Just over a month ago I reviewed Martin Whitman’s, “Value Investing: A Balanced Approach” (my review), which was published in 1999. I found that his approach to value investing sounds exactly the same today as it did then. In fact, it sounds nearly identical to, The Aggressive Conservative Investor, which he coauthored with professor Martin Shubik in 1979. While Whitman’s name may not be invoked like Graham’s and his name doesn’t command headlines like Buffett’s, he belongs alongside them at the top of the batting order. Whitman — unlike Graham who maintained a broad portfolio of securities and was increasingly formulaic, to the point that very late in his career he even suggested most (analysts and individuals alike) would be best off indexing — is an intensely focused investor (resembling much more the young Graham) with a solid understanding and appreciation of capital structure and the numerous ways to realize gains beside hoping for a higher stock price (many of which by what he calls resource-conversion, or asset-conversion, activities).
His unwavering approach spans at least three decades and includes the aforementioned emphasis on resource-conversion, and his shrewd analysis of balance sheets, not succumbing to the widespread (and often contradictory) “primacy of the income statement.” I find reading Whitman pleasurable and think that his work may be the most timeless of any value practitioner. I would recommend reading Aggressive Conservative first. The 2005 edition, pictured (and hyperlinked above) is a 2005 update to the original — I read the original 1979 edition. In neither does he spoon-feed readers exactly how he operates with real examples, but you do get some good glimpses and a full dose of Whitman’s thinking. More than worth your time. Reviews are not so great for his Value Investing, which is understandable if you’re looking to be spoon-fed or for short cuts. The cliff notes and required reading for Value Investing is Aggressive Conservative. Whitman is almost zen-like. He’s certainly a master at value investing.