Robin Greenwood
George Gund Professor of Finance and Banking
Robin Greenwood is the George Gund Professor of Finance and Banking. He has been at HBS since 2003. His research investigates the effects of investor demand on asset prices and risk, with a special emphasis on debt markets. Professor Greenwood received a Ph.D. from Harvard in Economics, and B.S. degrees in Economics and Mathematics at MIT. He has taught in both years of the MBA finance curriculum and various Executive Education Programs, and is the chair of the Finance for Senior Executives Program. Since Spring 2009, he has been teaching Behavioral and Value Investing, a second year elective. He is a Faculty Research Associate at the National Bureau of Economic Research and an associate editor at the Review of Financial Studies.
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Working Paper
| 2013
Waves in Ship Prices and Investment
Samuel G. Hanson and Robin Greenwood
We study the returns to owning dry bulk cargo ships. Ship earnings exhibit a high degree of mean reversion, driven by industry participants' competitive investment responses to increases in demand. This mean reversion is not fully reflected in ship prices. We show that high current ship earnings are associated with high secondhand ship prices and heightened industry investment, but forecast low future returns. We suggest and estimate a behavioral model that can account for the evidence. In our model, individual firms overestimate their ability to respond to common shocks and underestimate the ability of the competition, leading to excessive industry investment during booms and low subsequent returns on capital. Our model nests both rational expectations at one extreme and Kaldor's (1938) cobweb theory at the other, in which producers naively set current production quantities based on lagged prices. Formal estimation of our model suggests significant competition neglect in the shipping industry.
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Working Paper
| 2013
Expectations of Returns and Expected Returns
Robin Greenwood and Andrei Shleifer
We analyze time-series of investor expectations of future stock market returns from five data sources between 1963 and 2011. All five measures of expectations are highly positively correlated with each other, as well as with past stock returns and with the level of the stock market. However, investor expectations are strongly negatively correlated with model-based expected returns. We reconcile the evidence by calibrating a simple behavioral model, in which fundamental traders require a premium to accommodate expectations shocks from extrapolative traders, but markets are not efficient.
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Mimeo
| 2012
A Comparative-Advantage Approach to Government Debt Maturity
Robin Greenwood, Samuel G. Hanson and Jeremy C. Stein
We study optimal government debt maturity in a model where investors derive monetary services from holding riskless short-term securities. In a simple setting where the government is the only issuer of such riskless paper, it trades off the monetary premium associated with short-term debt against the refinancing risk implied by the need to roll over its debt more often. We then extend the model to allow private financial intermediaries to compete with the government in the provision of money-like claims. We argue that if there are negative externalities associated with private money creation, the government should tilt its issuance more towards short maturities. The idea is that the government may have a comparative advantage relative to the private sector in bearing refinancing risk, and hence should aim to partially crowd out the private sector's use of short-term debt.
Keywords: Private Sector;
Public Sector;
Borrowing and Debt;
Investment;
Risk Management;
Competition;
Financial Services Industry;
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Other Unpublished Work
| 2011
Vulnerable Banks
Robin Greenwood, Augustin Landier and David Thesmar
When a bank experiences a negative shock to its equity, one way to return to target leverage is to sell assets. If asset sales occur at depressed prices, then one bank's sales may impact other banks with common exposures, resulting in contagion. We propose a simple framework that accounts for how this effect adds up across the banking sector. Our framework explains how the distribution of bank leverage and risk exposures contributes to a form of systemic risk. We compute bank exposures to system-wide deleveraging, as well as the spillover of a single bank's deleveraging onto other banks. We show how our model can be used to evaluate a variety of crisis interventions, such as mergers of good and bad banks and equity injections. We apply the framework to European banks vulnerable to sovereign risk in 2010 and 2011.
Keywords: Capital;
Equity;
Insolvency and Bankruptcy;
Policy;
Risk Management;
Mathematical Methods;
Banking Industry;
Europe;
United States;
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Working Paper
| 2008
Bond Supply and Excess Bond Returns
Robin Greenwood and Dimitri Vayanos
We examine empirically how the maturity structure of government debt affects bond yields and excess returns. Our analysis is based on a theoretical model of preferred habitat in which clienteles with strong preferences for specific maturities trade with arbitrageurs. Consistent with the model, we find that (i) the supply of long- relative to short-term bonds is positively related to the term spread, (ii) supply predicts positively long-term bonds' excess returns even after controlling for the term spread and the Cochrane-Piazzesi factor, (iii) the effects of supply are stronger for longer maturities, and (iv) following periods when arbitrageurs have lost money, both supply and the term spread are stronger predictors of excess returns.
Keywords: Government and Politics;
Borrowing and Debt;
Bonds;
Investment Return;
Mathematical Methods;
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Article
| Review of Financial Studies
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Issuer Quality and Corporate Bond Returns
Robin Greenwood and Samuel G. Hanson
We show that the credit quality of corporate debt issuers deteriorates during credit booms, and that this deterioration forecasts low excess returns to corporate bondholders. The key insight is that changes in the pricing of credit risk disproportionately affect the financing costs faced by low quality firms, so the debt issuance of low quality firms is particularly useful for forecasting bond returns. We show that a significant decline in issuer quality is a more reliable signal of credit market overheating than rapid aggregate credit growth. We use these findings to investigate the forces driving time-variation in expected corporate bond returns.
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Article
| Journal of Finance
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Share Issuance and Factor Timing
Robin Greenwood and Samuel G. Hanson
We show that characteristics of stock issuers can be used to forecast important common factors in stocks' returns such as those associated with book-to-market, size, and industry. Specifically, we use differences between the attributes of stock issuers and repurchasers to forecast characteristic-related factor returns. For example, we show that large firms underperform following years when issuing firms are large relative to repurchasing firms. While our strongest results are for portfolios based on book-to-market, size (i.e., we forecast the HML and SMB factors), and industry, our approach is also useful for forecasting factor returns associated with distress, payout policy, and profitability.
