legendary — large-scale quantitative value investing is a different game than the special situations work that built his original reputation.

He is also on the board of Harlem Children''s Zone, a nonprofit he cares deeply about, and has donated tens of millions to education initiatives.

Greenblatt made his original fortune through special situations investing — spinoffs, mergers, restructurings, situations where a company goes through some event that causes normal investors to sell without fully understanding what they''re selling. His book "You Can Be a Stock Market Genius" is the definitive guide to this approach.

The core idea is that temporary confusion creates permanent mispricing.

His public-facing work is built around the "Magic Formula" — a systematic method of ranking companies by earnings yield and return on capital, then buying the cheapest, best-quality businesses and rotating the portfolio annually. He tested it on 17 years of data.

It worked. The appeal is that it removes emotion entirely: you run the formula, you buy the list, you don''t deviate.

It''s systematic value investing that any individual investor can implement with a screener and a brokerage account.

The Gotham Capital era from 1985 to 1994 is the biggest win. Approximately 50% annualized gross returns for a decade.

The exact mechanics varied — spinoffs, workouts, value situations — but the result was one of the most consistent runs of outperformance in hedge fund history. Some of his best individual trades came from spinoffs: companies that are spun off from larger parents tend to be misunderstood and mis-owned (institutional investors who didn''t want the spinoff dump the shares), creating a window to buy quality businesses at a significant discount.

That insight was the core of his original edge.

Greenblatt has been relatively quiet about specific losses, which is either admirable discipline or good PR management. The honest critique of his career is the second-act problem: Gotham Asset Management''s quantitative value approach has had meaningful periods of underperformance, particularly during the 2010s when growth stocks dominated and systematic value investing struggled badly.

From 2014 to 2020, value strategies broadly failed to deliver. He has remained committed to the approach — which is consistent with his philosophy — but it means some investors in his funds had a rough decade.

Greenblatt''s philosophy is that the market is not always right, but it''s right most of the time — and the times it''s wrong are predictable if you know where to look. Spinoffs are mis-owned.

Bankruptcy restructurings are under-analyzed. Post-merger stubs are ignored.

These are repeatable, structural mispricings, not random luck. His other core belief is that you don''t need complexity to beat the market.

The Magic Formula is simple by design. If something can''t be explained in a paragraph, he doesn''t trust it.

Greenblatt is married with five children. He lives in New York.

He has donated heavily to education, particularly through the Success Academy Charter Schools in New York City. He''s a major supporter of efforts to improve public school quality in lower-income urban neighborhoods.

He''s also involved with Harlem Children''s Zone and has given significant amounts personally — not just on the board, but with actual money. He is, by most accounts, a genuinely private person who prefers writing books to appearing on panels.

University of Pennsylvania (Wharton), BS in Economics, 1979. University of Pennsylvania (Wharton), JD/MBA, 1980.

The double Wharton is unusual. Most people do one or the other.

He did both in consecutive years, which suggests either extraordinary efficiency or an extreme affinity for Philadelphia.

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