Did you know that of the 12 positions we added to the European portfolio during the last 12 months, only 2 showed a small loss. One position doubled in value and 2 positions showed a gain of 50% or more. 3 positions added close to 30% to their value and 2 positions gained between 10 and 20%. The average of the investments recommended during the 12 last months is 27%, not bad if you compare this to a 1.6% loss for the STOXX600...[more]
While the STOXX600 continued its downward trend and ended October at -7.3%, our European portfolio maintained its upward course by adding 560 basis points. This brings the YTD return (TWR) to +19.2% or an alpha of 26.5! To see an up to date chart of the YTD performance, click here...[more]
The Magic Formula has featured in the scorecard for quite some time but we never really added any additional insights. A stock might get a high ranking, but is this mainly because of an excellent score on one of the ratios or does the company have a great score on both? And if a stock has a good Earnings Yield or ROC, how does it compare to other companies, i.e. where does it sit on the distribution? And how are companies distributed for each of the ratios for your specific stock screener selection?
To make it much easier to understand the relative cheapness and quality of the selected company, we created the magic formula scorecard...[more]
One of the most popular ratios in our screener has to be the Earnings Yield ratio. (EBIT/EV) It is one of the two ratios that make up the Greenblatt Magic Formula and many of our members have incorporated it in their own favourite screens. We also use it in the model that selects stocks for our European newsletter portfolio. Whist it is true that this ratio has helped us pick a significant amount of high earners, one of our members (bsinvest) pointed out a few important flaws with it. This article is based on the email conversations and the bright and clear explanation provided by bsinvest...[more]