Welcome to our compilation of readings tailored for aspiring value investors, thoughtfully assembled by the portfolio managers of IAG.

These readings underpin the bedrock of our group's investment strategy, one that follows the principles of legendary investors such as Warren Buffett, Charlie Munger, Benjamin Graham, and Joel Greenblatt.

Each volume serves as a guiding light, leading you through the intricate nuances of value investing and fostering the development of your business intuition. The books have been grouped into three categories: value investing fundamentals, technicals, and case studies.

Intelligent Investor by Benjamin Graham

Benjamin Graham, widely acclaimed as the father of value investing and a mentor to Warren Buffett, redefined investing in his time. He argued that to be recognized as an investor rather than a speculator (given the prevailing popularity of momentum investing), one had to analyze the financials of a business to determine its intrinsic value. In 1934, he co-authored Security Analysis, a comprehensive textbook-like reading on his value investment strategies. The Intelligent Investor, his follow up book, was designed to be more approachable for common investors. The book worked to demystify complicated subjects such as the implications of human psychology on equity valuation and repackaged them through the allegory of Mr. Market — symbolizing the stock market’s irrational and emotional behavior. While still a very long book, we recommend reading the revised edition which includes chapter by chapter commentary by Jason Zweig. The core of IAG’s investment philosophy is built on Graham’s principles.

The Most Important Thing by Howard Marks

Howard Marks at Oaktree has been one of the best value investors of the last three decades, and The Most Important Thing is perhaps the best entry-level book into value investing. In the book, Marks lays out the fundamental functions of the market, how investor psychology and fundamentals drive price movement in a stock, and how one can avoid the innately human pitfalls in thinking that inevitably drive market mispricings. Marks also introduced the idea of second-level thinking, which is a nuanced and multi-dimensional way of forming opinions relative to consensus thoughts, which is where the majority of exceptional returns are found. Understanding the principles he lays down in this book will serve as the table stakes for younger investors to generate alpha in the public markets, and IAG uses this as the very first required reading in our training program. 

You Can Be a Stock Market Genius by Joel Greenblatt

Joel Greenblatt’s You Can Be a Stock Market Genius focuses on specific strategies in security selection that Greenblatt uses to search for hidden value within the stock market. He focuses on a variety of special situations that can often lead to a mismatch between investor sentiment and the underlying value of the security or company.

Special Situations are rare, complicated, and take additional work, which can mean that the market glosses over important details. However, for the value investor, if proper research is conducted to form a nuanced point of view, this is a great opportunity to generate out-sized returns.  Greenblatt introduces spin-offs and provides examples on how to invest in the spin-co or the remain-co, which many other value investors have adopted. Additionally, Greenblatt discusses different methods to invest in companies that have bankruptcy risk, whether that be taking a position pre-bankruptcy or post-bankruptcy.

IAG likes to research special situations, but will never invest based on isolated events. We ensure we understand the business fundamentals and form distinctions between securities that are cheap due to fundamental reasons versus idiosyncratic reasons. When we are able to find companies that are mispriced due to idiosyncratic special situations and are able to form a fundamental view of how the business will perform in the medium-long term, we can get comfortable with purchasing the security.

Competition Demystified by Bruce Greenwald

Warren Buffett argued that “the most important thing is trying to find a business with a wide and long-lasting moat around it.” But what is a moat, otherwise known as a competitive advantage? In his book Competition Demystified, Professor Greenwald explains the various dimensions of competition that form a moat, encompassing factors such as potential market entrants, bargaining power of buyers and suppliers, substitution threats, and the prevailing competitive landscape (commonly known as the Porter's Five Forces framework). However, unlike Porter who made no diagnosis as to which of these forces was the most critical, Professor Greenwald makes a definitive argument that the barriers to entry for a given industry are the most important competitive aspect to analyze. Without barriers to entry, Greenwald argues that the industry and therefore company will be “driven down to levels where there is no economic profit.” While we at IAG may not explicitly state each of these forces in our pitches, we are constantly thinking about these forces when crafting our investment theses.

