Magic Formula Investing Weekly Roundup 9/18/2011
Magic Formula Investing (MFI), as described by hedge fund manager Joel Greenblatt in The Little Book that Beats the Market, consists of ranking stocks by earnings yield (cheap) and return on capital (quality), adding the rankings together, and buying from the resulting lists. Below are stocks that have moved into, and dropped out of, 3 of the MFI screens used by MagicDiligence:
Entering the 50 over 50 million screen:
Majesco Entertainment Co (COOL)
Cumberland Pharmaceuticals Inc (CPIX)
Dropping out of the 50 over 50 million screen:
Great Northern Iron Ore Properties (GNI)
NeuStar Inc (NSR)
Entering the 50 over 1 billion screen:Lorillard Inc (LO)
OmniVision Technologies Inc (OVTI)
Dropping out of the 50 over 1 billion screen:
Intel Corp (INTC)
Marvell Technology Group Ltd (MRVL)
Entering the 30 over 3 billion screen:Cephalon Inc (CEPH)Eli Lilly and Co (LLY)
Dropping out of the 30 over 3 billion screen:
Altera Corp (ALTR)
Linear Technology Corp (LLTC)
Interesting news and links from the week concerning Magic Formula stocks...
McGraw-Hill to Split Into Two Companies
This basically amounts to a spin-off of the education unit. I'm not clear on how this adds value. What's left over will be similar to Moody's (MCO), which trades at a lower multiple than McGraw!
LML Settles Litigation With Wells Fargo
$5 million is a disappointing number from one of the "big boys". With the key patent expiring in 2013, the last defendants seem to be running out the clock on LML.
Intel CEO Outlines Company's Plans to Lead Future of Computing
It is amazing that its taken this long for Intel to start taking the mobile threat from ARM seriously. Their new product roadmap has the company finally sporting a realistic alternative. Atom has been a failure so far.
6 Home Health Stocks to Watch
3 of the 6 are current MFI stocks, and 2 others (LHCG and LNCR) have Magic Formula characteristics.
Disclosure: Steve owns INTC