Joel Greenblatt

Joel Greenblatt

Last Update: 02-17-2015

Number of Stocks: 936
Number of New Stocks: 193

Total Value: $12,356 Mil
Q/Q Turnover: 42%

Countries: USA
Details: Top Buys | Top Sales | Top Holdings  Embed:

Joel Greenblatt Watch

  • Joel Greenblatt on Value Weighted Indexing at Ira Sohn Conference Today

    Joel Greenblatt is a managing principal and co-chief investment officer of Gotham Asset Management, LLC and the managing partner of Gotham Capital, which he founded in April 1985. Since 1996, he has been a professor on the adjunct faculty of Columbia Business School. Mr. Greenblatt serves on the Investment Boards for the University of Pennsylvania and UJA Federation, and is a director of Pzena Investment Management Inc. He is the former chairman of the board of Alliant Techsystems. Mr. Greenblatt is the author of "You Can Be a Stock Market Genius," "The Little Book That Still Beats the Market" and "The Big Secret for the Small Investor." He holds a BS and MBA from the Wharton School of the University of Pennsylvania.

    From his talk:  

  • Special – May Microcap “Magic Formula” Newsletter

    Joel Greenblatt's magic formula has proven to be one of most popular and successful quantitative screens. By finding stocks with better than average return characteristics selling for below average prices, the screen has proven its ability to outperform the market.

    However, the screen has one blind spot- stocks with a market cap under 50 million.  

  • New Magic Formula Stocks from Joel Greenblatt: DLB, LLTC, LEA, XLNX, ASNA

    Renowned value investor Joel Greenblatt reported his portfolio as of the first quarter. He now runs three magic formula mutual funds, and these are the picks based on his magic formula. As of 03/31/2011, Joe Greenblatt’s firm Gotham Capital owns 507 stocks with a total value of $333 million. These are the details of the buys and sells that have the impact to portfolio of more than 0.2%.

    This is the portfolio chart of Joel Greenblatt. You can click on the legend of the chart to show/hide buys, sells, or holdings. Each ball on the chart represents a position in the portfolio. You can move your mouse on the balls to see the details of each position and click to see the details of all guru trades with this position.  

  • Interview with Pat Dorsey

    Pat Dorsey is the Vice Chairman and Director of Research & Strategy at the Sanibel Captiva Trust Company, an independent trust company serving high net worth clients, based in Sanibel, Florida. Before joining SanCap, Pat was Director of Equity Research at Morningstar for over ten years, where he was responsible for the overall direction of Morningstar’s equity research, as well as for communicating Morningstar’s ideas to the media and clients. He led the development of Morningstar’s economic moat ratings as well as the methodology behind Morningstar’s framework for competitive analysis. Pat is the author of two books––The Five Rules for Successful Stock Investing : Morningstar's Guide to Building Wealth and Winning in the Market and The Little Book That Builds Wealth: The Knockout Formula for Finding Great Investments––and has been quoted in publications such as The Wall Street Journal, Fortune, The New York Times, and BusinessWeek. Pat holds a master’s degree in political science from Northwestern University and a bachelor’s degree in government from Wesleyan University. He is a CFA charterholder.

    Hi Pat Thank you for your time.  

  • Not Forgetting to Yield: CSCO , TGT , WMT , INTC

    Investors sometimes become too mechanical in their selection of stocks and do not really consider what they are actually looking at. We attempt to mechanize our process and may decide, as an example, that we want to screen our stocks to omit those with a return on equity of less than 15. While that is a great number, it also excludes stocks that have ROE’s of 14 that may actually be a better selection.

    Benjamin Graham advocated finding stocks that have an earnings yield that are at least twice the AAA bond rate. The earnings yield is an easy find and all investors should look at it; however, they should also realize exactly what they are looking at. If stock ABC has earnings for the last 12 months of .75 and is currently selling for $10.00, the earnings yield would be 7.5%. (0.75/10.00). This number is then measured against the current AAA bond rate (say 5%) to determine whether the extra 2 ½% return compensates the investor for the risk taken. In this example, we can see that the earnings yield is not twice the bond rate; therefore, we may choose to exclude it for now.  

  • RadioShack: Value or Value Trap?

    RadioShack is currently shown to be within portfolios of 4 famous investors, including Joel Greenblatt, George Soros, John Hussman and Robert Olstein. Ken Fisher sold out his position the later part of 2010. None of the gurus are currently shown to have increased the value of their portfolio by owning RadioShack; in fact, most have declined in value by approximately 20%.

    RadioShack’s competition appears to be mostly made up of Best Buy (BBY), Conn’s (CONN), Target (TGT), Walmart (WMT) and Amazon (AMZN). The electronics industry appears to have taken a beating lately, with Best Buy near its 52-week low and Conn’s trying to make a comeback in the last six months with its stock beaten down to approximately $6 per share. Even Target’s shares have dwindled close to its 52 week low. RadioShack, also beaten down, is currently offering shares at just under $16, very close to its 52-week low of $13.61. Noticeably, RadioShack is catching the eyes of many investors. More articles are popping up each day indicating that RadioShack is a true value. But is it?  

  • The Big Secret for the Small Investor by Joel Greenblatt

    Joel Greenblatt is, without a doubt, one of the best investors of our time. Greenblatt produced annual returns of 40% for 20 years at Gotham Capital. Additionally, Greenblatt is famous for the invention of the Magic Formula Investing. Greenblatt has released a total of three books which include "You Can Be a Stock Market Genius" — which has been recommended by Seth Klarman (here), Dan Loeb (here), and David Einhorn (here) — "The Little Book That Still Beats the Market," and his latest book, "The Big Secret for the Small Investor." Proved by the fanatical popularity of the first two books, Joel Greenblatt can undeniably deliver when it comes to talking about investment.

    The investing philosophy of Greenblatt, which is encapsulated by the Magical Formula, is highlighted in "The Little Book That Still Beats the Market." The basic principle of the Magical Formula is to concentrate on stocks with high returns on capital and a high earnings yield.  

  • AVX Corporation Reports Earnings Increase of 71%

    AVX Corporation, the South Carolina-based electronic components manufacturer, reported preliminary full year results to March 31 with a 71% increase in net income to $244.0 million and 82.5% increase in diluted EPS to $1.46.

