Joel Greenblatt is a popular American hedge fund manager and value investor who is famous due to his specific investment strategy known as the “magic formula”. He started Gotham Capital firm in the year 1985 and gain successes in achieving a 30% return on investment starting 1985 until 1994. This becomes possible due to his special investment situations such as mergers, spinoffs, acquisitions, bankruptcies, and tender offers. Currently, Greenblatt is working as a co-chief investment officer and managing principal of Gotham Asset Management company. The stock portfolio of this hedge fund is valued at $3.11 billion as estimated on September 30. The key theme of his magic strategy is to purchase stocks that are cheaper and have some value and sell those stocks which are expensive or increased in value as compared to their actual value. This particular magic strategy is similar to the deep value approach of Benjamin Graham. The basic thesis of Gotham’s magic formula is that public firms are similar to those of private firms in the context of functionality. Therefore, you are required to examine the value metrics such as price in form of investment and the return you are getting on investment. Let’s move to the list of Top 5 magic formula stocks which are reviewed by Insider Monkey.
On 10th place in this list is eBay which is the best magic formula investment stock of Gotham Asset Management in the Q3 of 2020. The stock holding of eBay has been increased by Greenblatt in Q3 of 2020 by 4%. The total stake of this hedge fund in this e-Commerce firm is valued at $21.27 million. This is considered that eBay is the largest beneficiary of the boom in the eCommerce industry. The worldwide eCommerce transactions have increased particularly because of the strong demand level of customers for household products, electronics, and remote education.
On 9th place in the list of top magic formula stock is Berkshire Hathaway. Gotham showed bullish behavior for this stock in the Q3 of 2020 and now the shares in the company of Warren Buffett has been increased by Gotham by around 86%. Currently, he owned around 105,111 shares of Berkshire Hathaway whose total worth is $22.38 million. For the purpose of combatting the adverse impact of COVID-19, the company had doubled down the repurchase stock program and repurchased its own shares of value $9 billion in Q3 of 2020. Want to get information about other magic formula stocks? You can learn here by reading 10 Best Magic Formula Stocks To Buy Now.