Keywords: Investment Portfolio;
Stock Shares;
Forecasting and Prediction;
Investment Return;
Policy;
Profit;
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Article
| Financial Management
| Forthcoming
Agency Costs, Mispricing, and Ownership Structure
Robin Greenwood, C. Fritz Foley and Sergey Chernenko
Standard theories of corporate ownership assume that because markets are efficient, insiders ultimately bear all agency costs that they create and therefore have a strong incentive to minimize conflicts of interest with outside investors. We argue that if equity is overvalued, however, mispricing offsets agency costs and can induce a controlling shareholder to list equity. Higher valuations may support listings associated with greater agency costs. We test the predictions that follow from this idea on a sample of publicly listed subsidiaries in Japan. Subsidiaries in which the parent sells a larger stake and subsidiaries with greater scope for expropriation by the parent firm are more overpriced at listing, and minority shareholders fare poorly after listing as mispricing corrects. Parent firms often repurchase subsidiaries at large discounts to valuations at the time of listing and experience positive abnormal returns when repurchases are announced.
Keywords: Business and Shareholder Relations;
Ownership;
Conflict of Interests;
Investment;
Valuation;
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Article
| Journal of Financial Economics
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Stock Price Fragility
Robin Greenwood and David Thesmar
We investigate the relationship between ownership structure of financial assets and non-fundamental risk. We define an asset to be fragile if it is susceptible to non-fundamental trading shocks. An asset can be fragile because of concentrated ownership or because its owners face correlated liquidity shocks, i.e., they must buy or sell at the same time. Two assets are co-fragile if their owners have correlated trading needs, even if the holdings of these owners do not directly overlap. We formalize this idea and apply it to the ownership of U.S. stocks between 1990 and 2007. Consistent with our predictions, fragility strongly predicts future price volatility, and co-fragility predicts cross-stock return comovement.
Keywords: Stocks;
Price;
Ownership;
Risk and Uncertainty;
Assets;
System Shocks;
Financial Liquidity;
Forecasting and Prediction;
Investment Return;
Volatility;
Relationships;
United States;
Citation: Greenwood, Robin, and David Thesmar. " Stock Price Fragility." Journal of Financial Economics 102, no. 3 (December 2011).
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Article
| Journal of Finance
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A Gap-Filling Theory of Corporate Debt Maturity Choice
Robin Greenwood, Samuel G. Hanson and Jeremy C. Stein
We argue that time-series variation in the maturity of aggregate corporate debt issues arises because firms behave as macro liquidity providers, absorbing the large supply shocks associated with changes in the maturity structure of government debt. We document that when the government funds itself with relatively more short-term debt, firms fill the resulting gap by issuing more long-term debt, and vice-versa. This type of liquidity provision is undertaken more aggressively: i) in periods when the ratio of government debt to total debt is higher; and ii) by firms with stronger balance sheets. Our theory provides a new perspective on the apparent ability of firms to exploit bond-market return predictability with their financing choices.
Keywords: Business Ventures;
Decision Choices and Conditions;
Borrowing and Debt;
Financial Liquidity;
Investment Return;
Government and Politics;
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Article
| American Economic Review: Papers and Proceedings
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Price Pressure in the Government Bond Market
Robin Greenwood and Dimitri Vayanos
Keywords: Price;
Government and Politics;
Bonds;
Markets;
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Journal Article
| Review of Financial Studies
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The Evolution of Corporate Ownership after IPO: The Impact of Investor Protection
C. Fritz Foley and Robin Greenwood
We use firm-level data from 34 countries covering the 1995-2006 period to analyze how the characteristics of public markets shape the process by which firms become widely held. Firms in all countries in the sample tend to have concentrated ownership at the time they go public. Decreases in ownership concentration are more likely for firms in countries with stronger protections for minority shareholders, lower block premia, and more liquid stock markets. In these countries, firms are more likely to issue equity when investment opportunities are high, becoming widely held in the process. We find scant evidence, however, that changes in percentage blockholding forecast future returns, inconsistent with market timing theories. Our results suggest that liquidity-based theories of corporate ownership may have been underemphasized in previous cross-country studies.
Keywords: Financial Liquidity;
Business History;
Market Timing;
Going Public;
Business and Government Relations;
Business and Shareholder Relations;
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Journal Article
| Journal of Finance
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Catering Through Nominal Share Prices
Malcolm Baker, Robin Greenwood and Jeffrey Wurgler
We propose and test a catering theory of nominal stock prices. The theory predicts that when investors place higher valuation on low-price firms, managers will maintain share prices at lower levels, and vice-versa. Using measures of time-varying catering incentives based on valuation ratios, split announcement effects, and future returns, we find empirical support for the predictions in both time-series and firm-level data. Given the strong cross-sectional relationship between capitalization and nominal share price, an interpretation of the results is that managers may be trying to categorize their firms as small firms when investors favor small firms.
Keywords: Stocks;
Stock Shares;
Investment;
Investment Return;
Price;
Theory;
Valuation;
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Article
| Journal of Financial Economics
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Inexperienced Investors and Bubbles
Robin Greenwood and Stefan Nagel
We use mutual fund manager data from the technology bubble to examine the hypothesis that inexperienced investors play a role in the formation of asset price bubbles. Using age as a proxy for managers' investment experience, we find that around the peak of the technology bubble, mutual funds run by younger managers are more heavily invested in technology stocks, relative to their style benchmarks, than their older colleagues. Furthermore, young managers, but not old managers, exhibit trend-chasing behavior in their technology stock investments. As a result, young managers increase their technology holdings during the run-up, and decrease them during the downturn. Both results are in line with the behavior of inexperienced investors in experimental asset markets. The economic significance of young managers' actions is amplified by large inflows into their funds prior to the peak in technology stock prices. Keywords: Investment Funds;
Behavioral Finance;
Price Bubble;
Technology;
Managerial Roles;
Stocks;
Citation: Greenwood, Robin, and Stefan Nagel. " Inexperienced Investors and Bubbles." Journal of Financial Economics 93, no. 2 (August 2009): 239–258. (formerly NBER Working Paper No. 14111, June 2008.)