    Chief Executive Officer and President John Gilbertson said, “We are encouraged by the overall outlook for the electronic component industry as end user demand for electronic products continued to increase as evidenced by the strong bookings we received throughout the fiscal year.  

  • How does Magic Formula Investing Work?

    In Brief

    Magic Formula Investing is a value investing strategy based on buying 20-30 "good, cheap companies" defined as having the best available combined ranking in terms of earnings yield and a return on capital.


    A widely respected hedge-fund manager, Joel Greenblatt, started as a value purist but was influenced by Warren Buffett's view about growth being part of the value equation. He founded Gotham Capital, a fund which apparently returned over 40% annualized from 1985 to 2005. By 1995, it had returned all money to its outside investors. He has authored two books, "You Can Be a Stock Market Genius" and New York Times bestsellier, “The Little Book That Beats the Market,” and is also adjunct professor at Columbia University Business School. Greenblatt espouses MFI as a do-it-yourself version of the approach he has used while amassing his investment track record. With the “Little Book,” Greenblatt wanted to write a book his children could read and learn from. The main point Greenblatt makes is that investors should buy good companies at bargain prices.  

  • Special - Microcap “Magic Formula” Newsletter

    Joel Greenblatt’s “Magic Formula” has proven to be one of the most popular (and successful) mechanical value investment screens. By finding stocks with above average earnings yields and returns on invested capital, the magic formula consistently outperforms the market. However, the magic formula has one blind spot: “micro-cap” stocks, specifically those under $50 million in market cap. The Micro-Cap Magic Formula Newsletter will capitalize on that blind spot by digging through stocks too small to make the official magic formula screen.

    This is the link to download the special report:  

  • Book Review: The Big Secret for the Small Investor

    Joel Greenblatt is out with a new book: "The Big Secret for the Small Investor."

    I downloaded it onto my Kindle the second it became available – because Joel Greenblatt is our modern day Ben Graham.  

  • GuruFocus Interview with Renowned Investor Joel Greenblatt

    Joel Greenblatt is a renowned investor who invented Magic Formula Investing and founded the New York Securities Auction Corporation (NYSAC). He is the founder and Co-CIO of Gotham Capital, an investment partnership that achieved 40 percent annualized returns for the 20 years after its founding in 1985, and adjunct professor at Columbia Business School. Mr. Greenblatt has written three books on investing, including his most recent, "The Big Secret for the Small Investor."

    His investment philosophy is to find cheap and good companies, usually those in special situations. In his own hedge fund, he employs the principals of the Magic Formula: Look for high ROC and earnings yield, try to figure out what "normalized earnings" will be 3-4 years into the future, and choose only stock that is very cheap based on normalized earnings. He typically has a concentrated portfolio of only 5-8 securities at a time.  

  • Joel Greenblatt Has a Big Secret for You

    The past few weeks have seen Joel Greenblatt, the father of Magic Formula Investing (MFI), out promoting his new book released Tuesday, titled The Big Secret for the Small Investor. MagicDiligence is in the process of reading the book, and a full review should be up as early as next week. From Greenblatt's interview with Morningstar, we already have a pretty good idea of what the book is about and the motivation behind it. The "big secret" is value weighted indexing. Most indexes, like the S&P 500 or Russell 3000, are weighted by market cap. That means that for every dollar you invest in them, the largest cap stocks get more pennies then the smaller cap stocks. For example, if you invest $100 in a S&P 500 index fund (SPY is a popular one), about $3.48 is invested in ExxonMobil (XOM), the largest-cap stock in the index, while about $2.52 is invested in Apple (AAPL), the second largest, and so on.

    Greenblatt believes weighing the indexes by value parameters, such as the operating earnings yield and return on tangible capital used by MFI, produces better results. In the Morningstar interview, he says that market cap weighting removes about 2% of annual returns as opposed to equal weighting (where money is spread evenly among all stocks in an index). A quick Google search will net you dozens of studies corroborating that fact, and it makes intuitive sense as well -— very large cap stocks have more limited growth avenues and are more appropriately priced, in general.  

  • Guru Stocks Raising Dividends: SKT, PNC, RELL, TJX, GOV

    This is the group of companies who raised their dividend during the week: Tanger Factory Outlet Centers (SKT), Pnc Financial Services Group (PNC), Richardson Electronics Ltd. (RELL), Tjx Companies Inc. (TJX), and Government Properties Income Trust (GOV).

    Tanger Factory Outlet Centers (SKT)

    Tanger Factory Outlet Centers Inc. is a fully-integrated, self-administered and self-managed real estate investment trust which focuses exclusively on developing, acquiring, owning and operating factory outlet centers. Tanger Factory Outlet Centers has a market cap of $2.06 billion; its shares were traded at around $25.28 with a P/E ratio of 20.4 and P/S ratio of 7.4. On April 7th the company increased its quarterly dividend 3.2% to $0.20/share. The dividend is payable on May 13, 2011 to shareholders of record on April 29, 2011. The yield based on the new payout is 3.2%.  

  • Guru Stocks at 52-Week Low: CSCO, AZ, MTU, GM, TGT

    Last week’s top five stocks that reached their 52-week lows were CSCO, AZ, MTU, GM, and TGT.According to GuruFocus list of 52-week lows, these Guru stocks have reached their 52-week lows.

    Cisco Systems Inc. (CSCO) Reached the 52-Week Low of $17.65  

  • Weekly Top Insider Buys: FMER, ANN, JOSB, HI, CMTL

    Weekly highlight of top insider buys: FirstMerit Corp. (FMER), Ann Inc. (ANN), Jos. A. Bank Clothiers Inc. (JOSB), Hillenbrand Inc. (HI), and Comtech Telecommunications Corp. (CMTL).

    FirstMerit Corp. (FMER): Director J Michael Hochschwender Bought 5,800 Shares  

  • Plan not to Panic

    “Plan not to panic” next time your stock portfolio drops 40%. That was billionaire hedge fund manager Joel Greenblatt’s advice for the little people in a column on his Magic Formula investing site last year (by the way, Virginia, there are no magic formulas). So what did Greenblatt do when Mike Burry, a hedge fund manager Greenblatt’s Gotham Capital invested with, was down 18% in 2006 (after several years of spectacular returns), due to early, illiquid bets against subprime mortgages — bets that Burry wanted to hold to fruition? From p.190 of Michael Lewis’s book, The Big Short,

    [quote]Immediately [...] Gotham Capital threatened to sue him.  

