"The Aggressive Conservative Investor will never go out of date. Regulation, disclosure, and other things may change, but the general approach and mindset to successful investing are timeless. Read this book and you will learn the rudiments of 'safe and cheap' investing. An essential read for every amateur and professional investor."
--Stan Garstka, Deputy Dean & Professor in the Practice of Faculty & Management, Yale School of Management
"Security analysis toward both better odds and higher long-term payoff: A readable, authoritative guide."
--Professor Bill Baumol, New York University
"In reading this book, one is struck by the simplicity of the ideas and the dependence of the investor on his own understandings of reality as opposed to the myths on the street. The updated version of this 1979 classic incorporates all the modern financial engineering that has occurred as a product of the late 20th century, and the new methodologies refine your abilities to measure risk but don't change the fundamentals of value. The updated version of The Aggressive Conservative Investor is very much a value-added proposition."
--Sam Zell, Chairman, Equity Group Investment LLC
"I concur with those people who regard Marty Whitman as the 'Dean of Value Investing.' This book is a must-read for everyone interested in understanding the art of investing."
--Melvin T. Stith, Dean, Whitman School of Management, Syracuse University
This no-holds-barred presentation of one of the most successful investment strategies of all time -- value investing in distressed securities/companie -- shows you how to analyze and evaluate stocks just like controlling owners. Based on the assumption that stock price rarely reflects real value, authors Whitman and Shubik use numerous case studies to present risk-minimizing methods that also provide high rewards. Still relevant today, this classic work includes a new introduction discussing the dramatic changes that have taken place in the value investing world since its first publication in 1979.

MARTIN J. WHITMAN is Chairman and co-CIO of Third Avenue Management LLC. Mr. Whitman has taught courses in value investing and distressed investing for the past thirty years at Yale University's School of Management. He has also taught classes at Syracuse University's Whitman School of Management, which is named in his honor.

MARTIN SHUBIK, PHD, is the Seymour H. Knox Professor of Mathematical Institutional Economics at Yale University.

Foreword xiii

Preface xvii

Section one

The Approach

1 / An Overview 3

2 / The Financial-Integrity Approach to Equity Investing 17

Section Two

The Uses and Limitations of Fundamental Analysis and Technical Analysis

3 / The Significance of Market Performance 39

4 / Modern Capital Theory 52

5 / Risk and Uncertainty 66

Section Three

Disclosures and Information

6 / Following the Paper Trail 81

7 / Financial Accounting 97

8 / Generally Accepted Accounting Principles 123

Section Four

The Financial and Investment Environment

9 / Tax Shelter (TS), Other People's Money (OPM), Accounting Fudge Factor (AFF) and Something off the Top (SOTT) 145

10 / Securities Analysis and Securities Markets 160

11 / Finance and Business 176

Section Five

Tools of Securities Analysis

12 / Net Asset Values 189

13 / Earnings 209

14 / Roles of Cash Dividends in Securities Analysis and Portfolio Management 220

15 / Shareholder Distributions, Primarily from the Company Point of View 236

16 / Losses and Loss Companies 248

17 / A Short Primer on Asset-Conversion Investing: Prearbitrage and Postarbitrage 255

Section Six

Appendixes-Case Studies

Introduction to Appendixes I and II 269

I / The Use of Creative Finance to Benefit

Controlling Stockholders-Schaefer Corporation 273

II / Creative Finance Applied to a Corporate Takeover- Leasco Data Processing Company 319

III / A Guide to SEC Corporate Filings- What They Are/What They Tell You (Reprinted Courtesy of Disclosure Incorporated) 341

IV / Examples of Variables Using the Financial-Integrity Approach-Pro and Con 358

index 411