Case Studies

Risk and Portfolio Management Similarities between Joel Greenblatt and Stanley Druckenmiller

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I have been busy over the past couple of weeks. My wife gave birth to twins about two weeks ago, and now that I am back in the office, I am catching up on some reading. While we were in the hospital for about a week, I did have some time to do some reading, and I have some comments on two annual reports of current holdings of mine—JP Morgan and Markel—which I may turn into brief posts. But briefly, […]

Investment Philosophy

Thoughts On Return On Capital And Greenblatt’s Magic Formula Part 2

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In part 1 of this post, I mentioned I caught a video interview with Joel Greenblatt at Morningstar. In the video, Greenblatt talks about indexing, and things that are not necessarily interesting to me and my investment strategy, but he also had some brief comments on Return on Capital. In the last post, I discussed the basic method that Joel Greenblatt uses to define Return on Capital. I also discuss some of the fundamentals and the importance of this key […]

General Thoughts

Thoughts on Return on Capital and Greenblatt’s Magic Formula Part 1

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I recently watched a video of Joel Greenblatt with Morningstar. Most of the video discusses the index approach to investing using a value weight (as opposed to equal weight or market weight, which most indexes use). I’m not that interested in indexing, although for individuals who want completely passive exposure to stocks, value weighting certainly makes much more sense to me than market weighting (because market weighting systematically buys more of a stock as it goes up, thus forcing you […]

General Thoughts

“Magic Formula” and Other Quantitative Results from 2013–Should the Computers Takeover?

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Let me say that the following few sentences only represent my humble opinion. There are many smart, talented, and successful practitioners that participate in the field that I am about to comment on… (Editor side note: unlike many who take pride in saying things such as “I tell it like it is”, or “I don’t care what others think”… I happen to dislike offending others and I do care what others think, but evidently I’m in the minority here. I […]

Case Studies

Star Manager’s Case Study of a Great Business vs. a Net-Net

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Over the weekend I was reading through some Charlie479 posts on VIC (who I’ll introduce below). He recommended a company called Winmall & Co (WNMLA), a small, illiquid, management-controlled stock in 2001 that was selling for about 43% of net cash. Below is an interesting comment Charlie479 made in response to another comment that basically stated that while the stock is in fact cheap, it wasn’t a great investment because it had been cheap for a long time and could […]

Case Studies

Aeropostale (ARO) Might Offer Turnaround Value

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Sometimes in life you’re timing is great. Other times, it can be uncannily poor. But such is life, and such is investing. It keeps things very interesting and fun. Over the past week, I’ve been leisurely reading about teen retailers in general (AEO, ARO, ANF, and others) as the market has done a number on their stock prices over the past few months. I’ve focused in on Aeropostale (ARO), simply because it has been hit the hardest and I wanted […]

General Thoughts

Some Thoughts on Joel Greenblatt’s Magic Formula and its YTD Results

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“Value investing is simply figuring out what something is worth and paying a lot less for it” – Joel Greenblatt I often describe my investment philosophy as a synthesis of ideas from Ben Graham, Walter Schloss, Warren Buffett, and Joel Greenblatt. At the core of my strategy is Graham and Schloss’ quantitative methods for valuing stocks. It’s far more difficult to make mistakes when you simply make obvious, simple decisions based on valuation. In each investment, I want to ensure […]

Investment Philosophy

Cheapness is an Excellent Catalyst

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I group my equity investments into three main categories: Compounders (These are Warren Buffett “forever” stocks, or franchise businesses with durable competitive advantages that I’m willing to hold for a long time as long time as long as the business continues to compound cash flow, dividends, and intrinsic value.) Cheap and Good (These are stocks that are not as high quality as the compounders, but are still above average businesses producing good returns on capital but are for some reason […]

How to Improve Results

Five Minute Stock Checkup

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With around 10,000 stocks to choose from when making investment decisions, you need to have a way of narrowing down the universe to a manageable number to perform more detailed research on. I’ve discussed my investment process a bunch in past posts, and I’m always looking for ways to make my routine more efficient. I basically use Value Line, screeners, 13-F’s, and other blogs for ideas on specific investments. I then put all my potential stock ideas onto a couple […]

General Thoughts

Value Investing: All Roads Lead to Rome

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I read an article this morning by John Mihaljevic, who runs the excellent ManualofIdeas.com. His article was called Value Investor or Value Pretender: Which are You?  The article is written in tongue-in-cheek fashion using 10 points that might tell you if you’re not a true value investor. David Merkel, fellow blogger and excellent value investor, then wrote an interesting counterpoint at his Aleph Blog. I got to thinking how it’s interesting how two value investors who both write about the […]