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Article
| Review of Financial Studies
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Trading Restrictions and Stock Prices
Robin Greenwood
Firms can manipulate their stock price by limiting the ability of their investors to sell. I examine a series of corporate events in Japan in which firms actively reduced their float—the fraction of shares available to trade—for periods of one to three months, locking investors into their long positions. Standard theory predicts that the greater are the restrictions, the greater is the impact of trading on price. Particularly severe restrictions are associated with positive event returns of over 30 percent, most of which are reversed when the restrictions are removed. Firms are more likely to issue equity or redeem convertible debt during the restricted period, suggesting strong incentives for manipulation.
Keywords: Equity;
Stock Shares;
Investment;
Investment Return;
Price;
Market Transactions;
Japan;
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Journal Article
| Journal of Financial Economics
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Investor Activism and Takeovers
Robin Greenwood and Michael Schor
Recent work documents large positive abnormal returns around the time that a hedge fund announces its activist intentions with a publicly listed firm. We show that these returns are largely explained by the ability of activists to force target firms into a takeover: In a comprehensive sample of 13D filings by portfolio investors between 1993 and 2006, we find that announcement returns and long-term abnormal returns are high for the subset of targets that are acquired ex-post, but not detectably different from zero for firms that remain independent eighteen months after the initial filing. We show that firms that are targeted by activists are more likely to get acquired than those in a control sample. Finally, we show that the portfolios managed by activist investors perform poorly during a period in which market-wide takeover interest declined.
Keywords: Mergers and Acquisitions;
Private Equity;
Investment Return;
Investment Activism;
Investment Portfolio;
Public Ownership;
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Article
| Review of Financial Studies
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Excess Comovement of Stock Returns: Evidence from Cross-sectional Variation in Nikkei 225 Weights
Robin Greenwood
In the presence of limits to arbitrage, cross-sectional variation in periodic investor demand should be related to the degree of comovement of returns. I exploit the unusual weighting system of the Nikkei 225 index in Japan to identify cross-sectional variation in periodic demand for index stocks. Relative to their weights in a value weighted index, some stocks in the Nikkei are overweighted by a factor of ten or more. Using overweighting as an instrument for the proportionality between demand shocks for index stocks, I find a strong positive relation between overweighting and the comovement of a stock with other stocks in the index, and a negative relationship between index overweighting and comovement with stocks outside of the index. Put simply, overweighted stocks have high betas. The results suggest that excess comovement of stock returns is a consequence of an institutionalized commonality in trading behavior, rather than inefficiencies related to the speed at which index stocks incorporate economy-wide information.
Keywords: Stocks;
Investment;
Investment Return;
Market Transactions;
Weight;
Performance Expectations;
Behavior;
Japan;
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Article
| Financial Analysts Journal
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Trading Patterns and Excess Comovement of Stock Returns
Robin Greenwood and Nathan Sosner
n April 2000, 30 stocks were replaced in the Nikkei 225 Index. The unusually broad index redefinition allowed for a study of the effects of index-linked trading on the excess comovement of stock returns. A large increase occurred in the correlation of trading volume of stocks added to the index with the volume of stocks that remained in the index, and opposite results occurred for the deletions. Daily index return betas of the additions rose by an average of 0.45; index return betas of the deleted stocks fell by an average of 0.63. Theoretical predictions for changes in autocorrelations and cross-serial correlations of returns of index additions and deletions were confirmed. The results are consistent with the idea that trading patterns are associated with short-run excess comovement of stock returns.
Keywords: Stocks;
Investment Return;
Market Transactions;
Volume;
Mathematical Methods;
Japan;
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Article
| Journal of Financial Economics
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Short- and Long-term Demand Curves for Stocks: Theory and Evidence on the Dynamics of Arbitrage
Robin Greenwood
I develop a framework to analyze demand curves for multiple risky securities at extended horizons in a setting with limits-to-arbitrage. Following an unexpected change in uninformed investor demand for several assets, I predict returns of each security to be proportional to the contribution of that security's demand shock to the risk of a diversified arbitrage portfolio. I show that securities that are not affected by demand shocks but are correlated with securities undergoing changes in demand should experience returns related to their hedging role in arbitrageur's portfolios. Finally, I predict a negative cross-sectional relation between post-event returns and the initial return associated with the change in demand. I confirm these predictions using data from a unique redefinition of the Nikkei 225 index in Japan, in which 255 stocks simultaneously undergo significant changes in index investor demand, causing more than ¥2,000 billion of trading in one week and large price changes followed by subsequent reversals for all of the reweighted stocks.
Keywords: Framework;
Demand and Consumers;
Change;
Risk and Uncertainty;
Debt Securities;
Forecasting and Prediction;
Stocks;
Assets;
Investment Portfolio;
System Shocks;
Price;
Japan;
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Article
| Journal of Financial Economics
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The Maturity of Debt Issues and Predictable Variation in Bond Returns
Malcolm Baker, Robin Greenwood and Jeffrey Wurgler
The maturity of new debt issues predicts excess bond returns. When the share of long-term debt issues in total debt issues is high, future excess bond returns are low. This predictive power comes in two parts. First, inflation, the real short-term rate, and the term spread predict excess bond returns. Second, these same variables explain the long-term share, and together account for much of its own ability to predict excess bond returns. The results are consistent with survey evidence that firms use debt market conditions in an effort to determine the lowest-cost maturity at which to borrow.
Keywords: Borrowing and Debt;
Bonds;
Investment Return;
Financial Markets;
Forecasting and Prediction;
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Article
| Harvard Business Review
|
How to Make Finance Work
Robin Greenwood and David S. Scharfstein
Once a sleepy old boys' club, the U.S. financial sector is now a dynamic and growing business that attracts the best and the brightest. It is tempting to declare the industry a roaring success. But its purpose is to serve the needs of U.S. households and firms, and by this standard its performance has been mixed. The sector's growth has been beneficial for U.S. corporations, which enjoy ready access to the deepest capital markets in the world. Venture capital, for example, and the public equity markets that support it, has channeled money to innovative ideas that have transformed industries and generated new ones. The rest of the economy, however, has not been well served by the financial sector's boom. First, the shift from deposit-based banking to a market-based "shadow banking" system, without adequate regulatory adjustments, has left the financial system vulnerable to crisis. Second, trillions of dollars have been steered into residential real estate and away from more productive investments. Third, the cost of professional investment management is too high, which drains talent from other industries. The financial sector could promote the health and competitiveness of the U.S. economy by increasing capital and liquidity requirements, reorienting the discussion around housing finance reform from keeping mortgage credit cheap to ensuring financial stability, and instituting measures that compel asset managers to compete on the true value of the services they provide.
