Best Things in Life Are Free To These Value Investors

6/4/2001

Savvy value investors like Mario Gabelli and Warren Buffett have been known to host private get-togethers where they swap stock picks and generate new ideas.

Now value investors can host such get-togethers on the Internet: the Value Investors Club, a Website where smart investors "audition" to share their best value-stock ideas. Even better: If and when you get in, Value Investors Club is free. Value Investors Club (www.valueinvestorsclub.com) is no ordinary message board, but a discussion group where students of Graham & Dodd or followers of investment-guru Buffett swap and critique each other's investment ideas.

The site, a year old last Friday, is run by two investment professionals but is peopled with many non-professional investors as well -- engineers, and even a meteorologist -- who bring extraordinary ideas to the site. The site's founders are former hedge-fund managers Joel Greenblatt and John Petry of Gotham Capital. Under founder Greenblatt, Gotham ran up annual average gains of 50% -- over nearly 10 years, ending in 1994. Since then, Gotham has run money focusing on a few cheap value stocks or special situations -- companies operating amid a restructuring or a spinoff.

"This is the right kind of market for a renaissance of value investing," says Greenblatt. "A lot of the ideas our members posted have worked. We have a lot of happy campers." He points to Alliance Gaming, written up on the site by a member when it was trading at $2.50 a share; it now trades around $28. Another member made a compelling case for Westmoreland Coal, now at $18, when the stock was at $4.75 in September. Abercrombie & Fitch was written up last year around $12; the retailer has since rocketed to $40. Last week's top-ranked pick was Atlantic Realty Trust.

The club boasts about 175 members, although Gotham aims to close it to the public once 250 members are admitted. Each member must submit a minimum of two ideas and a maximum of six ideas a year. "The admittance fee is an intelligent and well-thought-out argument," Greenblatt says.