Running Greenblatt Through the Micro-Cap Bin

What Survived the Magic Formula

Lately I’ve be reading some more Joel Greenblatt. I’m always interested in looking at companies through different lenses even if it’s just to see what happens. I thought last week that I’d apply some of Joel’s principals to some of the tickers on my white board.

I ran Greenblatt's Magic Formula across fourteen micro-caps and nano-caps I've been watching closely or already own. Greenblatt built the Magic Formula for a universe of 3,500 companies with a market cap floor above $100 million, held thirty at a time, and rebalanced annually. I ran this formula as an extra screen to further dive into some of the names I’ve already been paying attention to. The process of doing this was fun. and it was helpful to get a fresh perspective on something I’ve been so involved in and the results of this experiment were pretty interesting. Three names passed the screen and made me raise an eyebrow. Here’s what they are.