Keywords: Finance;
Performance Evaluation;
Business Ventures;
Household Characteristics;
Financial Crisis;
Investment;
Competitive Advantage;
Value;
Financial Services Industry;
United States;
Citation: Greenwood, Robin, and David S. Scharfstein. " How to Make Finance Work." Harvard Business Review 90, no. 3 (March 2012).
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Article
| Harvard Business Review
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When (Not) to Listen to Activist Investors
Robin Greenwood and Michael Schor
Keywords: Investment;
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Supplement
| HBS Case Collection
|
2013
Assured Guaranty (CW)
Robin Greenwood, Adi Sunderam and Jared Dourdeville
Keywords: Insurance;
value investing;
Investments;
behavioral finance;
Citation: Greenwood, Robin, Adi Sunderam, and Jared Dourdeville. " Assured Guaranty (CW)." Harvard Business School Spreadsheet Supplement 213-724, March 2013.
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Case
| HBS Case Collection
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2013
Assured Guaranty
Robin Greenwood, Adi Sunderam and Jared Dourdeville
Nate Katz at Yokun Ridge Capital Management is evaluating an investment in Assured Guaranty, a municipal bond insurance company that is trading at a discount to book value.
Keywords: Insurance;
value investing;
Investments;
behavioral finance;
Valuation;
Insurance;
Behavioral Finance;
Financial Services Industry;
Citation: Greenwood, Robin, Adi Sunderam, and Jared Dourdeville. " Assured Guaranty." Harvard Business School Case 213-100, February 2013.
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Teaching Note
| HBS Case Collection
|
2012
(Revised from original 2011 version)
Martingale Asset Management LP in 2008, 130/30 Funds, and a Low-Volatility Strategy (TN)
Robin Greenwood and Luis M. Viceira
Teaching Note for 209-047.
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Case
| HBS Case Collection
|
2012
(Revised from original 2012 version)
Hayman Capital Management
Robin Greenwood, Julie Messina and Jared Dourdeville
In late December 2011, Hayman Capital founder and portfolio manager Kyle Bass was reviewing Japanese government budget projections for 2012. The projections appeared contrary to Hayman Capital's views on Japan, where the fund had built a bearish position. Japan had the world's highest debt burden, whether expressed as a percentage of GDP or government revenue. Guided by recent global events, Bass forecast that Japan would soon experience increases in interest rates, a devaluation of the currency, and eventually, a restructuring of the country's debt.
Keywords: investment management;
macroeconomics;
speculative bubbles;
credit;
Japan;
government policy;
behavioral finance;
Government and Politics;
Macroeconomics;
Investment Portfolio;
Revenue;
Borrowing and Debt;
Sovereign Finance;
Budgets and Budgeting;
Financial Services Industry;
Japan;
Citation: Greenwood, Robin, Julie Messina, and Jared Dourdeville. " Hayman Capital Management." Harvard Business School Case 212-091, October 2012. (Revised from original March 2012 version.)
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Supplement
| HBS Case Collection
|
2012
Hayman Capital Management
Robin Greenwood, Julie Messina and Jared Dourdeville
Citation: Greenwood, Robin, Julie Messina, and Jared Dourdeville. " Hayman Capital Management." Harvard Business School Spreadsheet Supplement 212-711, April 2012.
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Case
| HBS Case Collection
|
2011
(Revised from original 2009 version)
Citigroup's Exchange Offer
Robin Greenwood and James Quinn
Citigroup faced considerable distress in early 2009. In late 2008, the bank had accepted $45 billion in preferred equity from the United States government via the Troubled Assets Relief Program (TARP). Yet, the stock had continued to slide in early 2009. In late February, the company announced that it would convert as much as $50 billion of preferred stock into common stock, at $3.25 per share. The case asks students to evaluate the pricing of preferred stock relative to common stock at this time. As the case takes place during a period of considerable uncertainty in global capital markets, and conventional sources of arbitrage capital have been depleted, the apparent mispricing may not be as attractive as it initially seems. In the B and C cases, students must decide whether their view of the appropriate pricing changes, when the apparent mispricing worsens. A final additional teaching point relates to the formation of a synthetic short position using the options markets.
Keywords: Financial Crisis;
Capital Markets;
Banks and Banking;
Stocks;
Price;
Globalized Markets and Industries;
Financial Services Industry;
Citation: Greenwood, Robin, and James Quinn. " Citigroup's Exchange Offer." Harvard Business School Case 210-009, June 2011. (Revised from original July 2009 version.)
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Supplement
| HBS Case Collection
|
2011
(Revised from original 2009 version)
Citigroup's Exchange Offer (B)
Robin Greenwood and James Quinn
Citigroup faced considerable distress in early 2009. In late 2008, the bank had accepted $45 billion in preferred equity from the United States government via the Troubled Assets Relief Program (TARP). Yet, the stock had continued to slide in early 2009. In late February, the company announced that it would convert as much as $50 billion of preferred stock into common stock, at $3.25 per share. The case asks students to evaluate the pricing of preferred stock relative to common stock at this time. As the case takes place during a period of considerable uncertainty in global capital markets, and conventional sources of arbitrage capital have been depleted, the apparent mispricing may not be as attractive as it initially seems. In the B and C case, students must decide whether their view of the appropriate pricing changes, when the apparent mispricing worsens. A final additional teaching point relates to the formation of a synthetic short position using the options markets.
Keywords: Financial Instruments;
Financial Services Industry;
Citation: Greenwood, Robin, and James Quinn. " Citigroup's Exchange Offer (B)." Harvard Business School Supplement 210-004, June 2011. (Revised from original September 2009 version.)
