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Joel Greenblatt  |  Earnings Yield Investor                                      Last Update: 12/19/2014


Joel Greenblatt Profile: In his 2005 bestseller The Little Book That Beats The Market, hedge fund manager Joel Greenblatt laid out a stunningly simple way to beat the market using two -- and only two -- fundamental variables. The "Magic Formula," as he called it, produced back-tested returns of 30.8 percent per year from 1988 through 2004, more than doubling the S&P 500's 12.4 percent return during that time. Greenblatt also produced exceptional returns as managing partner at Gotham Capital, a New York City-based hedge fund he founded. The firm averaged a remarkable 40 percent annualized return over more than two decades.

Joel Greenblatt Investment Strategy: Greenblatt's approach looks only at the return a company generates on its capital, and at the firm's earnings yield (which is similar, but not identical to, the inverse of its price-earnings ratio). The Greenblatt strategy ranks all stocks in both of those categories, and then adds their numerical rankings together. The lower the combined numerical ranking, the better. (Our Greenblatt strategy invests in the 30 stocks with the best combined ranking.) Greenblatt's research shows that while beating the market is hard, it doesn't have to be complicated. The hard part comes not in developing a complex strategy, but instead in finding a proven approach and sticking with it through good times and bad. He stresses discipline as much as any of the gurus we follow.

Book Used for Joel Greenblatt Strategy: The Little Book That Beats the Market

Joel Greenblatt Model Portfolio Performance:
Since Inception: 113.06%
S&P 500: 62.93%
Full Performance Details

Stocks Passing Joel Greenblatt Strategy: 10 Stock Model Portfolio  |  20 Stock Model Portfolio  |  All Stocks Passing Methodology

Recent Upgrades and Downgrades:
Upgrades - KELLOGG COMPANY  |  VSE CORPORATION  |  VECTRUS INC  |  ACCENTURE PLC  |  PILGRIM'S PRIDE CORPORATION  |  
Downgrades - AMERICAN PUBLIC EDUCATION, INC.  |  LIQUIDITY SERVICES, INC.  |  JOURNAL COMMUNICATIONS, INC.  |  SYMANTEC CORPORATION  |  U.S. PHYSICAL THERAPY, INC.  |  
 
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Disclaimer |  Privacy Statement |  Contact Us |  About Us Fundamental data provided by Reuters

The names of individuals (i.e., the 'gurus') appearing in this report are for identification purposes of his methodology only, as derived by Validea.com from published sources, and are not intended to suggest or imply any affiliation with or endorsement or even agreement with this report personally by such gurus, or any knowledge or approval by such persons of the content of this report. All trademarks, service marks and tradenames appearing in this report are the property of their respective owners, and are likewise used for identification purposes only.

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Performance results are based on model portfolios and do not reflect actual trading. Returns for both the model portfolios and the comparable benchmarkss do not include dividends. Actual performance will vary based on a variety of factors, including market conditions and trading costs. Past performance is not necessarily indicative of future results. Individual stocks mentioned throughout this web site may be holdings in the managed portfolios of Validea Capital Management, a separate asset management firm founded by Validea.com founder John Reese. Validea Capital Management, which is a separate legal entity and an SEC registered investment advisory firm, uses, in part, the strategies on the web site to select stocks for its clients.