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HOW IS JOEL GREENBLATT PERFORMING IN THIS MARKET?
Nov 20, 2008Yesterday on Value Investing News, there was an interesting link to a post on GuruFocus detailing Joel Greenblatt's recent purchases for Gotham Capital in the third quarter. The details were rather interesting. Usually, Greenblatt is a concentrated investor that focuses on 7-10 large positions, chosen using Magic Formula principles and special situations as detailed in his first book, You Can Be a Stock Market Genius
. However, this time he bought a huge portfolio of 156 stocks, totalling about $63 million dollars. The portfolio included a large number of Magic Formula stocks, as we would expect.
I thought it would be interesting to see how the inventor of Magic Formula Investing is faring in this train wreck of a market. Per MagicDiligence's research, the overall strategy has been vastly underperforming the market, and the Top Buys portfolio has been beat down as well, falling from 12% outperformance of the S&P in late August to being about 1.5% behind it today. Has Greenblatt been able to deliver a better performance than his strategy, or MagicDiligence?
The table below lists each of Joel's purchases and cost basis as reported by GuruFocus. It then lists yesterday's (11/19) closing price, and what his return on each position is so far. Stocks with a white background have been Magic Formula stocks (in one of our screens) in the past 6 months, the ones with a red background have not. Here are the results:
| Ticker | Greenblatt Cost | Current Price | Performance | |
|---|---|---|---|---|
| NT | 5.80 | 0.52 | -91.03% | |
| VCI | 9.60 | 1.11 | -88.44% | |
| VC | 2.90 | 0.39 | -86.55% | |
| NWY | 10.20 | 1.46 | -85.69% | |
| GTLS | 44.10 | 7.53 | -82.93% | |
| CTCM | 20.40 | 3.70 | -81.86% | MD Research |
| GTI | 20.40 | 3.98 | -80.49% | |
| GHM | 41.70 | 8.27 | -80.17% | |
| SANM | 1.80 | 0.36 | -80.00% | |
| ARM | 14.10 | 2.93 | -79.22% | |
| MTW | 24.20 | 5.47 | -77.40% | MD Research |
| TEX | 43.90 | 10.21 | -76.74% | |
| XIDE | 12.60 | 3.01 | -76.11% | |
| HMA | 5.70 | 1.43 | -74.91% | |
| DAR | 14.30 | 3.60 | -74.83% | MD Research |
| STX | 14.80 | 3.91 | -73.58% | |
| WFR | 44.50 | 12.20 | -72.58% | |
| BARE | 13.50 | 3.75 | -72.22% | MD Research |
| ANF | 51.50 | 14.55 | -71.75% | |
| KV.A | 22.00 | 6.30 | -71.36% | |
| JOYG | 64.30 | 18.45 | -71.31% | |
| BEAV | 23.20 | 6.78 | -70.78% | |
| M | 19.40 | 5.68 | -70.72% | |
| TXT | 40.80 | 12.20 | -70.10% | |
| BGP | 5.90 | 1.78 | -69.83% | |
| ERES | 13.90 | 4.20 | -69.78% | |
| IPG | 8.60 | 2.61 | -69.65% | |
| WBC | 42.70 | 13.37 | -68.69% | |
| BUCY | 60.30 | 19.10 | -68.33% | |
| MFW | 41.30 | 13.65 | -66.95% | |
| AIMC | 16.70 | 5.55 | -66.77% | |
| DISH | 28.10 | 9.62 | -65.77% | |
| CR | 35.20 | 12.08 | -65.68% | |
| GCO | 32.70 | 11.40 | -65.14% | |
| JBL | 15.10 | 5.27 | -65.10% | |
| FLS | 119.60 | 42.12 | -64.78% | |
| HLF | 42.80 | 15.50 | -63.79% | |
| IFSIA | 12.20 | 4.50 | -63.11% | |
| AP | 38.60 | 14.30 | -62.95% | |
| SNHY | 33.40 | 12.52 | -62.51% | |
| CIR | 56.20 | 21.17 | -62.33% | |