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Supplement
| HBS Case Collection
|
2011
(Revised from original 2009 version)
Citigroup's Exchange Offer (C)
Robin Greenwood and James Quinn
Citigroup faced considerable distress in early 2009. In late 2008, the bank had accepted $45 billion in preferred equity from the United States government via the Troubled Assets Relief Program (TARP). Yet, the stock had continued to slide in early 2009. In late February, the company announced that it would convert as much as $50 billion of preferred stock into common stock, at $3.25 per share. The case asks students to evaluate the pricing of preferred stock relative to common stock at this time. As the case takes place during a period of considerable uncertainty in global capital markets, and conventional sources of arbitrage capital have been depleted, the apparent mispricing may not be as attractive as it initially seems. In the B and C case, students must decide whether their view of the appropriate pricing changes, when the apparent mispricing worsens. A final additional teaching point relates to the formation of a synthetic short position using the options markets.
Keywords: Financial Instruments;
Financial Services Industry;
Citation: Greenwood, Robin, and James Quinn. " Citigroup's Exchange Offer (C)." Harvard Business School Supplement 210-015, June 2011. (Revised from original September 2009 version.)
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Module Note
|
2011
(Revised from original 2011 version)
Investor Demand
Robin Greenwood
This conceptual note describes a series of cases on the investor demand approach to investment strategy and management. The cases demonstrate how and why securities market dislocations are driven by non-fundamental demand. I use the cases to progressively build a decision making framework for active investing in public markets. This note serves as an extended guide to the ideas in the cases, and is aimed at instructors forming their own course in Behavioral Finance or Investment Management.
Keywords: Investment;
Citation: Greenwood, Robin. " Investor Demand." Harvard Business School Module Note 211-101, April 2011. (Revised from original April 2011 version.)
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Case
| HBS Case Collection
|
2011
(Revised from original 2011 version)
Gold in 2011: Bubble or Safe Haven Asset?
Robin Greenwood and Benjamin Steiner
Case explores the pricing of gold in 2011. Is the pricing justified or are we in a speculative bubble? What data are useful in determining a view on this question?
Keywords: Inflation and Deflation;
Money;
Asset Management;
Investment;
Price Bubble;
Policy;
Risk Management;
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Teaching Note
| HBS Case Collection
|
2011
(Revised from original 2007 version)
The Nikkei 225 Reconstitution (TN)
Robin Greenwood
Teaching note to 207109.
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Teaching Note
| HBS Case Collection
|
2011
(Revised from original 2008 version)
Livedoor (TN)
Robin Greenwood
Teaching Note for [206138].
Citation: Greenwood, Robin. " Livedoor (TN)." Harvard Business School Teaching Note 209-025, March 2011. (Revised from original July 2008 version.)
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Case
| HBS Case Collection
|
2011
(Revised from original 2011 version)
H Partners and Six Flags
Robin Greenwood and Michael Gorzynski
Rehan Jaffer, the founder of hedge fund H Partners, is considering what to do with his investment in Six Flags. H Partners had invested a significant amount of the firm's capital in the senior bonds of U.S.-based Six Flags, following that company's bankruptcy filing.
Keywords: Behavioral Finance;
Private Equity;
Insolvency and Bankruptcy;
Debt Securities;
Bonds;
Investment;
Entertainment and Recreation Industry;
Financial Services Industry;
United States;
Citation: Greenwood, Robin, and Michael Gorzynski. " H Partners and Six Flags." Harvard Business School Case 211-090, March 2011. (Revised from original March 2011 version.)
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Supplement
| HBS Case Collection
|
2011
Gold in 2011 (CW)
Robin Greenwood
Courseware for case 211095.
Keywords: Price;
Price Bubble;
Metals and Minerals;
Data and Data Sets;
Citation: Greenwood, Robin. " Gold in 2011 (CW)." Harvard Business School Spreadsheet Supplement 211-716, March 2011.
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Supplement
| HBS Case Collection
|
2011
H Partners and Six Flags (CW)
Robin Greenwood
Spreadsheet for case 211090.
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Supplement
| HBS Case Collection
|
2011
H Partners and Six Flags (B)
Robin Greenwood and Michael Gorzynski
Rehan Jaffer, the founder of hedge fund H Partners, is considering what to do with his investment in Six Flags. H Partners had invested a significant amount of the firm's capital in the senior bonds of U.S.-based Six Flags, following that company's bankruptcy filing.
Keywords: Equity;
Insolvency and Bankruptcy;
Business and Shareholder Relations;
Price;
Acquisition;
Decisions;
Borrowing and Debt;
Investment Funds;
Opportunities;
Bonds;
Investment Activism;
Financial Services Industry;
United States;
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Supplement
| HBS Case Collection
|
2011
Williams, 2002 (CW)
Robin Greenwood
Spreadsheet supplement for product number 203068.
Keywords: Energy Industry;
United States;
Citation: Greenwood, Robin. " Williams, 2002 (CW)." Harvard Business School Spreadsheet Supplement 211-711, February 2011.
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Teaching Note
| HBS Case Collection
|
2011
Citigroup's Exchange Offer (TN)
Robin Greenwood
Teaching Note for 210009.
Keywords: Equity;
Government and Politics;
Stocks;
Price;
Capital;
Banks and Banking;
Performance Evaluation;
Risk and Uncertainty;
Capital Markets;
Banking Industry;
Financial Services Industry;
United States;
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Case
| HBS Case Collection
|
2011
(Revised from original 2010 version)
MacroMarkets LLC
Robin Greenwood and Luis M. Viceira
MacroMarkets co-founder and CEO Samuel Masucci III is meeting with a strategic partner for his firm. Co-founded with Yale University Professor Robert Shiller, MacroMarkets' main innovation is the "MacroShare," which allows investors to take long or short, levered or unlevered, positions based on the value of any index. Both Shiller and Masucci are hopeful that MacroShares can help investors hedge all kinds of macroeconomic risks, including exposure to residential housing. The firm has ”battle-tested” two products—one linked to oil, and one linked to housing—with mixed success and is evaluating its strategy going forward. Specifically, Masucci wonders whether the MacroShare structure might come to replace the ETF as the predominant technology for index trading.
