Over the past month, we’ve taken the celebrated American investor Joel Greenblatt’s ‘Magic Formula’ on something of a mini-world tour. The formula, which Greenblatt first outlined in his bestseller The Little Book That Beats the Market, can be boiled down to the hunt for profitable, high-return companies at a good – ideally great – price.
First, we applied the method to this feature’s regular hunting ground: the MSCI All-World Index. The result was an interesting array of unloved, if time-tested, blue-chips. But by ranking the globe’s large caps in one go, we left a lot on the cutting room floor and assumed a common standard for valuations.
So to filter things further, we headed to Hong Kong, to find both fairly and cheaply priced stocks in China’s gateway, before zipping back to the Alps and the often-overlooked wonders of the Swiss stock market. This week’s final leg again finds us far from the global stockpicker’s tourist trail, off-roading in the Russell 2000 index of US small caps.