While he hasn’t changed his general value investing approach, hedge fund guru Joel Greenblatt has changed the way he implements that strategy. The reason? Many investors just can’t handle the ups and downs of a concentrated portfolio.
It may not be magic, but hedge fund guru Joel Greenblatt’s “Magic Formula” sure is a market-beater, Validea CEO John Reese writes in his latest Forbes.com column.
Standout hedge fund manager Joel Greenblatt says his “Magic Formula” is finding more value in large-cap stocks than small caps right now. Greenblatt told CNBC that, based on a review of decades of history, he’s finding that large-caps are in the 38th percentile towards expensive right now, meaning they’ve been cheaper than they are now 62% of the time over that several-decade span. From these levels, stocks on average have gone on to gain between… Read More
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
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
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
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
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
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
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