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How is Joel Greenblatt Performing in this Market?

Yesterday 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:

TickerGreenblatt
Cost
Current
Price
Performance
NT5.800.52-91.03%
VCI9.601.11-88.44%
VC2.900.39-86.55%
NWY10.201.46-85.69%
GTLS44.107.53-82.93%
CTCM20.403.70-81.86% MD Research
GTI20.403.98-80.49%
GHM41.708.27-80.17%
SANM1.800.36-80.00%
ARM14.102.93-79.22%
MTW24.205.47-77.40% MD Research
TEX43.9010.21-76.74%
XIDE12.603.01-76.11%
HMA5.701.43-74.91%
DAR14.303.60-74.83% MD Research
STX14.803.91-73.58%
WFR44.5012.20-72.58%
BARE13.503.75-72.22% MD Research
ANF51.5014.55-71.75%
KV.A22.006.30-71.36%
JOYG64.3018.45-71.31%
BEAV23.206.78-70.78%
M19.405.68-70.72%
TXT40.8012.20-70.10%
BGP5.901.78-69.83%
ERES13.904.20-69.78%
IPG8.602.61-69.65%
WBC42.7013.37-68.69%
BUCY60.3019.10-68.33%
MFW41.3013.65-66.95%
AIMC16.705.55-66.77%
DISH28.109.62-65.77%
CR35.2012.08-65.68%
GCO32.7011.40-65.14%
JBL15.105.27-65.10%
FLS119.6042.12-64.78%
HLF42.8015.50-63.79%
IFSIA12.204.50-63.11%
AP38.6014.30-62.95%
SNHY33.4012.52-62.51%
CIR56.2021.17-62.33%
NSTC11.704.46-61.88%
BBI2.500.96-61.60%
TTMI12.004.65-61.25%
CXR10.704.20-60.75%
CKXE7.703.03-60.65%
ISIL22.308.84-60.36%
MFLX20.708.21-60.34%
ALV38.9015.48-60.21%
PACR20.608.36-59.42%
ARO33.2013.65-58.89%
CMCO25.5010.50-58.82%
RBN43.8018.04-58.81%
VCLK12.205.05-58.61% MD Research
EME29.7012.45-58.08%
FLR75.1031.91-57.51%
NPO38.6016.42-57.46%
VSH8.503.62-57.41%
TTWO22.909.82-57.12% MD Research
GSOL12.305.31-56.83%
AG54.0023.48-56.52%
AKAM24.4010.63-56.43%
GDI45.4019.96-56.04%
CEC33.7014.91-55.76%
TIF39.7017.71-55.39%
CLS8.003.59-55.13%
SVR16.907.65-54.73%
PLCE38.2017.55-54.06%
SAPE7.703.57-53.64%
PCR27.0012.54-53.56%
KBR24.5011.44-53.31%
DELL22.1010.35-53.17%
NWS13.906.55-52.88% MD Research
VTIV22.2010.52-52.61%
VIA.B28.5013.51-52.60%
WTSLA4.702.25-52.13%
BKE32.1015.39-52.06%
FINL10.605.11-51.79%
NZ12.506.09-51.28%
NSM20.4010.04-50.78%
JAS23.6011.62-50.76%
MWW18.709.23-50.64%
GME41.4020.56-50.34%
RX21.6010.73-50.32%
CPWR10.805.39-50.09%
FIX13.806.93-49.78%
RSH16.808.46-49.64%
PII44.7022.64-49.35%
MSTR63.3032.65-48.42% MD Research
MAN49.4025.62-48.14%
SOHU71.9037.29-48.14%
PH63.2033.80-46.52%
OMC42.1022.68-46.13%
PCP96.2052.34-45.59%
CCRN15.608.49-45.58%
NTE10.205.58-45.29%
ADTN22.3012.31-44.80%
BR19.4010.72-44.74%
QLGC17.709.87-44.24%
GPS17.9010.09-43.63%
PCLN97.8055.25-43.51%
IVGN41.2023.42-43.16%
KNSY34.2019.48-43.04%
MRX19.2010.96-42.92%
GR48.6027.84-42.72%
IM18.2010.56-41.98%
INTC21.4012.49-41.64%
XLNX24.5014.67-40.12%
SYX16.309.79-39.94%
SWIR12.507.51-39.92%
AOB8.405.12-39.05%
ROST38.4023.50-38.80%
EQ45.2027.99-38.08%
ROG40.4025.16-37.72%
SWIM9.105.67-37.69%
SUNH15.709.85-37.26%
AYI41.9026.33-37.16%
FRX34.1021.49-36.98%
RSCR19.0012.00-36.84%
WMS30.7019.39-36.84%
CTL36.9023.86-35.34%
SLE13.508.82-34.67%
SNPS22.7015.18-33.13%
CA22.8015.30-32.89%
ELNK8.705.86-32.64% MD Research
EMR46.6031.63-32.12%
ACN39.4027.00-31.47%
MSFT26.5018.29-30.98%
LXK34.3023.79-30.64%
HUB.B40.7028.69-29.51%
CTR17.4012.31-29.25%
ASIA12.308.73-29.02%
CQB15.3010.87-28.95%
Q3.602.61-27.50%
ABC40.5029.61-26.89%
DDUP22.1016.24-26.52%
ORCL21.3016.00-24.88%
WPI29.4022.14-24.69%
NSR22.2016.92-23.78%
CHKP24.0018.44-23.17%
PPD43.2033.84-21.67%
BVF10.108.19-18.91%
T30.9025.23-18.35%
OMI46.6038.41-17.58%
EXPO31.4026.06-17.01%
BJ39.6033.42-15.61%
PFE18.4015.56-15.43%
RAI51.7044.19-14.53%
CBZ8.307.20-13.25%
VGR17.2015.03-12.62% MD Research
CEPH75.1074.27-1.11%
CPB36.6036.940.93%
DSCP48.6050.704.32%
CYCL7.207.554.86%
LHCG27.3031.6515.93%
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.

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