Joel Greenblatt Magic Formula Stocks In US, Japan And Europe

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Joel Greenblatt has one of the most impressive records of any fund manager in history. His firm Gotham Capital returned 40 percent annualized returns over the twenty years from 1985 to 2005.

About Joel Greenblatt

Read our resource page on this legendary investor here: “Joel Greenblatt believes in discovering stocks which are undervalued where the prices do not fairly take into account the future possible earnings and growth in value. He believes in being opportunistic and realizing the actual value of the stock without being deceived by the stated value. As a result, the companies he finds are not just cheap, but also are high quality (high ROC).”

SocGen’s popular investment screens for developed markets

SocGen’s Global Quantitative Research analysts, Andrew Lapthome and Georgios Oikonomou analyze markets through a well-designed repertoire of investment screens modeled around the principles suggested by legendary investors such as the Merton Model, Piotroski’s F-scores, Benjamin Graham’s deep-value screen and Joel Greenblatt’s Magic Formula. Read our previous coverage of this immensely useful and actionable investment insight here.

This month: Joel Greenblatt’s Magic Formula screen

Joel Greenblatt’s Magic Formula ranks firms on a combination of the following two factors:  Profitability (based on Greenblatt’s preferred metric, Return on Capital) and Earnings yield (the inverse of the P/E ratio, defined by Joel Greenblatt as EBIT / Enterprise Value). Read more about this formula in Greenblatt’s book, The Little Book That Still Beats the Market (Little Books. Big Profits).

SocGen’s model did rather well in October, outperforming in all regions but the eurozone (-0.4%). The performance of the model was especially noteworthy in the U.S. (5.7%) and Japan (3.9%).

Joel Greenblatt

Here are the top 20 Joel Greenblatt Magic Formula company names, arranged by a combined ROC and EY ranking, that were identified by the screener from a universe of developed countries:


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