however, no one was really listening. Over the last decade, Valens’ research has found an eager audience. But it’s an audience limited to top investors and clients of the firm. With his next project – called Altimetry – the idea is bigger. As Litman puts it, “Let’s get this in the hands of Americans!” For long-term investors, choosing the right companies is key. “He’s exposing me to data about companies I never would have looked at before,” says Whitney George, president of Sprott – a global asset-management firm, and a Valens Research client. George tells me he uses Litman’s database not just to monitor companies they own but also to screen for new investments he wouldn’t otherwise notice. And with Altimetry, the extension of similar opportunities to individual investors is an appealing prospect. George – who, along with Dave Daglio, serves on a uniform accounting advisory council Litman founded – has already signed up for the new service. One unexpected upside of the new venture, he tells me, is its creative demand: Composing a colorful case study for his "There's an authenticity or an honesty and purity about how he sees the world – and the way he makes his money is obviously publishing the information and providing it, but he doesn't feel slippery."
accounting fan Dave Daglio of BNY Mellon compares Litman’s uniform accounting to Oakland A’s general manager Billy Beane’s famous Moneyball theory. “Joel’s methods ensure that liabilities, assets, or long-term investments like research and development are calculated correctly – and it provides a clear sense of what a company is doing, particularly how company is doing versus itself and versus peers,” he explains. “If you go to a baseball game and you watch a single game, you might think one hitter is particularly talented because he went three for four, but it’s the long-term numbers that matter.” Understanding how he hits curveballs, fastballs, good hitters, and bad hitters – collecting the data – lets you know which player is actually the best. Litman does the same thing with companies: It’s Moneyball. If Litman is the Billy Beane (or the Bruce Lee) of accounting, we’re all potential students of his craft. He’s now launching a new initiative that stands to greatly expand his reach: a subscription service to give independent investors access to his analysis and accounting database. It’s nothing if not a teaching tool. It’s the next step in Litman’s mission to mine the true math from the rubble of the broken accounting rules. Being an accountant, “I’m pretty conservative in nature,” Litman admits: “It wasn’t until several years into my accounting career that I first said, ‘ None of this makes any sense .’” Even so, the progression is clear. While working as a consultant, he felt he was able to make more of a difference – showing clients what the financials really meant – but he wanted to publish more widely. On Wall Street,
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September 2019
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