  • Best Buy (BBY) – A Stock Traded at Historical Low P/E, P/S and P/B Ratios

    Computer and electronics retailer Best Buy’s (BBY) stocks have been falling steadily since the start of 2011, with a glaring $41.70 to $34.50 plunge from Dec. 13-15 after a lackluster third-quarter earnings report. Same store sales at the company had declined 5%, for net earnings of $217 million, compared to $227 million for the same quarter the year prior. In the fourth quarter, it also reported earnings decline – net earnings of $651 million compared to $779 million the year prior. Many investors worry that with competing online retailers and other changes in consumer preferences, Best Buy will go the way of similar companies that have filed for bankruptcy, such as Blockbuster and Circuit City.

    As a result, Best Buy is traded at close to historical low for all the important valuation ratios such as price to earnings (P/E), price to sales (P/S) and price to book (P/B).  

  • Stocks Traded at Historical Low Price/Book Ratios: RGLD, AZN, ABT, JNJ, WMT

    Stocks of Royal Gold Inc. (RGLD), AstraZeneca PLC (AZN), Abbott Laboratories (ABT), Johnson & Johnson (JNJ), and Walmart Stores (WMT) are found to lead the list of the stocks that are traded at historical low price/book ratios. We only list the companies with high Business Predictability Rank in this screen. These businesses have been very predictable historically. They could grow their revenue and earnings at steady pace. Currently their stocks are traded at historical low price/book (P/B) ratios. If we believe that the valuation will reverse to the mean over time for them, these stocks will generate above-average returns at lower risk.

    Study shows that stocks with low P/B ratios did outperform the market. According to the data published on the website of one of our gurus, Donald Smith, “A study that we conducted with Compustat data showed that from 1951 to 2009 stocks in the lowest price-to-tangible book value decile had the highest long-term returns, delivering a 15.4% return versus 10.7% for the S&P 500.” The results of the study are displayed in the chart below:  

  • What if Your Investment Strategy Stops Working?

    A while ago I had an interesting discussion with a subscriber.

    He asked a question that at first sounded easy, but the more I thought about it, the more I realised it was very difficult to answer.  

  • Questions and Answers With Joel Greenblatt

    GuruFocus is pleased to announce that our readers can now ask questions to Prof. Joel Greenblatt!

    This is the second time that Prof. Joel Greenblatt takes questions from GuruFocus users. You can find the complete transcript of the last Q&A session here.  

  • Book Review: You Can Be A Stock Market Genius: Chapter 1 - 2

    Value investor Joel Greenblatt takes the reader through a number of categories of investing examples where market inefficiencies exist. This book has numerous case studies, giving the investor a chance to learn and then apply the lessons to current and future market opportunities

    Chapter 1.   

  • New Magic Formula Stocks from Joel Greenblatt: IDCC, SNDK, MHP, OSK, LO, MRX

    When famed value investor Joel Greenblatt published his little book “The Little Book That Beat The Market”, it was an immediate hit. We started to track the portfolio of Mr. Greenblatt’s hedge fund Gotham Capital. But for the last two years Gotham Capital did not report its portfolio, Magic Formula fans could not track Mr. Greenblatt’s portfolio closely.

    To our delight, Mr. Greenblatt started to report his portfolio again. The portfolio consists of 358 stocks with the total value of $306 million on Dec. 31, 2010. As we look into these stocks, we found many of them have the characters of the stocks that would be top ranked in Mr. Greenblatt’s Magic Formula.  

  • Joel Greenblatt’s New Magic Formula Stocks: IDCC, SNDK, MHP, OSK, LO, MRX, MSFT, IPXL, CECO, FRX, LPS

    Joel Greenblatt has not filed his quarterly holdings for the last year. Now he started to file again. As of 12/31/2010, Gotham Capital owns 358 stocks with a total value of $306 million. These are the details of the buys and sells.

    With 358 stocks in his portfolio, and the top positions is just above 2% of the total portfolio, we believe that these are the magic formula stocks Joel Greenblatt bought.  

  • Upcoming Contango Spinoff of CORE Unit Seems Destined To Create Forced Selling – Will It Be A Good Investment Opportunity ?

    As the stock market keeps moving higher an investor has to work harder to find undervalued opportunities. One place to look of course is the area of spin-offs where the spun-off company is often sold quickly and without regard to price by many institutional shareholders.  

  • Joel Greenblatt's Recommended Reading List

    Joel Greenblatt in addition to being a great investor is also a professor at Columbia’s Business School. He teaches a class titled “Value and Special Situation Investing”.

    The course as described as follows:  

  • Comment for Joel Greenblatt Portfolio Holdings --

    Is Gurufocus still following JG>?  

  • Joel Greenblatt To Launch Value Based Mutual Funds

    Author and hedge fund manager Joel Greenblatt will soon launch 6 value investing mutual funds based on his magic formula investing system which he described in The Little Book That Beats The Market and his recently released The Little Book That Still Beats The Market.

    According to the SEC filing, Greenblatt plans to launch 6 mutual funds all based on the magic formula and his recent research in which he has done on international value stocks (videos below). The mutual funds that will be released are:  

  • Joel Greenblatt on CNBC discussing the Magic Formula

    Joel Greenblatt appeared on CNBC this morning to discuss his new book The Little Book That STILL Beats The Market. The book is an updated version of The Little Book That Beats The Market which presents a formula for finding great businesses (high ROC) at discounted prices (earnings yield). Since the original "Little Book" was released, a small following has developed great interest in the results that could be obtained by optimizing the formula. To those who have stuck with the formula, The Little Book That Still Beats The Market provides updated results along with a section of why the magic formula system has not worked as well as many had hoped, which was mainly due to the recent stock market drops.


  • Joel Greenblatt Launches New Hedge Fund

    Many people frequent this site profited from Professor Joel Greenblatt’s simple and beautiful investment method call “Magic Formula Investing”.

    The recent move from Greenblatt is that he launched a hedged fund called Formula Investing Hedged Value Strategies, LLC., with $15.58 million asset under management in total.  