Keywords: Macroeconomics;
Financial Instruments;
Financial Markets;
Investment Funds;
Investment Portfolio;
Innovation and Invention;
Risk Management;
Product Positioning;
Demand and Consumers;
Financial Services Industry;
Citation: Greenwood, Robin, and Luis M. Viceira. " MacroMarkets LLC." Harvard Business School Case 211-006, January 2011. (Revised from original July 2010 version.)
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Case
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2010
(Revised from original 2008 version)
NEC Electronics
C. Fritz Foley, Robin Greenwood and James Quinn
Why do shares in NEC Electronics, a publicly listed subsidiary of Japan conglomerate NEC, trade at a discount to their fundamental value? Can Perry Capital, a U.S. hedge fund, restructure this subsidiary and generate significant returns? This case provides students with an opportunity to analyze Perry's decision to invest in NEC Electronics. In doing so, it asks for the reasons that NEC might take actions that destroy value and shift value away from NECE's minority shareholders. The events covered allow for a discussion of how ownership concentration constrains restructuring alternatives, how hedge fund investors might confront controlling shareholders, and how the mispricing of agency costs can give rise to ownership structures that allow for minority shareholder expropriation.
Keywords: Restructuring;
Private Equity;
Investment Return;
Ownership Stake;
Business and Shareholder Relations;
Financial Services Industry;
Japan;
Citation: Foley, C. Fritz, Robin Greenwood, and James Quinn. " NEC Electronics." Harvard Business School Case 209-001, November 2010. (Revised from original October 2008 version.)
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Teaching Note
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2010
(Revised from original 2009 version)
NEC Electronics (TN)
C. Fritz Foley and Robin Greenwood
Teaching Note for [209001].
Keywords: Information Technology Industry;
Citation: Foley, C. Fritz, and Robin Greenwood. " NEC Electronics (TN)." Harvard Business School Teaching Note 209-028, November 2010. (Revised from original March 2009 version.)
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Case
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2010
(Revised from original 2008 version)
TravelCenters of America
Robin Greenwood, Daniel Jacob Goldberg and James Quinn
A New York-based hedge fund must decide whether to invest in TravelCenters of America (TA), a recent spin-off from a U.S.-based real estate investment trust. The case confronts students with the question: To what extent is this spin-off opportunity attractive from a value-investing standpoint? Historically, spin-offs have been attractive investments because of supply-demand dynamics associated with their investor base. The case is an opportunity to ask whether the same dynamics will operate for TA.
Keywords: Mergers and Acquisitions;
Investment;
Valuation;
Real Estate Industry;
Travel Industry;
United States;
Citation: Greenwood, Robin, Daniel Jacob Goldberg, and James Quinn. " TravelCenters of America." Harvard Business School Case 209-030, July 2010. (Revised from original December 2008 version.)
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Supplement
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2010
Tremblant Capital Group Exhibits (CW)
Robin Greenwood
Brett Barakett, CEO and founder of Tremblant Capital Group, a New York-based hedge fund, must decide what to do with his fund's position in Green Mountain Coffee Roasters, which has dropped in value by more than 40 percent in recent months. Tremblant is a hedge fund that specializes in forecasting consumer behavioral change, and capitalizes on the disconnect between stock prices and consumer behavior. In the case of Green Mountain Coffee, many other sophisticated investors have taken short positions in the stock, leading Barakett to question whether his fund had the right trade thesis.
Keywords: Transformation;
Decisions;
Forecasting and Prediction;
Cash Flow;
Cost of Capital;
Stocks;
Investment Funds;
Consumer Behavior;
Business Strategy;
Competitive Advantage;
New York (state, US);
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Case
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2010
(Revised from original 2010 version)
Tremblant Capital Group
Robin Greenwood
Brett Barakett, CEO and founder of Tremblant Capital Group, a New York–based hedge fund, must decide what to do with his fund's position in Green Mountain Coffee Roasters, which has dropped in value by more than 40% in recent months. Tremblant is a hedge fund that specializes in forecasting consumer behavioral change and capitalizes on the disconnect between stock prices and consumer behavior. In the case of Green Mountain Coffee, many other sophisticated investors have taken short positions in the stock, leading Barakett to question whether his fund had the right trade thesis.
Keywords: Business Earnings;
Behavioral Finance;
Stocks;
Investment Funds;
Consumer Behavior;
Competitive Advantage;
Financial Services Industry;
New York (city, NY);
Citation: Greenwood, Robin. " Tremblant Capital Group." Harvard Business School Case 210-071, April 2010. (Revised from original April 2010 version.)
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Background Note
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2010
(Revised from original 2005 version)
Calculating Free Cash Flows
Robin Greenwood and David S. Scharfstein
Outlines the mechanics of calculating free cash flows from historical and proforma financial statements. Focuses on the mechanical process of transforming numbers from financial forecasts into cash flows.
Keywords: Financial Statements;
Forecasting and Prediction;
Cash Flow;
Mathematical Methods;
Citation: Greenwood, Robin, and David S. Scharfstein. " Calculating Free Cash Flows." Harvard Business School Background Note 206-028, February 2010. (Revised from original October 2005 version.)
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Supplement
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2009
(Revised from original 2009 version)
Washington Mutual's Covered Bonds Courseware
Daniel Baird Bergstresser, Robin Greenwood and James Quinn
Washington Mutual issues 6 billion Euro of covered bonds in 2006. The objective of the case is to ask whether these bonds are mispriced in late 2008. The case is set in September 20008, and Washington Mutual is facing considerable distress due to mounting losses on its mortgage portfolio. Following investment bank Lehman Brother's Chapter 11 bankruptcy protection filing in mid September, the price of Washington Mutual's covered bonds has fallen to 75 per 100 of face value. As these bonds are over-collateralized, the case asks students to evaluate the underlying collateral portfolio in the event of liquidation, as well as assessing the likelihood of different outcomes. The case takes place during a period of considerable uncertainty in the global capital markets.