The Dark Side of Valuation by Aswath Damodaran

According to Damodaran, analysts will frequently “bend the rules of valuation and use shortcuts to justify whatever price they are predisposed to pay for a company.” The Dark Side of Valuation, a textbook, attempts to pinpoint many of these common shortcuts and explain their inherent deficiencies. What Damodaran does so masterfully through the use of charts, mathematical analyses, and examples is explicitly explain how to improve your valuation skills, particularly for companies that are hard to value such as young, growing tech companies. We do not suggest attempting to read this textbook in one go, but rather we recommend you  look to implement a few new valuation techniques from this book into each investment pitch that you do.

Warren Buffett and the Interpretation of Financial Statements by Mary Buffett

Warren Buffett, widely considered the greatest investor of all time with a value-investing approach, is known to be able to look at a company's financials and determine if they are great or not within 60 seconds. While Warren Buffett and the Interpretation of Financial Statements will not make you an expert on the topic, it does quickly and concisely take you into the thought process of Warren Buffett and get you one step closer to analyzing a company in 60 seconds. According to Buffet, “You have to understand accounting and you have to understand the nuances of accounting. It’s the language of business and it’s an imperfect language, but unless you are willing to put in the effort to learn accounting-how to read and interpret financial statements-you really shouldn’t select stocks yourself.”

Security Analysis by Benjamin Graham (net-net chapter)

Security Analysis was designed for the investment practitioner who wanted to learn how to take the concepts described in The Intelligent Investor and apply them to real-world investing. Written approximately 100 years ago though, many of the concepts in the book are either well taught in most business schools or better explained in more modern value investment books. “The one section I would highly recommend reading is Part VI: Balance Sheet Analysis and Implications of Asset values. This section helps those looking to invest in net-nets, a company whose market cap is currently below that of its net asset value, understand exactly how to value a balance sheet. Again while this style of valuation is not precise, it does provide a baseline liquidation valuation for a company. IAG used Graham’s teachings on balance sheet analysis to calculate the liquidation value of 3U, an IAG portfolio company purchased in March 2023.”  — Nithin Mantena ’25

Berkshire Hathaway Shareholder Letters by Warren Buffett

Traditional CEO communications to shareholders (shareholder letters, proxy’s, and earnings calls) often provide such vague information about the drivers and state of the business that you are left more confused about the business than when you started. Buffett, in his once per year shareholder letter, instead attempts to provide an in-depth understanding of many of the important businesses that Berkshire owns. On top of that, Buffett makes an effort to teach shareholders something new about capital allocation, financial markets, or business operations. Reading through these decades of letters takes you directly into the mind of Buffett, allowing you to see both the decisions that we call genius as well as his greatest mistakes. One of my favorite letters is the 1983 letter where Buffett shared stories about Mrs. B and Nebraska Furniture Mart and shared wisdom on “Goodwill and its Amortization: the Rules and The Realities.” Someone once said to us that reading all of Warren Buffett Berkshire’s shareholder letters was as valuable as the lessons learned in an MBA. 

Buffett Partnership Letters (1957-1970) by Warren Buffett

For those who have read The Intelligent Investor, Security Analysis, or Berkshire’s Shareholder Letters, you will likely have run into the cigarette butt investment strategy. Simply put, this strategy focuses on finding out of favor businesses who only have a few years of cash flows left. Some investors recognized that while these were not great businesses they could be great investments as the stock price of these unfavored companies was deeply out of sync with their tangible assets and potential cash flows.

The Buffett Partnership Letters take you through the investment years where Buffett heavily used this cigarette butt strategy, allowing him to generate some of the highest returns of his career. These letters are a gold mine, providing very specific case studies and investment theses for Buffett’s earliest investments.

The Big Short by Michael Lewis

Throughout The Big Short, Michael Lewis objectively explains the decisions made by various stakeholders in the housing market (individual investors, investment banks, credit agencies, and consumers) that led to the global financial crisis in 2007-2008. More interestingly, Lewis tells the stories of a handful of contrarian investors who bet that millions of homeowners would default on mortgage payments. While none of them knew exactly when the housing crash would occur or the scale of it, the beauty of their trades was that it cost so little with the potential to make so much. These highly asymmetric bets that require a differentiated viewpoint are exactly the types of investments that IAG analysts look for on a daily basis.