**
Introduction
Joel Greenblatt’s “You Can Be a Stock Market Genius” is a comprehensive guide on investment strategies, particularly focused on special situations in the stock market. Greenblatt emphasizes unconventional opportunities over traditional investment routes, supported by concrete examples and actionable advice for aspiring investors.

1. Special Situations: Finding Value Where Others Don’t

Greenblatt posits that special situations offer substantial investment opportunities that are often overlooked by the masses. These situations include spin-offs, mergers, restructurings, rights offerings, and bankruptcies.

Spin-offs
Greenblatt emphasizes that spin-offs can provide fertile ground for investment. When a parent company spins off a subsidiary, the market often misunderstands the true value of the new entity. For instance, Greenblatt highlights the 1993 spin-off of Liberty Media from Tele-Communications Inc. Investors who identified the undervalued Liberty Media were richly rewarded as it outperformed the market.

Action Point: Always investigate spin-offs as potential investments. Assess the fundamentals of both the parent company and the spin-off for hidden value.

Mergers and Acquisitions
Mergers and acquisitions (M&A) present unique investment scenarios where inefficiencies can be exploited. Greenblatt cites the example of Marion Merrell Dow’s merger with Hoescht AG, where despite initial market skepticism, informed investors saw substantial returns post-merger.

Action Point: Analyze deal terms and market reception of mergers and acquisitions to identify misunderstood opportunities.

Bankruptcies and Restructurings
Bankruptcies often spell doom in the eyes of most investors, but Greenblatt sees opportunity. He cites companies like Marvel Comics, which rose like a phoenix post-bankruptcy to deliver massive returns.

Action Point: Don’t overlook bankrupt companies. Research the restructuring plan and new management to determine if post-bankruptcy growth is possible.

2. The Importance of Research and Due Diligence

Greenblatt stresses the crucial role of thorough research and due diligence. Successful investors must look beyond surface-level information available to casual market participants.

Library and Information Resources
To exemplify, Greenblatt uses the example of Investors Library, LLC, and Value Line reports, which provide in-depth historical data and analysis crucial for evaluating investment prospects.

Action Point: Utilize specialized resources like Value Line reports and financial libraries to gather detailed historical information on potential investments.

Company Filings
The importance of company filings, especially 10-K and 10-Q reports, cannot be overstated. Greenblatt details how analyzing these filings for companies undergoing special situations can unearth valuable insights missed by the general market.

Action Point: Diligently review annual and quarterly reports for nuanced information about company operations, especially during special situations.

Expert Consultation
Greenblatt underscores consulting with experts or leveraging the expertise of analysts who specialize in specific industries or types of transactions. For example, subscribing to niche financial newsletters can provide insider views and speculation critical for making informed decisions.

Action Point: Regularly seek insights from industry experts and consider subscribing to specialized financial newsletters.

3. Diversification versus Focused Investment

Greenblatt advocates for a focused investment strategy over broad diversification. He argues that understanding and investing in a few select opportunities where you have a distinct informational or analytical advantage can yield better returns than a widespread allocation of assets.

Case Studies in Focused Investment
Drawing from his own experience, Greenblatt shares how his concentrated investments in Lorillard’s spin-off from Loews Corp. and Dun & Bradstreet’s separation into two companies generated superior returns compared to a broadly diversified portfolio.

Action Point: Identify a few promising investments based on your research and focus your capital on these selective opportunities.

4. Behavioral Aspects of Investing

Greenblatt delves into the psychological aspect of investing, asserting that understanding human behavior and market psychology can offer a competitive edge.

Market Overreactions
He explains how investor overreactions create buying opportunities. For instance, the 1995 spin-off of Chemical Banking Corporation from Manufacturers Hanover caused an initial sell-off but recaptured value as the market corrected its mistake.

Action Point: Watch for significant market reactions to news events and assess if the reaction is overblown for potential buying opportunities.

Contrarian Investing
Being a contrarian, or investing against prevailing market trends, can also bear fruit. Greenblatt references Lucent Technologies’ early days, which saw initial skepticism but performed exceedingly well as a standalone entity.

Action Point: Investigate and consider investing in companies that are currently out of favor with the market but have strong fundamentals.

5. Event-Driven Investment Strategies

Greenblatt champions event-driven strategies, which capitalize on specific corporate events that can lead to substantial stock price movements.

Restructuring Announcements
Corporate restructuring often involves significant changes that can reveal hidden value. For example, when RJR Nabisco announced restructuring plans, it opened a window for astute investors to capitalize on the anticipated value shift.

Action Point: Monitor news and announcements about corporate restructuring to evaluate potential investment prospects.

Rights Offerings and Share Buybacks
Rights offerings and share buybacks also present lucrative opportunities. Greenblatt describes the success of shareholders who capitalized on the rights offering by Illinois Tool Works, reaping significant rewards due to the underpricing of shares offered.

Action Point: Evaluate the terms and potential impact of rights offerings and share buybacks to seize undervalued purchasing opportunities.

Conclusion
Joel Greenblatt’s “You Can Be a Stock Market Genius” provides a wealth of actionable insights for making informed investment decisions through disciplined research and an understanding of market nuances. By focusing on special situations, leveraging detailed analysis, opting for concentrated investments, and considering investor behavior, Greenblatt equips readers with strategies to uncover hidden gems in the stock market.

By adhering to the outlined points and actions from Greenblatt’s playbook, investors can enhance their ability to identify and capitalize on less obvious but highly profitable investment opportunities.

This structured summary encapsulates the core themes and strategies from Joel Greenblatt’s “You Can Be a Stock Market Genius,” emphasizing practical actions for investors to implement in their own portfolios.