NYT article on Greenblatt:
nytimes.com
..."When readers clamored for ways to follow the “magic formula” strategy in real life, he developed a website that generated stock picks that also topped the market. But individuals who tried them actually trailed the market by mistiming their purchases and sales. And when he introduced four conventional mutual funds pursuing the strategy starting in 2010, they raised only $360 million.
But now Mr. Greenblatt, 56, is suddenly being showered with money from Wall Street. Four new mutual funds, started by his Gotham Asset Management using variations of the book’s computerized approach, have mushroomed to $4.8 billion in assets from $1 billion in January.
The Gotham funds are part of the hot new category of “liquid alternatives,” hedge funds in mutual fund form, where Gotham this year ranks No. 1 among fund sponsors in new-money inflows, according to Morningstar"...
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This might be good news for the individual investor following a Greenblatt screen if the investor can find and buy some of the qualifying stocks before the Greenblatt fund managers decide to commit to a purchase.
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..."Every quarter, 13 Gotham analysts feed 2,000 companies’ earnings reports into a database, making adjustments for factors like pension obligations and legal claims. Gotham then picks stocks from the top 20 percent of the field and shorts stocks from the bottom.
Turnover is high, up to 399 percent a year, a possible pitfall. As of the funds’ last reports in July, the largest holdings included Gilead Sciences, a California biotech company, and Delta Air Lines."... |
