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Joel Greenblatt | Earnings Yield Investor
Last Update: 5/19/2013
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: 92.42%
S&P 500: 31.81%
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 - PRIMORIS SERVICES CORP | GENTIVA HEALTH SERVICES, INC. | BRIDGEPOINT EDUCATION INC | ITT EDUCATIONAL SERVICES, INC. | LABORATORY CORP. OF AMERICA HOLDINGS |
Downgrades - U.S. PHYSICAL THERAPY, INC. | ENANTA PHARMACEUTICALS INC | COACH, INC. | WESTERN DIGITAL CORP. | PATTERSON-UTI ENERGY, INC. |
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