  • Introducing The Little Book that Still Beats the Market

    It has been almost 5 years since value investor Joel Greenblatt introduced The Little Book That Beats The Market. The book highlights a simple value investing strategy which focuses on finding great companies at attractive prices. To find great companies the Magic Formula uses Return On Capital (EBIT/ (Net Working Capital + Net Fixed Assets) a simple metric that measures how well a company is using its capital to generate returns. The other metric used in the Magic Formula is Earnings Yield (EBIT/Enterprise Value), which measures the company's yield versus a comparable rates such as a 10 year treasury yield to determine if the stock is undervalued or not. For example, say current 10 year Treasury yields are at 2%. If a company has an earnings yield of 12%, the stock would be attractive. In cases where treasury yields are low when compares to historical numbers, Joel Greenblatt recommends using an default 6% yield to replace that low yield. Either way, if the earnings yield is 12% vs. 6%, the stock would be considered for purchase.

    A couple of events have occurred since the release of the original "Little Book." First, the website that accompanied the book has been completely re-designed. With the new look came a couple of changes such as the removal of earnings yield and return on capital which allowed individual investors to see why the stock was classified as "magic formula".  

  • Knowing Vs Understanding

    Joel Greenblatt is a very successful value investor and has written a popular book called 'The Little Book That Beats the Market'. In the book, Mr. Greenblatt shows the merits of picking a portfolio of 30 stocks using a "magic formula" - buying businesses cheaply that have high earnings yield and high returns on capital. Furthermore, Mr. Greenblatt's firm has done extensive research to show the validity of such an approach. However, I see grave dangers in relying solely on such a mechanical approach to investing i.e. without understanding the underlying business and the industry dynamics. (Before you get upset about me challenging Mr. Greenblatt, look at the notes section at the end of this article).

    This goes way beyond "magic formula" investing. You cannot help but notice that Wall Street's extent of valuation mostly starts and ends with such simplistic valuation metrics. In this article, I want to point out some of the perils of exclusive dependence on the two metrics - PE ratio and ROE.  

  • Recent Interview: Joel Greenblatt Discusses the Magic Formula

    In an interview with Forbes Joel Greenblatt discusses his book The Little Book That Beats the Market and his magic formula.

    Some main points from the interview:  

  • Joel Greenblatt Interviewed by Steve Forbes

    Joel Greenblatt appeared on Steve Forbes’s Intelligent Investing program this week. The author of The Little Book That Beats the Market (Little Books. Big Profits) has been working on expanding the offerings for his business venture Formula Investing. The book illustrated a stock investment method that selects stocks based on the combination of earning yield and return on equity.

    Individual investors can use the investment method by signing up with Greenblatt’s business venture  


    Joel Greenblatt's book The Little Book that Beats the Market, in which the Magic Formula Investing (MFI) strategy was revealed to the world, was first published in December 2005. After an initial rush of publicity, the strategy has largely been relegated to the background since then, despite continuing to vastly outperform the market since it was made public. Only recently are we seeing some of the more mainstream investment media start to discover and write about it, probably due largely to the publicity push behind Greenblatt's Formula Investing venture to provide "do-it-for-me" services for those interested in MFI.This can be seen recently in a piece published by Morningstar looking into the Magic Formula. Morningstar is most widely known as a company that tracks, rates, and provides data on the thousands of different mutual funds out there, though they also have services that provide equity and ETF ratings. I was rather surprised it took the site over 4 years to write anything substantial about MFI, as their equity review service is highly skewed towards the value investing principles of Warren Buffett, who was tutored by Benjamin Graham, from whom MFI is inspired.

    Graham to Greenblatt, For the Win  

  • Joel Greenblatt's "magic formula" touted by Morningstar

    Joel Greenblatt's magic formula gets a favorable review in a recent article posted by Morningstar.

    Greenblatt's formula, first unveiled in the popular "The Little Book That Beats the Market," uses just two data points to pick a basket of stocks: return on invested capital and earnings yield. Investors buy the stocks that rank the highest on Greenblatt's "magic formula" and then repeat the process every year.  

  • View on BGP



    One of the most common questions received here at MagicDiligence is "how many stocks should comprise my portfolio?". This may, in fact, be one of the most common questions that individual investors around the world ask. Let's take a look at the reasons behind diversifying stock positions, investigate the answers and actions of some well-known investors, and then see what the Magic Formula Investing strategy has to say about the topic. In the process, hopefully we can come to a conclusion on a good number of stock positions to be sufficiently diversified (without over-doing it).So, first, why diversify at all? The simple answer is to reduce risk. In investing, there are two basic categories of risk, which we will call "macro risk" and "micro risk". Macro risk are systematic concerns that can affect all stocks negatively. Examples of this would be recessions, military conflicts, inflation, high interest rates, and so forth. Micro risk, on the other hand, applies only to a single company or a number of related companies. For example, the FDA's loss-of-smell warning on Matrixx Initiatives' (MTXX) Zicam nasal products caused that stock to plummet 75%, but did not really affect any other stocks. These micro risks can also affect a handful of players in a particular industry or geographic area.

    Holding a number of different stock positions cannot protect you against macro risk, but it can certainly help protect from micro risk. Going back to the MTXX example, if you were an employee there who held all of your 401(k) in company stock, your retirement nest egg would have been largely wiped out. On the other hand, if you had diversified evenly into just 2 stocks, the hit to MTXX would have brought your portfolio down "just" 38% (assuming a constant value for the other holding, of course). If you held a portfolio of 10 stocks, your total portfolio value would be down just 7.5%. Since no investor has a perfect crystal ball into the future, diversification is an important protection against micro risk.  

  • Breaking Down the “Magic Formula” Strategy

    For the past couple weeks, I’ve written to you about several fundamentally attractive stocks based on Joel Greenblatt’s Magic Formula Investing (MFI) strategy. But what exactly is Magic Formula Investing, how does it work, and – more importantly – does it work?

    In this article, we’ll briefly go over the strategy’s philosophies, implementation, and past results. Anyone interested in going further should pick up a copy of Greenblatt’s book The Little Book That Beats the Market. It’s the “Bible” of MFI.  

  • View on Joel Greenblatt

    Good guy.  