Keywords: Banks and Banking;
Bonds;
Education;
Information;
Banking Industry;
Citation: Bergstresser, Daniel Baird, Robin Greenwood, and James Quinn. " Washington Mutual's Covered Bonds Courseware." Harvard Business School Spreadsheet Supplement 209-724, November 2009. (Revised from original March 2009 version.)
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Case
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2009
(Revised from original 2009 version)
Washington Mutual's Covered Bonds
Daniel Baird Bergstresser, Robin Greenwood and James Quinn
Washington Mutual issued 6 billion euro of covered bonds in 2006. The objective of the case is to ask whether these bonds are mispriced in late 2008. The case is set in September 2008, and Washington Mutual is facing considerable distress due to mounting losses in its mortgage portfolio. Following investment bank Lehman Brother's Chapter 11 bankruptcy protection filing in mid-September, the price of Washington Mutual's covered bonds has fallen to 75 per 100 of face value. As these bonds are overcollateralized, the case asks students to evaluate the underlying collateral portfolio in the event of liquidation, as well as assessing the likelihood of different outcomes. The case takes place during a period of considerable uncertainty in the global capital markets.
Keywords: Capital Markets;
Financial Liquidity;
Bonds;
Mortgages;
Price;
Banking Industry;
United States;
Citation: Bergstresser, Daniel Baird, Robin Greenwood, and James Quinn. " Washington Mutual's Covered Bonds." Harvard Business School Case 209-093, October 2009. (Revised from original March 2009 version.)
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Teaching Note
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2009
(Revised from original 2009 version)
Washington Mutual's Covered Bonds (TN)
Daniel Baird Bergstresser and Robin Greenwood
Teaching Note for [209093].
Keywords: Banks and Banking;
Bonds;
Banking Industry;
Citation: Bergstresser, Daniel Baird, and Robin Greenwood. " Washington Mutual's Covered Bonds (TN)." Harvard Business School Teaching Note 209-130, October 2009. (Revised from original March 2009 version.)
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Teaching Note
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2009
TravelCenters of America (TN)
Robin Greenwood and Daniel Jacob Goldberg
Teaching Note for [209030].
Keywords: Investment Funds;
Valuation;
Opportunities;
Business Organization;
Real Estate Industry;
New York (state, US);
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Case
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2009
Aderans
Robin Greenwood, Rakesh Khurana and Masako Egawa
Steel Partners is a U.S.-based hedge fund that has made a large investment in Japan-based wigmaker Aderans. The case is set at the close of the annual meeting in May 2008, when shareholders have voted against all incumbent board members. Steel Partners must act quickly. The case serves as an overview of corporate governance issues in Japan, as well as describing the costs and benefits of the "stakeholder" view of corporate governance.
Keywords: Voting;
Investment;
Corporate Governance;
Governing and Advisory Boards;
Ownership Stake;
Business and Shareholder Relations;
Japan;
Citation: Greenwood, Robin, Rakesh Khurana, and Masako Egawa. " Aderans." Harvard Business School Case 209-090, March 2009.
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Teaching Note
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2009
(Revised from original 2008 version)
Opportunity Partners (TN)
Robin Greenwood
Teaching Note for [208097].
Citation: Greenwood, Robin. " Opportunity Partners (TN)." Harvard Business School Teaching Note 208-139, January 2009. (Revised from original March 2008 version.)
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Supplement
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2008
NEC Electronics (CW)
C. Fritz Foley, Robin Greenwood and James Quinn
Why do shares in NEC Electronics, a publicly listed subsidiary of Japan conglomerate NEC trade at a discount to their fundamental value? Can Perry Capital, a U.S. hedge fund, restructure this subsidiary and generate significant returns? This case provides students with an opportunity to analyze Perry's decision to invest in NEC Electronics. In doing so, it asks for the reasons that NEC might take actions that destroy value and shift value away from NECE's minority shareholders. The events covered allow for a discussion of how ownership concentration constrains restructuring alternatives, how hedge fund investors might confront controlling shareholders, and how the mis-pricing of agency costs can give rise to ownership structures that allow for minority shareholder expropriation.
Keywords: Business Conglomerates;
Business Subsidiaries;
Restructuring;
Decisions;
Investment Return;
Investment Funds;
Price;
Ownership;
Agency Theory;
Business and Shareholder Relations;
Value Creation;
Electronics Industry;
Japan;
United States;
Citation: Foley, C. Fritz, Robin Greenwood, and James Quinn. " NEC Electronics (CW)." Harvard Business School Spreadsheet Supplement 209-711, November 2008.
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Supplement
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2008
Travel Centers of America (CW)
Robin Greenwood and James Quinn
Keywords: Food and Beverage Industry;
Service Industry;
Travel Industry;
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Supplement
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2008
(Revised from original 2008 version)
Kerr-McGee (CW)
Robin Greenwood and James Quinn
Citation: Greenwood, Robin, and James Quinn. " Kerr-McGee (CW)." Harvard Business School Spreadsheet Supplement 209-708, August 2008. (Revised from original August 2008 version.)
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Supplement
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2008
The Pilgrim Assurance Building Courseware
Robin Greenwood
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Teaching Note
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2008
The Pilgrim Assurance Building (TN)
Robin Greenwood
Teaching Note for [206078].
Keywords: Real Estate Industry;
Boston;
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Case
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2008
(Revised from original 2008 version)
Opportunity Partners
Robin Greenwood and James Quinn
Philip Goldstein, the principal in a growing hedge fund and prominent activist investor, has taken a position in a Mexico-based closed-end fund. Following a hard-fought proxy contest in which he advocated for management to eliminate the fund's substantial discount, Goldstein earns a seat on the board of directors. Now he and the board are faced with the decision of how best to "unlock value" in the fund by delivering Net Asset Value to shareholders. The case, which provides rich detail on the workings of closed-end funds, invites students to examine the trade-offs among liquidating the fund, converting it to an open-end fund, or carrying out a self-tender offer. It also raises topics of fund selection and investing in country-specific funds such as Mexico.
