Piotroski and Book/Market-Based Investing

 In a recent article for Nasdaq, Validea CEO John Reese shares insights on quantitative investing and outlines the approach of Stanford University accounting professor Joesph Piotroski (a market guru that inspired one of the stock screening models Reese created for Validea). Piotroski, writes Reese, was a trailblazer in the investment approach, turning heads on Wall Street in 2000 with his research on unpopular companies with high book-market ratios (defined as total assets minus total liabilities divided by market capitalization). Reese offers an explanation of Piotroski’s approach and the metrics he used, as well as an overview of the Validea portfolio […]

Five Stocks that Satisfy Piotroski’s Book/Market Model

The concept of quantitative investing, while gaining a lot of limelight these days, is not a new concept, writes Validea CEO John Reese in a recent Nasdaq article. Reese offers a profile of investing guru Joesph Piotroski, who authored a paper on the subject in 2000 which, writes Reese, “took Wall Street by surprise.” Reese describes Piotroski’s philosophy which focused on the book-market value of stocks as well as other metrics that enabled him to differentiate those companies whose share prices were low due to underlying financial distress from those that represented good investment opportunities. Using stock screening models Reese created […]

Guru Screen of the Week: Looking for high Book-to-Market Stocks with Sound Fundamentals

This week, we bring you the Stock Screen of the week from Validea. On Validea.com, you can screen for stocks using the site’s Guru Stock Screener, which scores stocks based on the fundamental stock selection criteria of legendary investors. The firm’s models are based on investing legends such as Warren Buffett, Peter Lynch, Benjamin Graham, Kenneth Fisher, Martin Zweig, David Dreman, Joel Greenblatt and others. This week’s screen is based on Validea’s Joseph Piotroski-based strategy, which looks for stocks trading with a strong book/market ratio and high return on assets. The model’s criteria are listed below.   Book/Market Ratio Return on […]

The Piotroski Model: Little-Known Strategist, Big-Time Rewards

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 Joseph Piotroski-inspired strategy. Below is an excerpt from the newsletter, along with several top-scoring stock ideas from the Piotroski-based investment strategy. Taken from the January 3, 2014 issue of The Validea Hot List Guru Spotlight: Joseph Piotroski If you haven’t heard of Joseph Piotroski, you’re not alone. He’s probably the least well-known of the investment “gurus” who inspired my strategies. Actually, he’s not even a professional investor, but instead an accountant and college professor. In 2000, however, […]

Low-P/E Stocks That Pass An Accountant’s Tests

In his latest column for Forbes.com, Validea CEO John Reese takes a look at how to go beyond the P/E ratio when looking for cheap stocks. “P/E ratios are useful tool, but they are by no means the be-all and end-all when it comes to gauging the valuation and attractiveness of a stock. In fact, no single metric is,” Reese writes. “As Forbes’ own Kenneth Fisher has said, there are no silver bullets in the stock market.” In the article, Reese looks at low-P/E stocks that also get approval from his Joseph Piotroski-inspired Guru Strategy. Piotroski, an accounting professor, developed […]

Piotroski-Style Bargains at Home, and North of the Border

In a “Number Cruncher” column for Canada’s Globe and Mail, Ian McGugan takes a look at some overlooked bargain-priced stocks using Validea.com’s Joseph Piotroski-inspired strategy.  “Piotroski, a professor at Stanford University, has discovered that applying a battery of accounting tests to a portfolio of value stocks can improve returns by eliminating ones that are financially too weak to recover and spotlighting ones with improving fundamentals,” McGugan writes, explaining that Validea’s Piotroski-inspired model targets stocks in the top 20% of the market based on their book/market ratios (which is the same as stocks with the lowest price/book ratios). Then it applies […]

The Little-Known Guru Who Beats The Market

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 Joseph Piotroski-inspired strategy, which has averaged annual returns of 6.0% since its February 2004 inception vs. 1.8% for the S&P 500. Below is an excerpt from the newsletter, along with several top-scoring stock ideas from the Piotroski-based investment strategy. Taken from the February 3, 2012 issue of The Validea Hot List Guru Spotlight: Joseph Piotroski If you haven’t heard of Joseph Piotroski, you’re not alone. He’s probably the least well-known of the investment “gurus” who inspired my […]

The Piotroski Method: An Overlooked Guru Turns Up Overlooked Gems

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 Joseph Piotroski-inspired strategy, which has averaged 8.2% annualized returns since its inception more than seven years ago, over a period in which the S&P 500 has returned 2.0% per year. Below is an excerpt from today’s newsletter, along with several top-scoring stock ideas from the Piotroski-based investment strategy. Taken from the May 27, 2011 issue of The Validea Hot List Guru Spotlight: Joseph Piotroski If you haven’t heard of Joseph Piotroski, you’re not alone. He’s […]

Piotroski Looks at the Value/Glamour Effect

Joseph Piotroski, the little-known guru who authored an influential paper on how accounting-based financial analysis can lead to big stock market returns, has written a new paper looking at why value and “glamour” stocks tend to perform differently. (A tip of the cap to The Stingy Investor for highlighting this.) The paper, entitled “Identifying Expectation Errors in Value/Glamour Strategies: A Fundamental Analysis Approach”, was co-authored with Eric C. So, also of the Stanford University Graduate School of Business. It examines whether value and glamour stocks behave differently because of risk, or because of inaccurate expectations of investors. Among Piotroski and […]

2010 Guru Report: Piotroski Approach Leads Way With 55% Gain

While 2010 was a good year for the broader stock market, it was an even better year for John Reese’s Validea.com Guru Strategies. For the full year, Reese’s guru-inspired 10-stock portfolios returned an average of 19.2%, easily outpacing the S&P 500’s 12.8% return. The best performer was the approach inspired by little-known professor Joseph Piotroski, who in 2000 developed an accounting-based method to find solid stocks using the book/market ratio. In 2010, Reese’s Piotroski-inspired portfolio returned 55.9%, more than quadrupling the S&P’s gain. Reese’s Guru Strategies are based on the published approaches of several investing greats, including Benjamin Graham, Warren […]

The Piotroski Strategy: How an Accountant Beats the Market

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 Joseph Piotroski-inspired strategy, which has beaten the market by more than 5 percentage points per year since its inception more than six-and-a-half years ago. Below is an excerpt from today’s newsletter, along with several top-scoring stock ideas based on the Piotroski investment strategy. Taken from the September 17, 2010 issue of The Validea Hot List Guru Spotlight: Joseph Piotroski If you haven’t heard of Joseph Piotroski, you’re not alone. He’s probably the least well-known of […]

Little-Known Guru Generates Big Profits

In his latest article for Canada’s Globe and Mail, Validea CEO John Reese takes a look at the Guru Strategy he bases on the writings of Joseph Piotroski, a little-known accounting professor who authored an influential stock-picking paper. “Mr. Piotroski’s approach started with a variable many investors had used before: the book-to-market ratio (the inverse of the price-to-book ratio),” writes Reese, whose 10-stock Piotroski-based portfolio is up about 10% in 2010 while the broader market is well in the red. “He targeted stocks that were in the top 20 per cent of the market based on their book-to-market ratio, meaning […]