Review: The Sleuth Investor, by Avner Mandelman


The Sleuth Investor: Uncover the Best Stocks Before They Make Their Move, by Avner Mandelman. New York: McGraw-Hill, 2007. 224 pp. $24.95 (hardcover).

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Many books on investing begin with complex instructions for analyzing a stock’s fundamentals or the blips that its price makes on a screen. Avner Mandelman, however, begins The Sleuth Investor: Uncover the Best Stocks Before They Make Their Move by simply describing what a company is and is not.

A company is not its legal charter, nor its annual report, nor its corporate filings . . . nor is it a string of historical prices that can be plotted together and regressed. Rather, a company is a group of people doing work in an office or a plant, so that other people (the customers) will send them checks. A company, in short, is a check-receiving work group. If the work group does good work, the other people (the customers) will send them lots of checks, and then the stock (which is a piece of the company you can buy) will rise. If the work group does bad work (or work that is not as good or as cheap as that done by other work groups), the customers will send fewer checks, and the stock will fall. (pp. 9–10)

This essentialized view of a company sets the stage for one of the most unique books on investing ever written. Mandelman emphasizes the importance to investors of having first-hand, exclusive information about a company’s people, products, plant, and periphery. A precautionary reason to seek out such information is to avoid investment losses: “If you invest in a company without knowing anything about its own specific drama, or characters, you’ll likely end up losing money” (p. 29). A proactive reason is to invest profitably—as Mandelman has done for decades at Giraffe Capital. . . .

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