About this project
FINAL EPISODE (5/28): A crucial source for Schiller’s relationships with the 1940s New York Institute of Finance hub of analysts? The NYIF archives were destroyed in 9/11. Presumably, there would have been class lists, articles, announcements – something to connect Schiller with, for example, Max Heine, who started the first open end mutual fund (the kind we know today), and later employed value luminaries Michael Price and Seth Klarman. A call to Klarman’s office (I was shaking lol) came back with “never heard of him” (Schiller).
All we know is that Schiller was obsessively private, obsessed with avoiding with risk, and an obsessive researcher of trade records and filings to support his expansion of special situations. While comfortable, he was the only one of his circle not to become wealthy, finishing out his career in Santa Barbara as a Registered Investment Advisor. Until we know more than that Joel Greenblatt holds one of the books up in his Columbia Business School investing class, this is all we know. Please help with any info, no matter how little. firstname.lastname@example.org Hans Jacobson, Gus Levy, Harold Meyer, Cy Lewis, etc. Any former clients or children of clients. Any straw.
Ep. 6: (5/25): Why Schiller Matters: Graham notes in 1946 that speculation has replaced the technical exercise of special situations, yet "perhaps enough interest remains...to warrant an article..."
All the while, Schiller was toiling quietly and alone, building data and expanding special situations, so that when he wrote these words in 1955, they were undeniably true:
"There is no other publication extant that contains the material found in this book. Nor is there any group of books that can give the reader the instructional information contained herein. This is the only publication containing the information regarding “how to buy and sell” to make profits in investments requiring technical knowledge." [where "technical knowledge" = analysis required for special situations - note Graham's "technical branch" above."]
Until 1997, this was true.
Ep. 5 (5/25): Why Schiller Matters: Ben Graham wrote: "The exploitation of special situations is a technical branch of investment which requires a somewhat unusual mentality and equipment. Probably only a small percentage of our enterprising investors are likely to engage in it, and this book is not the appropriate medium for expounding its complications."
In 1946: "The period 1939-1942 was a heyday for operators in special situations and undervalued securities. During these years the trend was unfavorable to those owning standard issues, and the brokerage business was on the quiet side. By contrast, many bargain industrial stocks scored substantial advances—especially since the early war years brought proportionately greater business improvement to the secondary companies than to the leaders. In addition, quite a number of railroad and utility reorganizations were taking shape, and developing good profits for those who had bought their issues at unpopular times and consequently at basement prices.
By 1942 many in Wall Street had come to believe that the only real and dependable income was to be made in special situations. As usually happens, this generalization proved wide of the mark. In the ensuing four years there have been good profits in almost everything, and the spectacular returns have lately been shown in essentially speculative, as distinct from “special,” operations. But perhaps enough interest remains in the latter type of activity to warrant an article on the subject." (emphasis added)
Especially when Maurece Schiller was expanding special situations far beyond what Graham knew.
(Scroll down for episodes 1-4)
"Since special situations were in a sense created by myself, they were my life’s work and I knew all about them, I decided to write about them." - Maurece Schiller, 1959
Hit our goal (thank you backers!), what to we do with the extra? Why are we having a stretch goal of $20,000?
ADDITIONAL BACKING BEYOND GOAL ALLOWS:
--->PRODUCTION OF AUDIOBOOKS FOR TWO OF SCHILLER'S MASTERWORKS.
--->FUNDS TO VERIFY AND EXPAND ON NEW RESEARCH FOR BOOKS' BIO SECTION! (info came out of the blue from a backer)
--->NEW REWARD TO ALL CURRENT AND FUTURE BACKERS IF WE HIT THE GOAL.
HELP US GET THERE!*****
*****BREAKING NEWS: BACKER COMES FORWARD WITH RESEARCH SHOWING DIRECT CONNECTION FROM SCHILLER to...yes...Max Heine, Michael Price, and Seth Klarman. Support the project and be listed for all time in one or more of the books!
The Untold Story of the Value Investing/Special Situations Family Tree (in 10 daily parts, ending when the campaign ends, May 29).
Episode 4 (5/22): Hilary Rosenberg's The Vulture Investors covers the 1940s development of bankruptcy and distressed debt special situations, including Jacobson, Meyer, Heine (starts first open end fund, Mutual Shares, later hires Michael Price and Seth Klarman), Gus Levy, and Cy Lewis (ran Bear Stearns 1949-1978), but Schiller is mysteriously absent. He is the quiet bookish force who somehow doesn't promote himself but also branches out beyond the arbitrage/deb/bankruptcy special situations into new territory. By 1955 he has the data to present the parts of the field he has invented, as well as to codify the entire field for the first time. But where is the link between him and the New York Institute of Finance group, when we know he and Lewis tutored Gus Levy? And why no record of pickup of the books until Greenblatt in the late 1980s?