  • Seth Klarman's Margin Of Safety, and Joel Greenblatt's You Can Be A stock Market Genius. The $1200 Vs $10 Book

    Seth Klarman and Joel Greenblatt have a lot of things in common. They both are extremely successful value investors who have a long record of beating the market by wide margins. Both are widely followed in the value investing community and are very popular on GuruFocus. Both of them run large and successful hedge funds. One last similarity between the two is the both are excellent authors. Joel Greenblatt wrote two books, the more in depth of the two being titled You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits. Normally when you see the title of a book with such a pompous statement you should run in the other direction as fast as possible, however this book is accurately described by its title. Seth Klarman wrote a book nearly 20 years ago titled Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor. Both are excellent books about investing in obscure securities that are unwanted and not analyzed by others.

    Joel Greenblatt and Seth Klarman have many things in common but here is where their paths diverge. Greenblatt's book is selling on Amazon for $10 while Klarman's is selling for $1200. For those of you who have not read Klarman's book I will give you an outline of it. The first part of the book Seth Klarman discusses how markets are not efficient, bubbles and the difference between speculation and investing. In the second part of the book Klarman discusses investing with a margin of safety, and refutes the common myth that to get more return you need to take more risk. The third and last section of the book is where Klarman discusses how actually to find securities that have higher returns. As I mentioned in a Klarman is not a classic low P/E, high dividend etc investor. He tries to look for areas with the greatest inefficiencies in the market where most institutional investors are unwilling or unable to invest. Some of these situations include spinoffs, asset sales, overcapitalizations and liquidations. Klarman provides a few examples but overall his book is scant on details.  

  • View on Joel Greenblatt

    Great investor. One of the best.  

  • Notes On Greenblatt: Value Investing a Bumpy Ride, but It Works

    Joel Greenblatt author of "The Little Book that Beats the Market" was interviewed by to discuss his magic formula and value investing.


  • Joel Greenblatt's Magic Formula Investing made even easier

    It just got even easier to follow the investment advice put forth in Joel Greenblatt's "The Little Book That Beats the Market."

    Greenblatt's firm, Formula Investing LLC, is now offering to manage investors' money using the "magic formula" strategy made famous in "The Little Book That Beats the Market."  

  • Recent Media Appearances of Joel Greenblatt

    In the past two days, Hedge Fund Manager and Professor Joel Greenblatt appeared to all the major media to promote his magic formula investing and his investment management firm

    This time, we found him interviewed by Fox Business News:  

  • Venturing for Value

    Joel Greenblatt, of “Magic Formula” fame, gave a rare interview yesterday on CNBC. The interview had Greenblatt talking about the components of his magic formula as well as recapping its phenomenal performance to date. What Greenblatt stressed multiple times in the interview is that the formula selects many stocks that are currently out of favour with the market, and as such it is important to implement the formula in the context of a “basket”. That is, as Greenblatt is not looking into each company on his screen individually, he recommends buying a basket of 25-30 stocks and expects that on average the basket will outperform. The historical outperformance of Greenblatt’s formula can not be disputed, but I truly believe that the diligent value investor can do even better. This is what I try to accomplish through the individual company analysis I conduct on this site.

    The two components of Greenblatt’s formula are ‘return on capital’ and ‘earnings yield’, that is the formula screens for stocks that are performing top of class in terms of return on capital but which are trading at a cheap valuation (high earnings yield means low price to earnings). I think this makes perfect sense, as a first step. Conducting such a screen allows the value investor to narrow the thousands of stocks available down to a pre-qualified list of candidates. What I say is, why buy the basket? A diligent investor can look into each potential investment from both quantitative and qualitative points of view in order to arrive at a fair estimate of intrinsic value. The investor will then only buy the shares of companies which are trading at a significant discount to this estimated value. Sure it’s a lot more work than the “set it and forget it” mentality of the formula, but the results should be worth it.  

  • Joel Greenblatt On CNBC

    Joel Greenblatt appeared on CNBC this morning. Here are quick notes I took.

    • No reason why value investing wouldn't be great right now
    • Emotion is the biggest problem for many investors
    • There are always undervalued companies
    • The Magic Formula continues to work, and likely will continue to work

  • Joel Greenblatt's Magic Formula vs. S&P 500

    Joel Greenblatt's "magic formula investing" strategy trounced the Standard & Poor's 500 index during the 10-year period ending June 30.

    An investor who started with $10,000 on July 1, 1999, and used the magic formula method ended up with $29,400, according to the updated results published this week. That's a 194 percent total return, or 11.4 percent annualized. The figures are net of a 1 percent annual management fee.  

  • Book Reiew: The Little Book That Beats The Market

    Joel Greenblatt, the book's author, is a value investor extraordinaire and a professor at Columbia's business school. In the book, Greenblatt discusses and justifies the "Magic Formula", a stock selection method that allows individual investors to beat the market using value investing.

    Chapter 1-3
  • Comment for Joel Greenblatt Stock Market Insight and


    Joel Greenblatt's Magic Formula Investing (MFI) strategy is a very simple but very effective design. The two screen components are earnings yield (basically the inverse of P/E, using operating earnings) and return on capital. Stocks with a high earnings yield indicate that they may be under-priced based on past levels of profitability. Stocks with high returns on capital indicate good businesses - ones that possess some kind of competitive advantage, be it structural or managerial, that allows them to earn outstanding returns on shareholders' capital. Combine the two and you get "good companies at cheap prices" - a winning investment recipe, proven through numerous back-tested studies to outperform the market at large.

    However, any experienced investor can spot obvious frauds just by perusing the top 50 stocks on the official MFI screen for any given day. Simply because of the way the MFI screen components are calculated, imposters can find their way into the list. Some examples of these imposters are: heavily cyclical commodity stocks after a boom period; fad stocks with no second act that have outlived their year or 2 in the sun; declining businesses in run-off mode with little hope of future growth; and firms that grow exclusively through expensive and risky acquisitions that are hidden by the MFI tactic of removing goodwill assets from return on capital calculations.  


    Last week, Joel Greenblatt, the founder and "godfather" of Magic Formula Investing (MFI), gave an interview to value investing supersite In the interview, he answered a number of questions relating to Magic Formula Investing, his new FormulaTrading venture (which MagicDiligence reviewed here), and on the market and his investing principles in general. I encourage all MagicDiligence readers to take a look at the interview, as it is an enlightening read. Some common themes ran through his answers, and I wanted to comment on a couple of them in this article. Joel's comments to GF are italicized, with my comments below. All comments belong to GuruFocus, and are reprinted with permission.

