Greenblatt's Little Book That Beats The Market Message Board

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Strategies & Market Trends : Greenblatt's Little Book That Beats The Market

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To: Stewart Whitman who wrote (63)	2/6/2006 9:48:26 PM
From: Shane M	Read Replies (1) of 218

Hi Stewart, I haven't handled the issue with negative denominator in ROC calc at all. Something I need to look at. So many companies get ridiculous ROC due to denominator being close to 0. It really doesn't make sense to me to base a ROC on only current assets - and that's what prompted my first post. My current ROC calc for this is [Gross operating income 12m]/([Current assets Q1]-[Current liabilities Q1]+[Net fixed assets Q1])*100 where net fixed assets are prop/plant/equip less deprec. I reread sections in the book and I'm thinking Greenblatt is only speaking of current assets. I may use another Return on Capital calcs that includes other assets for comparison, but for the initial runs I want to see what bubbles up. Here's a MidCap list (1.5B to 5.0B in mkt cap). Lotsa home builders on here too. I am familiar with several of these, but CECO is the only one I currently own. ticker comp name mktcap EVq1 ROCq1 Yieldq1 Rankq1 NVR NVR, Inc. 4733 4756 3614 23.1 1 MDC M.D.C. Holdings 2832 3875 2617 20.9 2 CG Carolina Group 3145 4802 497 23.1 3 MTH Meritage Homes 1650 2287 1224 18.2 4 RYL Ryland Group, I 3368 3816 1094 18.9 4 HOV Hovnanian Enter 3033 4527 790 16.7 6 DWA DreamWorks Anim 2763 2470 408 14.1 7 BZH Beazer Homes US 2983 4364 1686 11.9 8 MVL Marvel Entertai 1609 1545 253 10.5 9 NX Quanex Corporat 1573 1642 52 17.7 10 CECO Career Educatio 3267 2859 61 12.3 11 FTO Frontier Oil Co 2652 2543 51 14.3 12 IPS IPSCO Inc. (USA 4422 4131 43 22.5 13 AH Armor Holdings, 1655 1735 49 12.5 14 AEOS American Eagle 4122 3477 46 12.9 15 KOSP KOS Pharmaceuti 2015 1712 50 11.1 16 MNI McClatchy Compa 2637 2825 65 9.6 17 RSH RadioShack Corp 3183 3825 46 11.9 18 JNY Jones Apparel G 3644 5022 64 9.4 19 TBL Timberland Comp 2313 2152 47 11.1 20 LNCR Lincare Holding 4154 4297 83 8.8 21 DPZ Domino's Pizza, 1654 2396 147 8.5 22 GIB CGI Group Inc. 3371 2578 75 8.7 23 SVM ServiceMaster C 3772 4299 198 8.2 24 HOC Holly Corporati 2253 1942 42 11.3 25 Here's the sort for the best over a 3yr average for the same mid cap group (recalced an avg annl return from Y1/Y3 for these stocks. This grp seems to have a better return, but is certainly a different list than I'm familiar with. AnnlPchg ticker comp name mktcap ROC3yr Yld3yr Rank Y1/Y3 NVR NVR, Inc. 4733 3309 21.6 1 23 MDC M.D.C. Holdings 2832 3714 20.2 1 17 CG Carolina Group 3145 446 24.7 3 32 MTH Meritage Homes 1650 1189 15.9 4 38 RYL Ryland Group, I 3368 1048 17.5 4 28 HOV Hovnanian Enter 3033 1102 14.5 6 7 BZH Beazer Homes US 2983 1596 13.1 7 50 DADE Dade Behring Ho 3478 88 22.5 8 51 MVL Marvel Entertai 1609 157 9.3 9 -8 LNCR Lincare Holding 4154 100 9.3 10 18 JNY Jones Apparel G 3644 57 10.5 11 -7 GIB CGI Group Inc. 3371 71 8.9 12 14 CVG Convergys Corpo 2394 60 9.1 13 -5 PDX Pediatrix Medic 2055 287 8.1 14 27 RSH RadioShack Corp 3183 39 11.3 15 -17 TBL Timberland Comp 2313 44 10.0 16 12 LIZ Liz Claiborne, 3680 38 11.3 17 1 NX Quanex Corporat 1573 36 14.2 18 28 MNI McClatchy Compa 2637 74 8.2 19 -7 HHS Harte-Hanks, In 2327 93 7.9 20 10 OSK Oshkosh Truck C 3437 81 7.9 21 32 AEOS American Eagle 4122 33 11.8 22 67 THO Thor Industries 2413 45 8.8 23 19 PII Polaris Industr 2262 74 7.8 24 6 GLYT Genlyte Group I 1611 36 9.9 24 35

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