Episode 3 (5/21): In 1920, 19 year-old Maurece Schiller leaves Dartmouth to start as a Wall Street runner, who takes orders from the customers to the firm's floor broker on the exchange. The same year, Ben Graham is made partner at Newburger Henderson Loeb (NL). Graham departs in 1923 to manage money, takes an office downstairs in same building. Schiller joins NL in early 1930s as a “customer’s man, ” firm rep who works with the customers who buy and sell stocks in the ticker tape room. Their trading provides customers' men commissions and income - and the same inherent conflict addressed recently (80-90 years later and only in part) by new regulations.
From 1920 and for the rest of his life – notably in his few books and an unpublished 1959 paper - Schiller notes lack of ethics everywhere, customer be damned. He greets the SEC with great expectations. An academic mind, he rises to be NL Director of Research where he can back up the customer’s men with better recommendations. Builds data files on special situations.
Episode 2 (5/19): Before the 1940s hub at the New York Institute of Finance (Ep. 1, below), analysts in the 1930s at Newburger Loeb and Bear Stearns were brewing the first special situations, catalyzed (!) by the Public Utility Holding Company Act of 1935 and railroad reorganizations. Arbitrage/hedging were not considered gentlemanly, but the pioneers grabbed the opportunities.
Episode 1 (5/18): The untold story's nucleus is the NY Institute of Finance in the 1940s. Ben Graham taught at night there as well as Columbia during the day. The working professionals could only take night classes. One way or another, Maurece Schiller, Gus Levy, Cy Lewis, Harold Meyer, Hans Jacobson, and Max Heine all connected through or around the NY Institute and BG. All were special situations pioneers, yet only Heine is known today and within a small circle. This project will republish Schiller's works and situation him in the family tree, before and then from Heine to Michael Price and Seth Klarman, and eventually to Greenblatt.
Bombshell: In the 1940s, 50 years before Joel Greenblatt published his influential book on special situations, Maurece Schiller invented the field. This contribution has never been recognized, and not one biographical detail about this quiet modest man was known. Until now.
Rising through the Great Depression to become Director of Research at Newburger & Loeb, he pored over mountains of paper trade records and discovered a special way to take risk out of stock investing. Here's his contribution:
Life is full of speculation and uncontrollable variables: People and relationships evolve and change, politicians forget commitments, neighborhoods and cities gentrify or decline, and corporate CEOs make emotional decisions. In the world of financial analysis and wealth management, Wall Street’s stock market has traditionally been seen as the most speculative form of investment. Not so for those who understand the opportunities to be gleaned by the measured analysis of Special Situations investing.
Special Situations stocks are the happy hunting ground for those who prefer to deal with the future in terms of specific, measurable developments rather than general anticipations. Instead of speculating, they seek to maximize profits while minimizing risk. The work achieved during several decades beginning in the 1940’s by one little-known Wall Street analyst named Maurece Schiller represents the richest core of value-with-catalyst investing research of our time.
Schiller’s collection of five volumes on Special Situations investing, published between 1955 and 1966, represents the missing link between Graham’s Security Analysis and the Intelligent Investor of the late 40’s, and Greenblatt’s 1997 release of You Can Be a Stock Market Genius. Schiller’s five books on the subject of Special Situations stock-market investing can only be called the Rosetta Stone of investment-opportunity analysis for those seeking to maximize profits in the stock market while minimizing risk.
Having licensed the copyrights for his long out-of-print books** and received exclusive authorization from Maurece Schiller’s estate, I'm ready to reintroduce Schiller’s groundbreaking research to the world. The republications of his seminal works will be akin to the discovery of the Dead Sea Scrolls when Schiller's books are made available as a complete set of reference manuals generously supported by you. This Kickstarter campaign is an invitation to attach your name to Maurece Schiller’s complete life's work - memorialized for all time in their pages - which will be a bombshell event.
**Until recently. only the 1961 book was available and from a print on demand publisher reprinting in the original typescript (yup, single spaced, typewritten, unedited, etc.). In March, before this campaign started, and without my knowing, another print on demand house published 1961 and 1959 (super guy, spoke with him on the phone). We intend to make the two copyrighted and three public domain works true value/special situations contributions, with bio, case studies, commentary, and beautiful design. Also, POD houses do not market (they literally publish tens of thousands of works). The goal is to spread the word. These will.
Risks and challenges
The biggest logistical challenges have already been met: to track down the living family, obtain their support and help, exclusively license the copyrights, and receive exclusive authorization for their father's work. No other outside approvals or reviews are required. After two years of time and $$$, I need help to get to the finish line - the costs for interior design, cover design, copyediting and more. We need your support to put everyone to work! And with all the experience I and we have had in publishing (my own two books and work on many more by the production team), I know that everything takes longer than expected. So we've built in extra time in setting the deadline for the publication of the last and fifth book at Dec. 2017, beginning with the first one in a few months.Learn about accountability on Kickstarter
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