Greenblatt’s Winning Formula: More Discipline than Magic

Every other issue of The Validea Hot List newsletter examines in detail one of John Reese’s computerized Guru Strategies. This latest issue looks at the Joel Greenblatt-inspired strategy, which has averaged annual returns of 10.0% since its December 2005 inception vs. 4.4% for the S&P 500. Below is an excerpt from the newsletter, along with several top-scoring stock ideas from the Greenblatt-based investment strategy. Taken from the December 6, 2013 issue of The Validea Hot List Guru… Read More

The Gurus Accessorize with Coach

In his latest Seeking Alpha column, Validea CEO John Reese takes a look at a luxury goods stock that’s getting strong scores from his guru-inspired models: Coach Inc. Reese notes that Coach shares have stumbled over the past year and a half, with the latest negative catalyst being a downward revision to its forward guidance. “Some weakness in North America, in part due to increased competition, is a driving factor behind the guidance change. Investors… Read More

For Greenblatt, Simplicity Equals Success

In his latest RealMoney column, Validea CEO John Reese takes a look at Joel Greenblatt’s remarkably simple — and remarkably successful — investment strategy. “For many years, I have been studying how great investors invest, and almost always, they use five or 10 or more variables, so they can look at a stock and its underlying company from a variety of perspectives,” writes Reese. “I’ve never seen an exceptional strategist use one variable, but there… Read More

The Real Trick Behind Greenblatt’s “Magic” Formula

Hedge fund guru Joel Greenblatt has produced remarkable returns over the long haul using what he calls his Magic Formula. But in his latest column for Forbes.com, Validea CEO John Reese says there is much more to Greenblatt’s approach than magic. “While the remarkably simple strategy includes just two variables, Greenblatt — much like the magician who pulls a rabbit from his hat — possesses no real magical powers,” Reese writes. “Instead, his success, too,… Read More

Beating The Market With Simplicity — And Discipline

Every other issue of The Validea Hot List newsletter examines in detail one of John Reese’s computerized Guru Strategies. This latest issue looks at the Joel Greenblatt-inspired strategy, which has averaged annual returns of 6.6% since its December 2005 inception vs. 2.4% for the S&P 500. Below is an excerpt from the newsletter, along with several top-scoring stock ideas from the Greenblatt-based investment strategy. Taken from the February 1, 2013 issue of The Validea Hot List Guru… Read More

Without Discipline, The Numbers Won’t Help You In The Market

In a recent column for Canada’s Globe & Mail, Norman Rothery says that using simple numerical stock-picking models can lead to strong returns — but that sticking to those strategies is both critical and very difficult. “A huge pile of research points to an array of simple numerical stock strategies that boosts returns over the long term,” Rothery writes. “Such methods range from low-ratio value strategies to momentum-oriented schemes. If the studies are to be… Read More

Greenblatt Talks Market Valuation, Value Investing, and Much More

In a wide-ranging interview with the Columbia Business School’s Graham & Doddsville newsletter, hedge fund guru Joel Greenblatt says the stock market is in the “87th percentile towards cheap” right now, and discusses a myriad of aspects of his investment approach. Greenblatt says that, using the market-cap-weighted free cash flow yield of the Russell 1000 as a gauge for cheapness, the market has been cheaper only 13% of the time over the past 23 years.… Read More

Greenblatt Finding Value in Tech, Retail

Hedge fund guru Joel Greenblatt is finding value in the technology and retail sectors. Greenblatt tells CNBC that he’s high on tech firms like Apple and Microsoft, and retailers like Best Buy. He says some of the firms are facing headwinds, but that the headwinds are actually good, because they’ve lowered expectations and baked negative scenarios into the prices already. “If you put together a diversified portfolio of companies that are out of favor and… Read More

Greenblatt: Less Is More In Portfolio Management

The more you try to do with your portfolio, the worse your returns will often be, according to hedge fund guru Joel Greenblatt. In a column for Morningstar.com, Greenblatt explains why investors who tried to implement his “magic formula” investing plan by themselves have fared worse than those who have asked for the plan to be professionally managed. And he says that “the best performing ‘self-managed’ account didn’t actually do anything. What I mean is that… Read More

How Many Stocks Is Enough?

How many stocks should an investor own in order to diversify away stock-specific risk? Some interesting data shows that it may be fewer than you think. The data comes from hedge fund guru Joel Greenblatt’s book, You Can Be A Stock Market Genius, and was highlighted by top value investor Whitney Tilson a few years back (and recently reprinted on The Motley Fool website). According to Greenblatt’s book, the risk-reduction benefits of adding more stocks to… Read More