Post #272 by CathyInOhio on the Berkshire Hathaway board

Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A) ❤

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'I believe it [Magic Formula] is not well regarded in the mechanical investing community - they could not duplicate Greenblatt's published results.

Still, the theory is sound - buy a slate of stocks with quality (high ROA) and value (Low PE) characteristics. It ought to give reasonable results, if you can stick with the inevitable tracking error versus the index.

Too much work for me. Avantis will do it for me for 15 bps.'

That was a reference to this:

Avantis U.S. Large Cap Value ETF
https://www.avantisinvestors.com/avantis-investmen...

I've experimented a little with adding a momentum component to a universe of value stocks. Using your favorite value or low volatility ETF of choice (like the Advantis one referenced above, or my personal favorite Franklin Low Volatility High Dividend (symbol LVHD), go to the home page of the fund, scroll down to the link to download the portfolio holdings into a spreadsheet. Add a column to pull a one year return for each holding and then buy the top 15. Rinse and repeat every month. I haven't formally backtested this, but I do like the stocks that it pulls. Current picks using the LVHD ETF are:

LMT
CPB
GIS
ABBV
GILD
SJM
DTM
ED
PCAR
OMC
CMI
K
UBSI
PNW
GLPI

Cathy

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