    Theme #1: Investing Should be Simple  

  • Answers from Joel Greenblatt are Here!

    (GuruFocus, June 30, 2009) Back in early June, when we became aware of Investment Guru, Joel Greenblatt became the strategist for the money management firm, we reached out and requested an opportunity for our users to ask Joel questions. To our delight, the good professor (Joel is also an Adjunct Professor with Columbia University) agreed.

    After we announced the good news, the response from our users were overwhelming. In the end, we collected a total of 60 questions and passed them all on to Joel. Dear GuruFocus users, thank you all very much for asking the questions!  

  • Chance of Asking Joel Greenblatt a Question Closed

    Since we announced the Q&A Session with Investment Guru, Columbia University Professor Joel Greenblatt last Friday, we have received 50 questions (listed below).

    In case you do not know who Joel Greenblatt is, click here.  

  • Asking Joel Greenblatt A Question - Closed

    Since we announced Investment Guru Joel Greenblatt will conduct a Q&A with our users last Friday, we have had overwhelmingly positive response. So far, twenty questions have been raised (including some loaded ones). Here is the un-edited summary:

    Question 1. (grol1971) Traditionally your portfolios have been very focused. What do you think about the Bruce Berkowitz's investment in PFE, which accounts for more than 20% of Fairholme Fund.  

  • Q&A Session With Professor Joel Greenblatt -- Closed

    GuruFocus is pleased to announce that Investment Guru, Columbia University Professor Joel Greenblatt has agreed to conduct an email Q&A with GuruFocus users.

    According to the money management firm Formula Trading, LLC ’s website:
    Joel Greenblatt is the founder and managing partner of a successful private investment partnership in New York City. He is a professor on the adjunct faculty of Columbia Business School, and holds a BS and an MBA from the Wharton School.

  • After Selling Ambassadors Group Inc., Joel Greenblatt Keeps only two stocks: Telemig Celular Participaes S.A. and Ark Restaurants Corp.

    Joel Greenblatt must be distracted by something else or on his way out of the picture of investment management. His portfolio that we track has dwindled to just two stocks and $1.2 million or reported assets. But that is two mighty stocks, for since the quarter end of 1Q09, his two-stock portfolio is on fire, shooting up 54% in about two months.

    The Man Behind the Magic Formula  


    Warren Buffett is a legend in the investing world. The chairman of Berkshire Hathaway (BRK-B), he has amassed a fortune of over $60 billion dollars, using his company as a vehicle for investing in stocks, fixed income instruments, and buying entire businesses. As of the last list, he was the 2nd richest man in the world according to the Forbes 400. Berkshire has evolved from a textile mill in the northeast into a huge conglomerate, with operations ranging from car insurance (GEICO) to underwear (Fruit of the Loom) to paint (Benjamin Moore). Moreover, some of Warren's stock investments, such as his positions in Moody's (MCO), Coca-Cola (KO), and Gillette (now Proctor & Gamble) (PG) are textbook examples of buying quality at bargain prices. Berkshire's performance has been remarkable - since 1965, the company has grown book value at an annualized 20.3%, vs. the S&P 500's 8.9% annual gain, outperforming the market in 39 of those 44 years. So it is with baited breath that value investors await his annual letter to shareholders. These have been Warren's principal method of passing his wisdom along to the general public, on everything from how he chooses stocks to his outlook on the near future. Entire books have been written from the content in his letters - for example, The Essays of [url=]Warren Buffett[/url] is an organized compilation of the wisdom from these letters. Let's take a look at a few points from his 2009 letter to shareholders and see what nuggets we can apply to investing the Magic Formula way.

    Keep Investing in Down Markets  


    MagicDiligence believes primarily in fundamental stock analysis. The share price of a company is dependent, more than anything else, on underlying corporate performance metrics such as net profit, book value, revenue growth, and so forth. The view of short term technical analysis here, paraphrasing a quote by Warren Buffett, is "technical analysis is great at predicting the past". However, it's clear over the past year that macro-economic conditions are very important when the final performance of investments are calculated. The purpose of the Magic Formula Investing strategy, and of the MagicDiligence Top Buys portfolio, is to outperform the market over the long term. When devising an equity-only strategy, this is the primary goal. However, the purpose of most investors is to earn as high a return on their investments as possible, while keeping risk in check. Therefore, a stock strategy can outperform the market but still deliver poor returns over a period of time. This is exactly the situation over the past year, where the Magic Formula and MagicDiligence have outperformed the market but still delivered very poor returns of -25% or more.

    The Little Book that Beats the Market has published annual returns of over 30% from a 17 year period from 1988 to 2004. But is it realistic to expect those kinds of returns going forward over the next 17 years? While doing some research, I came across some interesting technical data that suggests that it may not be realistic.  

  • Fundamental Value Investors: Characteristics and Performance

    All 2912 individual investment decisions of professional fundamental value investors on Value Investors Club ( are analyzed. We answer a simple question: do professional value investors have stock picking skills?


  • Graham vs. Greenblatt (Session 5) Bringing it all Together

    We made it to the final installment of our Graham vs. Greenblatt series. Throughout the series we examined each of the ratios that Greenblatt recommended in his book The Little Book that Beats the Market. The final posting will look at how Greenblatt draws the ratios together and bring this all back around, so lets get into it.

    What is it?

    Greenblatt says:  

  • Graham vs. Greenblatt (Session 2) Buy America & Buy Big

    Joel Greenblatt is a modern value investor, his approach as we outlined in our previous post was to find value companies like Graham, but he also wanted a company that has potential for the future. The first set of criteria looks very similar to Graham.

    What is it?

    1. Establish a minimum market capitalization (greater than $50 million is recommended).
    2. Exclude utility and financial stocks and any foreign companies (Non US).

    What does it tell us?

