Glenn Greenberg: the world’s greatest investors

Glen Greenberg was a value investor, although he sought out firms that looked inexpensive rather than dirt cheap.

12-12-23-Greenberg-1200

Glenn Greenberg in the 1980s

Glenn Greenberg was born in New York in 1947, the son of baseball player Hank Greenberg. After studying English at Yale and New York University, he set up Chieftain Capital Management with John Shapiro in 1984. In 2009 they split and he founded Brave Warrior Advisors, which manages nearly $3bn worth of assets.

What was his strategy?

Greenberg was a value investor, although he sought out firms that looked inexpensive rather than dirt cheap. His favourite technique was to gauge future cash flows, discounting future profits by at least 20% (rather than the more usual 10%-12%). He thought this meant that even if his predictions proved too optimistic he would still end up making money. He also believed in having a very concentrated portfolio. At least 5% of the total portfolio was allocated towards each investment, and it rarely contained more than ten different companies.

Did it work?

Chieftain started out badly, losing about a fifth of its initial capital within a few months. However, it ended its first year with a positive return. Between 1984 and 2009 the fund produced an annual return of 18%, compared with the market's 12% (though the stated figure doesn't adjust for fees so investors received less). Assets under management also increased from $43m in 1984 ($98m in 2015 money) to $3bn in 2009. Brave Warrior has been volatile, but it has returned an annual average of 16% since 2009.

What was his best investment?

During the late 1990s the market believed that cable television companies would be destroyed by competition from satellite television. However, Greenberg disagreed, pointing out that satellite TV had a number of technical drawbacks. As a result, Chieftain piled into cable firms to such an extent that they comprised around 40% of the portfolio. The bet paid off handsomely as the shares rocketed.

What can we learn from Greenberg?

Greenberg's experience shows that limiting the number of positions you take in the stocks of individual companies can help you focus your energy on a few key investments. Chieftain's success also demonstrates the importance of doing your own homework. But lack of diversification does of course have its downside: Brave Warrior Advisors was recently hit by the collapse in the stock of Valeant Pharmaceuticals, a controversial and debt-laden healthcare firm.

Recommended

Latest issue
Investments

Latest issue

Latest issue of MoneyWeek magazine
7 May 2021
Uncertain times, strong performance
Advertisement Feature

Uncertain times, strong performance

Alex Crooke, Fund Manager of The Bankers Investment Trust, looks back at the previous 12 months and casts his eye to the year ahead.
6 May 2021
FOMO versus fundamentals
Advertisement Feature

FOMO versus fundamentals

We're living in a time of great emotional, social and economic upheaval – is this driving our investment decisions?
21 Apr 2021
Reuniting investors with lost investments and inheritances
Advertisement Feature

Reuniting investors with lost investments and inheritances

What happens when you don’t keep track of all your accounts?
9 Apr 2021

Most Popular

Could you end up paying inheritance tax on your family home?
Inheritance tax

Could you end up paying inheritance tax on your family home?

The value of the average UK home has risen by 53% since April 2009, but the inheritance tax threshold has remained static. And that means more people …
7 May 2021
Big Tech on steroids: why the 2020s will be the “decade of the DAO”
Bitcoin & crypto

Big Tech on steroids: why the 2020s will be the “decade of the DAO”

Big tech companies have transformed the way we live our lives. But if you thought they were disruptive, you haven’t seen anything yet. As Dominic Fris…
6 May 2021
Why woeful US jobs data might spell higher inflation in the near future
US Economy

Why woeful US jobs data might spell higher inflation in the near future

The latest US employment figures were much worse than expected. And that matters not just for the US economy, but for global markets too – and for inf…
10 May 2021