VerdyktPlaybooksJoel Greenblatt
Joel Greenblatt
Magic Formula quality-value screen
Rules-based Verdykt interpretation of a published formula. Not affiliated with or endorsed by Joel Greenblatt or Gotham Capital.
Quality valueFundamentals + priceHigh confidenceUS equities
Quality valueMethod familyHighSource confidence3Documented factorsv1.1Rule version
Screen thesis
Rank the universe on earnings yield (EBIT/EV) and return on capital, then combine the ranks. The idea is to buy good businesses at cheap prices, using a transparent two-factor ranking rather than a single valuation metric.
Rulebook
Every rule is visible. Required rules must pass; scoring and guardrail rules shape or caution the result.
RuleThresholdRoleRationale
Earnings yield (EBIT / EV)>= Top 30% rankRequiredCheap on operating earnings
Return on capital>= Top 30% rankRequiredCapital efficiency
Combined rank<= Top 50 namesRequiredBest of both factors
Market cap>= $1.0BLiquidity floorTradable size
Sector exclusionexclude Financials, utilitiesUniverse ruleFormula not designed for them
Verdykt Playbooks are rules-based interpretations of public investing principles. Screens are not affiliated with or endorsed by the named investors or firms, and nothing here is investment advice or a recommendation to buy or sell securities.