    Market capitalization = Number of outstanding stock * Current Price of stock  

  • Graham vs.Greenblatt (session 1)

    Graham passed away in September 21, 1976 well before Joel Greenblatt graduated from Wharton in 1979 but a linkage between the two men's investment theories is not difficult to find. Greenblatt during his time at Wharton went to great lengths to study the value approach that Graham had devised (there are stories that Greenblatt entered vast amounts of stock data by hand into a mainframe and then ran tests on it using Graham's system). He saw the benefit that could be returned from purchasing companies that were inexpensive.

    Greenblatt struggled with Graham's rules- like so many professional investors do. If you stick to Graham's rules you make no estimation on the future and deal only with the past, you want strong companies with strong histories that are currently cheap. But if you do this you have two problems as a broker or hedge fund manager:  

  • Joel Greenblatt buys Herbalife Ltd., The Buckle Inc., Chiquita Brands International Inc., Polaris Industries Inc., AmerisourceBergen Corp., Syniverse Holdings Inc.

    Ever wonder why Joel Greenblatt does not use his Magic Formula for his own portfolio? Here we go. Instead of a very concentrated portfolio, he bought 156 stocks with a $63 million portfolio. Now let's see how a real magic formula portfolio works. These are the details of the buys.


  • Out of the Market Now buys everything in sight?

    With regard to Joel Greenblatt....if memory serves me correctly....he was basically out of the market except for a holding in AmEx(we know that didnt do well) andnow he just bought over 150 stocks for about 65 I correct? any comments  

  • Magic Formula Question

    Why do you think Greenblatt insists on holding for a year?

    Wouldn’t it be a better option to buy 30 stocks and then re-balance every month? That way you are always holding stocks with a low PE and high ROIC and dropping those that do not meet the criteria.  

  • Andrew Barrett Book Review: You can be a Stock Market Genius by Joel Greenblatt

    Amazon subtitle: ‘Awful title, excellent book’ 4/5. 1999 Fireside reissue of 1 st edition (1997), 299 pages (of which 261 pages form the main body of the book). "Despite the awful title, I really enjoyed ‘You can be a Stock Market Genius’."

    Greenblatt laces his (excellent) content with plenty of jokes, which I always think of as a somewhat risky approach: some readers who would otherwise appreciate the content will not like the delivery.  

  • My worst investment mistake

    OK maybe one of my worst. I bought WNR (Western Refining) in November '06 at 23.50. Loaded up on it. As of summer of this year, it was trading at around 65, something just short of a triple. However, if I had sold it, I would have had to pay short term capital gains taxes on it, which in my tax bracket would have been a huge hit, so I wanted to hold for at least one year.

    The sad ending? Today the stock is trading in the high 20s.  

  • Magic Formula’s: Do As I Say, Not As I Do?

    In my last articles, “Warren Buffett’s Magic Formula in 1965?” and “Benjamin Graham’s Lost Magic Formula in 1976?”, I explored the use of and/or public endorsement of investment formulas by value investors Benjamin Graham, Warren Buffett, Joel Greenblatt, and Mohnish Pabrai. Given such credible endorsements, I wondered three things:

    Is value investing a simple formula?  

  • sabrient and the magic formula

    just for fun, i recently ran a screen for sabrient buy recommendations with PEs below 15x. i was suprised to see a large number of magic formula stocks in the results  

  • Joel Greenblatt: How to Outperform The Magic Formula – Part 2

    In my last article [link] on Joel Greenblatt’s investment system we discussed two ideas that could improve the Magic Formula stock selection process. In this article I will pay attention to two other ideas that also may help to outperform standard Magic Formula selections.

    In my last article on Joel Greenblatt’s investment system we discussed two ideas that could improve the Magic Formula stock selection process. The main idea was to do some further research on the real reasons behind high Returns on Capital and high Earning Yields. We recommended:  

  • Joel Greenblatt: How to Outperform The Magic Formula – Part 1

    The Magic Formula beat the market, as Joel Greenblatt has proved in his book. But Joel Greenblatt himself does not use the magic formula. What does he do differently? This article tells you something that Joel Greenblatt might be doing.

    In my first article about Joel Greenblatt (LINK) I showed the incredible returns of Greenblatt’s magic formula investment system. Then, we focussed on ‘relative goodness’ (LINK), an essential concept for determining how good companies are in allocating capital. Last month (LINK) I wrote about ‘relative cheapness’, which gives an idea of the relative valuation of companies.  

  • Joel Greenblatt Sells Aeropostale Inc., AutoZone Inc.

    Joel Greenblatt, the author of the best seller "The Little Book that Beats the Market", sells Aeropostale Inc., AutoZone Inc. during the 3-months ended 12/31/2006, according to the most recent filings of his investment company, Gotham Capital. Joel Greenblatt owns 2 stocks with a total value of $24 million. These are the details of the buys and sells.

    Sold Out: ARO, AZO,  

  • The Magic Flawmula – Did Joel Greenblatt Miss Something?

    Excuse the blatant typo, Mr. Greenblatt is ultra successful! Yet as I read through his book, you know the one; I couldn’t help think he was doing the "Jim Cramer!" You know... the part where he tries to appeal to everyone all at once.

    The book is a great read and very easily done within an hour or two. Again, the problem with the "magic formula" is supposed to be a long term investment strategy and it doesn't take into account consistency of the business, which is the MOST IMPORTANT factor in determining future cash flows or earnings... a la intrinsic value. All are the foundation of a long term investment strategy. Otherwise you a speculating!  

  • FreightCar America (RAIL)

    This is what Joel Greenblatt would call a “Magic Formula Stock” (from his popular The Little Book that Beats the Market), which is currently in the top 30 ranks in terms of high EBIT/EV (return on capital), coupled with high EBIT/Price (earnings yield). With a PE around 6, a nil chance of bankruptcy, and solid growth over the past few years, there is no doubt the company’s numbers look attractive and a possible buying opportunity exists.

    Before saying anything else on this company (and to avoid saying what’s already been said just as well if not better), I’ve found it instructive to check out Hans Wagner’s recent post, upon which I hope to build.  

  • What investment pro Greenblatt considers as a good company

    Last time, I wrote about the incredible returns an investor would have achieved when he or she exactly followed Greenblatt’s magic formula for investing (see here). We saw then that his magic formula was simply based on ranking companies by looking at how ‘good’ they are at earning money and how cheap they are when looking at their share price. This time I want to explain in more detail how to decide whether a company is ‘good’.

