Value Investing — A Balanced Approach

Whitman built Third Avenue Value Fund on distressed and bankrupt securities, and this is his argument with the standard version of his own discipline. He thinks conventional value investing over-weights the income statement and the assumption of a going concern, and that a serious analyst reads the balance sheet, the credit agreements and the bankruptcy code — because much of the value in a cheap security is realised through resource conversion: restructurings, liquidations, recapitalisations, takeovers. The “balance” in the title is between the going-concern view and the liquidation view of the same company.

Why it’s on the list: Li Lu’s section on Value Investing, Finance, and Capitalism runs from Graham through Buffett and Munger, and Whitman is its awkward, useful dissent — same premise about price versus value, a materially different toolkit for getting paid. Including it makes the section a survey of the discipline rather than a single lineage.

Where I saw it: On Li Lu’s Recommended Book List, entry 34 in the value-investing section, cited as Wiley 1999 — also its first publication. Kyle saved the list as two X posts that between them photographed only this section; the full list was recovered from the source PDF.

Connections

• Li Lu’s Recommended Book List — the bibliography this came from.
• Value Investing — the discipline the book is arguing with.
• Investing — where distressed and resource-conversion strategies sit.