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哪位英文好的给翻译一下
Joel Greenblatt: How to Outperform The Magic Formula – Part 1
by Hendrik Oude Nijhuis
Related gurus' buys/sells:
Ticker Date* Price* buy/sell Picked By
AZO 2006-12-31 $113.3 Sell Joel Greenblatt
ARO 2006-12-31 $29.9 Sell Joel Greenblatt
LYV 2006-09-30 $20.7 Sell Joel Greenblatt
LEA 2006-09-30 $20.9 Sell Joel Greenblatt
ARO 2006-09-30 $27.3 Buy Joel Greenblatt
*The price and date might not be the actual time and price at which the transactions were made. In the case of institutional owners, the date is stated as the last day of their fiscal quarter. The prices are estimates if no accurate information available.
In my first article about Joel Greenblatt I showed the incredible returns of Greenblatt’s magic formula investment system. Then, we focussed on ‘relative goodness’, an essential concept for determining how good companies are in allocating capital. Last month I wrote about ‘relative cheapness’, which gives an idea of the relative valuation of companies.
In this article I want to introduce two ideas that may help you to outperform the returns of portfolios based on automatically generated picks from Greenblatt’s magic formula investment system. In general, I think it is a good idea for inexperienced investors to select top ranked stocks (with high Returns on Capital en high Earning Yields) randomly for their own portfolio (as suggested by Greenblatt). More seasoned and knowledgeable investors may generate additional returns by giving attention to e.g. the following two ideas:
Do not invest in companies that are wrongfully selected
With his focus on Return on (Invested) Capital (ROIC), Greenblatt tries to automatically select companies with durable competitive advantages. The problem is that not all companies with high ROIC ratios have durable competitive advantages and, as a consequence, the ability of these companies to generate high ROIC numbers for years to come should be questioned.
Sometimes a high ROIC is related to external factors or specific ways in which a company is being managed and not to durable competitive advantages. Think of companies that simply profit from high commodity prices or management teams that make use of (legal) bookkeeping and tax tricks or that sell specific company assets. Another explanation for high ROIC numbers can be found in one-time windfalls or an occasionally, and not structural, very profitable year. The expected long-term ROIC figures for such companies lie at the market average.
By not investing in these ‘wrongfully selected companies’ you may outperform the average return of the top-ranked stocks selected by the automatic system.
Give special attention to companies with durable competitive advantages
Groups of stocks with high ROIC ratios are, on average, better than average. This is because companies with durable competitive advantages are included in selections of stocks with high ROIC numbers.
We already saw that companies with durable competitive advantages are also the companies Joel Greenblatt is looking for, as he screens for companies that have shown a high ROIC ratio. It is very important to note that a high Return on Capital ratio at a specific moment can be an indication of a (durable) competitive advantage, but is absolutely no guarantee for it!
Only when a company has (one or more) durable competitive advantages it is possible to create value on a longer term basis. In other words, only then can a company consistently generate higher Returns on Capital than its Costs of Capital.
As we are looking for companies with such durable competitive advantages, we have to look at the quality of their business models. By doing this, you can get an indication of the existence and strength of their competitive advantages and therefore also of their capacity to generate above average ROIC ratios in the long-term.
In my next article, I will bring up two additional ideas that also may help you to outperform randomly selected Magic Formula portfolios over time!
Joel Greenblatt: How to Outperform The Magic Formula – Part 2
by Hendrik Oude Nijhuis
Related gurus' buys/sells:
Ticker Date* Price* buy/sell Picked By
AZO 2006-12-31 $113.3 Sell Joel Greenblatt
ARO 2006-12-31 $29.9 Sell Joel Greenblatt
LYV 2006-09-30 $20.7 Sell Joel Greenblatt
LEA 2006-09-30 $20.9 Sell Joel Greenblatt
ARO 2006-09-30 $27.3 Buy Joel Greenblatt
*The price and date might not be the actual time and price at which the transactions were made. In the case of institutional owners, the date is stated as the last day of their fiscal quarter. The prices are estimates if no accurate information available.
In my last article on Joel Greenblatt’s investment system we discussed two ideas that could improve the Magic Formula stock selection process. The main idea was to do some further research on the real reasons behind high Returns on Capital and high Earning Yields. We recommended:
not to invest in companies that are wrongfully selected, and
to give special attention to companies with durable competitive advantages.
Over time, both ideas will in our opinion help outperforming randomly selected Magic Formula stock portfolios. In this article I will pay attention to two other ideas that also may help to outperform standard Magic Formula selections.
Idea 3: Three types of value
As investors we can distinguish three types of value:
book value
value of operational activities
value in profitable growth (growth supported by competitive advantage)
Both Benjamin Graham and Warren Buffett (in his partnership years) were able to generate enormous returns by simply buying stocks below book value. With book value we simply mean the value of all the possessions of a company (factories, machinery, money on bank accounts, etc.). As the financial industry reached maturity, companies selling below book value have almost ceased to exist. Also, companies that only have value in their book value probably have low Returns on their Capital. As a result, these companies will not show up on the Magic Formula screen.
Other companies have a lot of value in their operational activities. One can, for instance, think of some highly efficient (branded) cigarette manufacturers - these companies aren’t growing much anymore, but they are still highly profitable from an operational viewpoint. These types of companies will show up on the Magic Formula screen and some of them are really attractive stocks to invest in.
Some companies have, besides value in operational activities, also value in profitable growth opportunities (read: growth opportunities supported by one or more competitive advantages). As the Magic Formula selects on financial numbers already reported, the Formula doesn’t consider growth potential. As a consequence, no difference is made between companies with high or low expected growth rates. Ceteris paribus, we would opt for companies that not only have value in their operational activities but also have profitable growth opportunities.
Idea 4: Expected returns aren’t linear
The expected returns of undervalued stocks are better represented by a hyperbolic line instead of a linear line. Or, to say it differently, one should expect that the most undervalued stocks will - on average - rise faster than stocks which are only somewhat undervalued.
Because stocks will, on average, rise the fastest when they are the most undervalued, one could opt for one year holding periods instead of e.g. two or three year holding periods (when the slope of expected returns flattens). Or, maybe one should even opt for shorter holding periods or ‘checking’ periods. Of course, trading costs and tax considerations should also be taking into account with this somewhat adjusted strategy.
As we have shown in our two-part series on how to outperform the Magic Formula, there are quite some possibilities to adjust Joel Greenblatt’s Magic Formula strategy, which will likely lead to higher returns. What’s probably most interesting is that one doesn’t have to choose for one of the ideas: if you want, you can combine all of them! |
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楼主
发表于 2007-6-21 12:46
