I ran Joel Greenblatt’s Magic Formula for 1 year. Finished +35.48%. Here’s what happened.
I read Joel Greenblatts "The Little Book That Beats the Market" last year and decided to try the *magic formula* for myself.
If you have't read the book then in summary the idea is to pick stocks that are are a good price and make good returns on invested capital (glossing over a lot here but you get the idea). You essentially rank order these companies and pick the top 30 (or 50) and invest in them.
The thing most people find difficult with this strategy is that at the end of the year you re-run the calculation and refresh the entire portfolio, regardless if the stock made a profit or loss.
I decided to give it a go and today is one year. I just refreshed the portfolio and been one I wanted to share my results.
but first, the setup:
On **28/04/2025**, I used the stock picker tool on the Magic Formula website (I don't own it, it's free) and selected **30 stocks** with a minimum market cap of **100 million** and invested £5,000.
I then put the whole thing into a T212 Pie. Each company was allocated roughly **4%**, although a few ended up at **3%**.
One year later, the portfolio finished at:
**+35.48%**
I’ve added my spreadsheet below. This shows my original 30 stocks (left) I was allocated last year, and the new 30 stocks (right) i chose today for 2026/27. The bold highlights are the stocks that exited during the year. On the right-hand side of the spreadsheet are the companies that have carried over into year two, there's 11 in total.
|2025/26|val|2026/27|Renewal|
|:-|:-|:-|:-|
||
|Abercrombie & Fitch Co.|21.22%|BioCryst Pharmaceuticals Inc (BCRX)||
|AMC Networks Inc|27.46%|Black Diamond Therapeutics Inc (BDTX)||
|biote Corp|\-18.06%|Bumble Inc (BMBL)|Yes|
|Buckle Inc (The)|56.49%|Cerence Inc (CRNC)||
|Bumble Inc (BMBL)|\-3.66%|CGI Inc (GIB)||
|Collegium Pharmaceutical Inc (COLL)|18.60%|Collegium Pharmaceutical Inc (COLL)|Yes|
|Consensus Cloud Solutions Inc|31.95%|CorMedix Inc (CRMD)||
|Crocs Inc (CROX)|8.04%|Crocs Inc (CROX)|Yes|
|Entrada Therapeutics Inc|38.48%|Enghouse Systems Ltd (EGHSF)||
|Franklin Covey Co.|1.82%|EverQuote Inc (EVER)||
|GDEV Inc|43.87%|GAMBLING DOT COM GROUP LTD (GAMB)||
|GigaCloud Technology Inc|235.32%|H&R Block Inc (HRB)||
|Harmony Biosciences Holdings Inc (HRMY)|6.65%|Harmony Biosciences Holdings Inc (HRMY)|Yes|
|**Heidrick & Struggles International Inc**|51.33%|HP Inc (HPQ)|Yes|
|HP Inc (HPQ)|\-19.28%|Ironwood Pharmaceuticals Inc (IRWD)|Yes|
|Innoviva Inc|26.55%|Keros Therapeutics Inc (KROS)||
|**Interpublic Group of Cos Inc (The)**|11.32%|MediaAlpha Inc (MAX)||
|Ironwood Pharmaceuticals Inc (IRWD)|313.58%|MTY Food Group Inc (MTYFF)||
|J Jill Inc|\-16.58%|Phoenix Education Partners Inc (PXED)||
|Pediatrix Medical Group Inc|85.70%|Playtika Holding Corp (PLTK)|Yes|
|Perdoceo Education Corp|29.08%|PTC Therapeutics Inc (PTCT)||
|Playtika Holding Corp (PLTK)|\-34.45%|Puma Biotechnology Inc (PBYI)|Yes|
|Puma Biotechnology Inc (PBYI)|154.12%|Rigel Pharmaceuticals Inc (RIGL)||
|Shutterstock Inc (SSTK)|1.20%|SBC Medical Group Holdings Inc (SBC)||
|SIGA Technologies Inc|\-21.43%|Shutterstock Inc (SSTK)|Yes|
|Sirius XM Holdings Inc|21.81%|The Arena Group Holdings Inc (AREN)||
|**TEGNA Inc**|35.32%|TriNet Group Inc (TNET)||
|Travelzoo|\-0.83%|Unisys Corp (UIS)|Yes|
|Unisys Corp (UIS)|\-20.75%|Vaxart Inc (VXRT)||
|Xponential Fitness Inc (XPOF)|\-20.59%|Xponential Fitness Inc (XPOF)|Yes|
|**Closing fund increase**|**35.48%**|||
This was the first year I’ve run the strategy and I’m going to continue with it. I’ll be adding more money this year.
I’m fully aware this is a long-term strategy, and I expect there to be good years and bad years. I’m not treating one strong year as proof that I’ve cracked the market. The plan is to run this for at least 10+ years and see what happens over a proper time window.
For now though, year one was a decent start. Will probably update this again in a year if people care.