| NSTC | 11.70 | 4.46 | -61.88% | |
| BBI | 2.50 | 0.96 | -61.60% | |
| TTMI | 12.00 | 4.65 | -61.25% | |
| CXR | 10.70 | 4.20 | -60.75% | |
| CKXE | 7.70 | 3.03 | -60.65% | |
| ISIL | 22.30 | 8.84 | -60.36% | |
| MFLX | 20.70 | 8.21 | -60.34% | |
| ALV | 38.90 | 15.48 | -60.21% | |
| PACR | 20.60 | 8.36 | -59.42% | |
| ARO | 33.20 | 13.65 | -58.89% | |
| CMCO | 25.50 | 10.50 | -58.82% | |
| RBN | 43.80 | 18.04 | -58.81% | |
| VCLK | 12.20 | 5.05 | -58.61% | MD Research |
| EME | 29.70 | 12.45 | -58.08% | |
| FLR | 75.10 | 31.91 | -57.51% | |
| NPO | 38.60 | 16.42 | -57.46% | |
| VSH | 8.50 | 3.62 | -57.41% | |
| TTWO | 22.90 | 9.82 | -57.12% | MD Research |
| GSOL | 12.30 | 5.31 | -56.83% | |
| AG | 54.00 | 23.48 | -56.52% | |
| AKAM | 24.40 | 10.63 | -56.43% | |
| GDI | 45.40 | 19.96 | -56.04% | |
| CEC | 33.70 | 14.91 | -55.76% | |
| TIF | 39.70 | 17.71 | -55.39% | |
| CLS | 8.00 | 3.59 | -55.13% | |
| SVR | 16.90 | 7.65 | -54.73% | |
| PLCE | 38.20 | 17.55 | -54.06% | |
| SAPE | 7.70 | 3.57 | -53.64% | |
| PCR | 27.00 | 12.54 | -53.56% | |
| KBR | 24.50 | 11.44 | -53.31% | |
| DELL | 22.10 | 10.35 | -53.17% | |
| NWS | 13.90 | 6.55 | -52.88% | MD Research |
| VTIV | 22.20 | 10.52 | -52.61% | |
| VIA.B | 28.50 | 13.51 | -52.60% | |
| WTSLA | 4.70 | 2.25 | -52.13% | |
| BKE | 32.10 | 15.39 | -52.06% | |
| FINL | 10.60 | 5.11 | -51.79% | |
| NZ | 12.50 | 6.09 | -51.28% | |
| NSM | 20.40 | 10.04 | -50.78% | |
| JAS | 23.60 | 11.62 | -50.76% | |
| MWW | 18.70 | 9.23 | -50.64% | |
| GME | 41.40 | 20.56 | -50.34% | |
| RX | 21.60 | 10.73 | -50.32% | |
| CPWR | 10.80 | 5.39 | -50.09% | |
| FIX | 13.80 | 6.93 | -49.78% | |
| RSH | 16.80 | 8.46 | -49.64% | |
| PII | 44.70 | 22.64 | -49.35% | |
| MSTR | 63.30 | 32.65 | -48.42% | MD Research |
| MAN | 49.40 | 25.62 | -48.14% | |
| SOHU | 71.90 | 37.29 | -48.14% | |
| PH | 63.20 | 33.80 | -46.52% | |
| OMC | 42.10 | 22.68 | -46.13% | |
| PCP | 96.20 | 52.34 | -45.59% | |
| CCRN | 15.60 | 8.49 | -45.58% | |
| NTE | 10.20 | 5.58 | -45.29% | |
| ADTN | 22.30 | 12.31 | -44.80% | |
| BR | 19.40 | 10.72 | -44.74% | |
| QLGC | 17.70 | 9.87 | -44.24% | |
| GPS | 17.90 | 10.09 | -43.63% | |
| PCLN | 97.80 | 55.25 | -43.51% | |
| IVGN | 41.20 | 23.42 | -43.16% | |
| KNSY | 34.20 | 19.48 | -43.04% | |
| MRX | 19.20 | 10.96 | -42.92% | |
| GR | 48.60 | 27.84 | -42.72% | |
| IM | 18.20 | 10.56 | -41.98% | |
| INTC | 21.40 | 12.49 | -41.64% | |
| XLNX | 24.50 | 14.67 | -40.12% | |
| SYX | 16.30 | 9.79 | -39.94% | |
| SWIR | 12.50 | 7.51 | -39.92% | |
| AOB | 8.40 | 5.12 | -39.05% | |
| ROST | 38.40 | 23.50 | -38.80% | |
| EQ | 45.20 | 27.99 | -38.08% | |
| ROG | 40.40 | 25.16 | -37.72% | |
| SWIM | 9.10 | 5.67 | -37.69% | |
| SUNH | 15.70 | 9.85 | -37.26% | |
| AYI | 41.90 | 26.33 | -37.16% | |
| FRX | 34.10 | 21.49 | -36.98% | |
| RSCR | 19.00 | 12.00 | -36.84% | |
| WMS | 30.70 | 19.39 | -36.84% | |
| CTL | 36.90 | 23.86 | -35.34% | |
| SLE | 13.50 | 8.82 | -34.67% | |
| SNPS | 22.70 | 15.18 | -33.13% | |
| CA | 22.80 | 15.30 | -32.89% | |
| ELNK | 8.70 | 5.86 | -32.64% | MD Research |
| EMR | 46.60 | 31.63 | -32.12% | |