Keywords: Investment Activism;
Investment Funds;
Business and Shareholder Relations;
Value;
Financial Services Industry;
Mexico;
Citation: Greenwood, Robin, and James Quinn. " Opportunity Partners." Harvard Business School Case 208-097, July 2008. (Revised from original January 2008 version.)
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Case
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2008
(Revised from original 2005 version)
Yamanote Kaikan
Robin Greenwood, Arthur I Segel and Joshua Katzin
In 2001, James O'Connell, president of Holyoke Japan, an affiliate of Larson Capital, a distress debt private equity firm, wants to bid on a 90 billion yen loan currently in default by the borrower, Sanjo Enterprises, for a popular wedding and banquet facility with an adjacent office tower in downtown Tokyo. O'Connell has to determine a bidding strategy, consider the competition, and price the deal.
Keywords: Borrowing and Debt;
Private Equity;
Price;
Bids and Bidding;
Competition;
Japan;
Citation: Greenwood, Robin, Arthur I Segel, and Joshua Katzin. " Yamanote Kaikan." Harvard Business School Case 205-084, May 2008. (Revised from original June 2005 version.)
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Case
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2008
(Revised from original 2007 version)
The Nikkei 225 Reconstitution
Robin Greenwood
Taka Haneda, a proprietary trader at the Tokyo office of Goldman Sachs, has just learned that the Nikkei 225 will undergo a significant redefinition over the coming week. He faces several billion dollars of customer orders, as well as the opportunity to commit the firm's capital to provide liquidity for the event. He must decide what positions to establish, and at what price he is willing to get out.
Keywords: Financial Liquidity;
Stocks;
Investment Return;
Price;
Market Transactions;
Financial Services Industry;
Tokyo;
Citation: Greenwood, Robin. " The Nikkei 225 Reconstitution." Harvard Business School Case 207-109, March 2008. (Revised from original March 2007 version.)
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Supplement
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2008
The Nikkei 225 Reconstitution (CW)
Robin Greenwood
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Teaching Note
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2008
Kerr-McGee (TN)
Robin Greenwood
Teaching Note for [207020].
Keywords: Energy Industry;
Chemical Industry;
United States;
Citation: Greenwood, Robin. " Kerr-McGee (TN)." Harvard Business School Teaching Note 208-135, February 2008.
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Case
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2007
(Revised from original 2005 version)
The Pilgrim Assurance Building
Robin Greenwood, David S. Scharfstein and Arthur I Segel
A local real estate developer has to decide how much to bid for a Boston office building in 2005.
Keywords: Buildings and Facilities;
Decisions;
Investment;
Bids and Bidding;
Real Estate Industry;
Boston;
Citation: Greenwood, Robin, David S. Scharfstein, and Arthur I Segel. " The Pilgrim Assurance Building." Harvard Business School Case 206-078, April 2007. (Revised from original December 2005 version.)
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Case
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2012
(Revised from original 2006 version)
Kerr-McGee
Robin Greenwood and Andre F. Perold
Activist investors Carl Icahn and Barry Rosenstein acquire a stake in Oklahoma-based company Kerr-McGee. They demand two board seats and ask the company to make several operational and financial changes, including the repurchase of equity and divestiture of their chemicals business. The case protagonist, Luke Corbett, CEO, opposes these changes,
Keywords: Restructuring;
Chemicals;
Equity;
Investment;
Governance Controls;
Managerial Roles;
Chemical Industry;
Energy Industry;
United States;
Citation: Greenwood, Robin, and Andre F. Perold. " Kerr-McGee." Harvard Business School Case 207-020, July 2012. (Revised from original November 2006 version.)
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Case
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2006
(Revised from original 2006 version)
Livedoor
Robin Greenwood and Michael Schor
The president of Fuji Television must decide how to respond to a competing bid for the shares of Nippon Broadcasting Systems (NBS). Livedoor, the other bidder, is a highly valued Internet company that has been accused of financial wizardry to keep its stock price high.
Keywords: Stock Shares;
Internet;
Ethics;
Television Entertainment;
Behavioral Finance;
Corporate Finance;
Media and Broadcasting Industry;
Japan;
Citation: Greenwood, Robin, and Michael Schor. " Livedoor." Harvard Business School Case 206-138, November 2006. (Revised from original April 2006 version.)
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Background Note
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2006
(Revised from original 2006 version)
Introduction to Valuation Multiples
Robin Greenwood and Lucy White
Outlines the definition and applicability of financial multiples and their relationship to discounted cash flow analysis.
Keywords: Cash Flow;
Valuation;
Citation: Greenwood, Robin, and Lucy White. " Introduction to Valuation Multiples." Harvard Business School Background Note 206-095, October 2006. (Revised from original February 2006 version.)
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Supplement
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2006
Livedoor Courseware
Robin Greenwood and Michael Schor
Keywords: Curriculum and Courses;
Citation: Greenwood, Robin, and Michael Schor. " Livedoor Courseware." Harvard Business School Spreadsheet Supplement 206-713, April 2006.
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Background Note
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2006
(Revised from original 2004 version)
Decision Trees
Robin Greenwood and Lucy White
This case introduces decision analysis. Using a simple example, it illustrates the use of probability trees and decision trees as tools for solving business problems.
Keywords: Decision Making;
Citation: Greenwood, Robin, and Lucy White. " Decision Trees." Harvard Business School Background Note 205-060, March 2006. (Revised from original December 2004 version.)
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Background Note
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2004
Subscriber Models
Mihir A. Desai, Robin Greenwood and Lucy White
Introduces the subscriber model as an alternative valuation framework for firms whose revenues can be traced to repeated transactions with customers.
Citation: Desai, Mihir A., Robin Greenwood, and Lucy White. " Subscriber Models." Harvard Business School Background Note 205-061, December 2004.
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Teaching Note
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2004
Williams, 2002 (TN)
Robin Greenwood
Teaching Note to (9-203-068).
Keywords: Energy Industry;
United States;
Citation: Greenwood, Robin. " Williams, 2002 (TN)." Harvard Business School Teaching Note 204-127, February 2004. (2003.) Coval, Joshua D., Peter Tufano, and Robin Greenwood. "Williams, 2002." Harvard Business School Case 203-068 (2003.)
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