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."
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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."
Read the complete article