| ACN | 39.40 | 27.00 | -31.47% | |
| MSFT | 26.50 | 18.29 | -30.98% | |
| LXK | 34.30 | 23.79 | -30.64% | |
| HUB.B | 40.70 | 28.69 | -29.51% | |
| CTR | 17.40 | 12.31 | -29.25% | |
| ASIA | 12.30 | 8.73 | -29.02% | |
| CQB | 15.30 | 10.87 | -28.95% | |
| Q | 3.60 | 2.61 | -27.50% | |
| ABC | 40.50 | 29.61 | -26.89% | |
| DDUP | 22.10 | 16.24 | -26.52% | |
| ORCL | 21.30 | 16.00 | -24.88% | |
| WPI | 29.40 | 22.14 | -24.69% | |
| NSR | 22.20 | 16.92 | -23.78% | |
| CHKP | 24.00 | 18.44 | -23.17% | |
| PPD | 43.20 | 33.84 | -21.67% | |
| BVF | 10.10 | 8.19 | -18.91% | |
| T | 30.90 | 25.23 | -18.35% | |
| OMI | 46.60 | 38.41 | -17.58% | |
| EXPO | 31.40 | 26.06 | -17.01% | |
| BJ | 39.60 | 33.42 | -15.61% | |
| PFE | 18.40 | 15.56 | -15.43% | |
| RAI | 51.70 | 44.19 | -14.53% | |
| CBZ | 8.30 | 7.20 | -13.25% | |
| VGR | 17.20 | 15.03 | -12.62% | MD Research |
| CEPH | 75.10 | 74.27 | -1.11% | |
| CPB | 36.60 | 36.94 | 0.93% | |
| DSCP | 48.60 | 50.70 | 4.32% | |
| CYCL | 7.20 | 7.55 | 4.86% | |
| LHCG | 27.30 | 31.65 | 15.93% | |
| Average: | -49.40% |
MFI investors are in good company... This $63 million portfolio is getting hammered just as hard, if not harder, than everyone else, with the positions down an average 49.4%. Only 4 of 156 positions are positive. Well over half of them were MFI stocks: 90 of 156. There may be more that appeared on the official MFI site, as MagicDiligence only records the 100 over 50 million and 50 over 2 billion screens.
Of course, if we confronted Joel Greenblatt on this, his response would be predictable. Stocks return to their true value over a period of 2-3 years. 3-month returns don't matter. Stocks are deeply undervalued. This is the outlook we need to maintain, even in these scary times.
A MagicDiligence Membership gives you full access to the best stocks that Magic Formula Investing has to offer. Professional quality research, formal stock recommendations, timely updates, and exclusive investing tools are all at your fingertips, at one of the lowest prices in the entire investment world. Click here to learn more!
Joel Greenblatt and MagicFormulaInvesting.com are not associated in any way with this website. Neither Mr. Greenblatt or MagicFormulaInvesting.com endorse this website's investment advice, strategy, or products. Investment recommendations on this website are not chosen by Mr. Greenblatt, nor are they based on Mr. Greenblatt's proprietary investment model, and are not chosen by MagicFormulaInvesting.com. Magic Formula® is a registered trademark of MagicFormulaInvesting.com, which has no connection to this website. The information on this website is for informational purposes only. No warranty is provided or implied as to the accuracy, completeness, or timeliness of this information. This information may not be construed as investment advice of any kind. The proprietor of this website is not responsible in any way for losses or damages resulting from the use of this information. Alexander Online Properties is not a registered investment advisor.
© 2008-2011 Alexander Online Properties
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