Joel Greenblatt Investing Philosophy
Greenblatt tries to find cheap and good companies. He looks for value with a catalyst, so nice things happen sooner. Greenblatt likes special situations, and thinks that they are simply different places to find cheap stocks. In his own hedge fund, Greenblatt uses the basic principals in the Magic Formula: Look for high ROC and high earnings yield. He tries to figure out what "normalized earnings" will be 3-4 years into the future. Greenblatt makes sure the stock is very cheap based on normalized earnings. He is very concentrated in investing, 5 to 8 securities can make up 80% of his portfolio. One position could be as high as 30%.
Performance of Gotham Absolute Return Fund
|Year||Return %||S&P500 %||Excess Gain %|
|3-Year Cumulative (2017-2019)||16.70 (5.28/Year)||51.65 (14.89/Year)||-34.95 (-9.61/Year)|
|5-Year Cumulative (2015-2019)||13.09 (2.49/Year)||71.96 (11.45/Year)||-58.85 (-8.94/Year)|
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