European Shorting
Number of Stocks: 822
Number of New Stocks: 187
Total Value: $1,972 Mil
Q/Q Turnover: 29%
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Joel Greenblatt is author of the Magic Formula, professor at Columbia Business School and investor at Gotham Capital. He also just reported his fourth quarter 2012 portfolio. Updates include 184 new stock buys, for a 34% quarter-over-quarter turnover rate. Greenblatt’s largest new buys of the quarter art: Computer Sciences Corp. (CSC), Hillshire Brands Co. (HSH), Cubist Pharmaceuticals Inc. (CBST), Micros Systems (MCRS) and Cardinal Health Inc. (CAH). 
Joel Greenblatt, founder of Gotham Asset Management LLC, has reported his third quarter portfolio updates, which totaled 668 transactions:| Adds to Current Shares | 217 |
| New Buys | 170 |
| Reductions to Current Shares | 159 |
| Sold Out | 122 |
Investor Joel Greenblatt bought 192 new stocks in the second quarter for his 728-stock portfolio. His top new buys are: Tempur-Pedic International (TPX), Wells Fargo (WFC.WS), Wells Fargo (WFC), Lockheed Martin (LMT) and Huntington Ingalls Industries (HII). Greenblatt is also the founder of Gotham Capital, a Columbia professor and author of several investing classics. 
When investors hear that one of their holdings had a dismal quarter far below Wall Street’s expectations, their hearts sink to the very same depth. However, as value investors at heart, the reins of reason must be held to stay any short-term panic. With that in mind, Ceradyne (CRDN) recently announced earnings on July 24, 2012, with revenues and earnings far below analyst consensus. In addition, outlook was negatively revised. An in-depth examination of Ceradyne’s business model can be found via the following link: http://www.gurufocus.com/news/178574/ceradyne-ceramics-and-more-for-your-portfolio. As such, Ceradyne’s feasibility in a portfolio, at least for the short term, is neutral to risky, but remains a valuable stock to hold for the long term.
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Calculating intrinsic value is great if it was dependable and possible to calculate accurately. The 1938 thesis by John Burr Williams, "The Theory of Investment Value," was groundbreaking and introduced us to fundamental analysis. He proposed calculating intrinsic value of a stock by discounting all future cash flows to the present. No argument, as investors we know this. 
A recent study by Wes Gray and Jack Vogel, Dissecting Shareholder Yield, makes the stunning claim that dividend yield doesn’t predict future returns, but more complete measures of shareholder yield might hold some promise. Gray and Vogel say that, ”regardless of the yield metric chosen, the predictive power of separating stocks into high and low yield portfolios has lost considerable power in the last twenty years.” The only one fair fight in finance: Joel Greenblatt versus himself. In this instance, it’s the 250 best special situations investors in the US on Joel’s special situations site valueinvestorsclub.com versus his Magic Formula. Yesterday I took a look at the different ways of structuring an index suggested by Joel Greenblatt.
Continue Reading » Joel Greenblatt’s rationale for a value-weighted index can be paraphrased as follows:
Joel Greenblatt’s rationale for a value-weighted index can be paraphrased as follows: Last week I looked at James Montier’s 2006 paper The Little Note That Beats The Market and his view that investors would struggle to implement the Magic Formula strategy for behavioral reasons, a view borne out by Greenblatt’s own research. This is not a criticism of the strategy, which is tractable and implementable, but an observation on how pernicious our cognitive biases are.
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