    Greenblatt uses the Return on Capital (ROC) ratio to figure out how well a company is doing in generating profits. The ROC criterion gives a good indication of how well a specific company is performing, on a relative basis.  

  • Joel Greenblatt: The results revealed

    Annual return rates of 40%? When someone is claiming these kinds of returns, scepticism is justified. After all, with such amazing returns, an investment of $ 10,000 will grow to almost $ 300,000 within only ten years!

    Only the world’s best investors are able to make such exceptional returns. And most of them became billionaires. Joel Greenblatt, the founder and managing partner of Gotham Capital and adjunct professor at the Columbia Business School , is one of them. His investment portfolio generated an average annualized return of 40% for over 20 years. In the first 10 years, Greenblatt even achieved annual returns of over 50%!  

  • Joel Greenblatt Buys Aeropostale Inc., Sells Lear Corp., Live Nation, Inc.

    Famed investor Joel Greenblatt buys Aeropostale Inc., sells Lear Corp., Live Nation, Inc. during the 3-months ended 09/30/2006, according to the most recent filings of his investment company, Gotham Capital. Joel Greenblatt invented the "magic formula", and authored the value investing classic "The Little Book that Beat the Market". These are the details of his buys and sells.  

  • Can you beat the professionals?

    Can small investors beat the professionals? YES! According to Joel Greenblatt. In his book “You can be a stock market genius” he listed the disadvantages that investment professionals have: For a professional who manages $12 billion, if he wants to own less than 10% of each company, he needs to own 50-100 stocks. His choices are limited to those most followed large companies. Small investors have a much broader choices. This is similar to what Warren Buffett said “size is an anchor against Performance”.

    Read the complete article  

  • That Magic Little Book

    When I first heard about Joel Greenblatt’s “The Little Book That Beats the Market”, I was skeptical. Investing has never been that simple. I have read most of value investing classics, from the bible “The Intelligent Investor”, to Peter Lynch’s “Beating the Street”, to Warren Buffett’s annual shareholder letters. Through the readings I have been converted from a technology speculator to a value investor. My investment returns have improved significantly, but they are still not as good as the numbers claimed in the “little book”.

    Read the complete article  

  • Finding magic investing formula

    ‘The Little Book that Beats the Market” proposes a simple formula for picking a portfolio of stocks that beats market averages over the long-term. Joel Greenblatt discloses the magic formula that his investment firm has used to yield average annual returns of 40 percent for more than 20 years.

    One consistent theme that all of my finance professors taught me was that it is very hard to beat the market rate of return. I was taught to simply buy an index fund and spend the time I would have spent searching for individual stocks pursuing other hobbies. The results of Greenblatt’s magic formula could make you rethink that advice.  

  • When Joel Greenblatt speaks, investors listen

    When Joel Greenblatt speaks, investors listen. Since founding Gotham Capital in 1985, hedge-fund maestro Greenblatt says he's returned an astonishing 40% a year. He agreed to discuss two of the five stocks in his super-concentrated portfolio with us.

    In his recently published The Little Book That Beats the Market (Wiley, $20), Greenblatt describes a "magic formula" for picking stocks. In brief, he seeks companies with high returns on capital and high earnings yields (profits divided by stock price); the formula uncovers high-return businesses with undervalued stocks. Greenblatt, 48, offers a clue about what the formula is uncovering these days: "This is the first time in 25 years that most of the bargains we're finding are in large-cap, quality businesses."  

  • The magic money machine: triple your investing returns

    Joel Greenblatt says he has a magic formula for investing that can double or even triple the returns you get from the stock market. Our normal response when we hear such claims is to mutter, "Yeah, and I'm selling some swampland in Florida." But Greenblatt deserves more respect than most of the get-rich-quick crowd.

    For one thing, he packs some real-world credibility. As head of Gotham Capital, a hedge fund based in New York, he claims to have achieved average annual returns of 40% for 20 years. He teaches part-time at Columbia Business School and his new book, called simply enough, The Little Book that Beats the Market, carries complimentary blurbs from Wall Street heavy hitters such as Michael Steinhardt and Michael F. Price, as well as a foreword from Andrew Tobias, the dean of U.S. personal finance writers.  

  • Is value investing a thing of the past -- or future?

    they have become bargains. In other words, they look like value stocks. "The dip in valuation for many growth stocks blurs the traditional lines between growth and value," the writer says, "making it increasingly difficult for everyone to agree on which stocks are growth and which are value."

    Aha! So growth's not really back, it's just that growth can be purchased at a reasonable price. Kind of like the clearance sale at Macy's where the Jones New York outfit is marked down 50 percent, plus you can take off another 30 percent at the cash register.  

  • The Joel Greenblatt Way : Grow Rich "Not Trying Very Hard"

    Would you like to earn 30% a year and turn $11,000 into $1 million in 17 years while "not trying very hard"? If you would, you start by making a mere $20 purchase of "The Little Book That Beats The Market" by Joel Greenblatt. In the book, you will find a "magic formula" and the operating steps towards your millions. The beauty of the magic formula is that it can be summarized in one sentence. Are you ready?

    Read the complete article  

  • Joel Greenblatt: How Is a Hedge Fund Like a School?

    Hedge-fund guru Joel Greenblatt applied Wall Street principlesand $1,000 per studentto turn around a struggling Queens elementary school. And it worked, spectacularly. "I'm an investor," Greenblatt says. "I spend my time trying to figure out whether a business model works or not. I wanted to find a school model that worked and roll it out."


  • Joel Greenblatt Appears on Bloomberg



  • How Joel Greenblatt uncovers the secret hiding places of stock market profits?

    An enlightened man turns on the "Light" in the dark hidden places. Joel Greenbaltt is such a man.

    Discovering The Hidden Places:  

  • Joel Greenblatt speaking at NYSSA

    In the freezing cold evening of December 7th, 2005, Joel Greenblatt of Gotham Capital, armed with delightful jokes and a magic formula, warmed the hearts and souls of about 200 security analysts in a seminar organized by New York Society of Security Analysts ( We are pleased to bring you the financial enlightenments captured from that event:

    Crunching Data, Searching Magic Formula: During his years at Wharton, Joel Greenblatt manually entered stock data based on 9 years worth of S&P Stock Guides and created their own database for research.  

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