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Joel Greenblatt's 5 Largest Buys of the 1st Quarter

- By Holly LaFon

Joel Greenblatt (Trades, Portfolio), author of "You Can Be a Stock Market Genius," purchased 318 stocks for his vast portfolios at the value investing-oriented Gotham Asset Management in the first quarter.


Greenblatt's portfolio was valued at $6.83 billion at first quarter-end, with 1,161 securities listed. Technology represented the largest sector at 22.14%, followed by industrials at 18.49% and consumer cyclical at 17.76%. Most holdings occupy less than 1% of space.

The strategies Greenblatt, a professor at the Columbia University Graduate School of Business, employs garnered 40% annualized returns over 20 years. In documents of his fund, Gotham Asset Management, he described his investing approach as first valuing all the companies within its research universe, then buying those trading at the largest discount and shorting those trading at the highest premiums to their assessments of intrinsic value.

"We believe that although stock prices often react to emotion over the short term, they generally trade toward fair value over the long term. Therefore, if we are good at identifying mispriced businesses (a share of stock represents a percentage ownership stake in a business), the market will agree with us ... eventually. For an individual stock selection, we believe the waiting period for the market to get it 'right' is not more than 2 or 3 years in the vast majority of cases. For a portfolio of stocks, we believe the average waiting period can often be much shorter," Greenblatt wrote.

In the first quarter, Greenblatt's largest buys were: General Dynamics Corp. (GD), Northrop Grumman Corp. (NOC), VF Corp. (VFC), Microchip Technology Inc. (MCHP) and Stanley Black & Decker Inc. (SWK).

General Dynamics Corp. (GD)

Greenblatt purchased 343,980 shares of General Dynamics, giving it 0.85% portfolio weight. The stock's first-quarter share price averaged $168.

General Dynamics Corp. has a market cap of $47.28 billion; its shares were traded around $163.66 Tuesday with a price-earnings ratio of 14.75 and price-sales ratio of 1.29. The trailing 12-month dividend yield of General Dynamics Corp. is 2.34%. The forward dividend yield of General Dynamics Corp. is 2.49%. General Dynamics Corp. had an annual average earnings growth of 5.60% over the past 10 years.

Northrop Grumman Corp. (NOC)

Greenblatt purchased 145,166 shares of Northrop Grumman, giving it 0.57% portfolio weight. The stock's first-quarter share price averaged $273.

Northrop Grumman Corp. has a market cap of $52.34 billion; its shares were traded around $308.23 Tuesday with a price-earnings ratio of 15.95 and price-sales ratio of 1.70. The trailing 12-month dividend yield of Northrop Grumman Corp. is 1.55%. The forward dividend yield of Northrop Grumman Corp. is 1.69%. Northrop Grumman Corp. had an annual average earnings growth of 23.80% over the past 10 years. GuruFocus rated Northrop Grumman Corp. the business predictability rank of 2-star.

VF Corp. (VFC)

Greenblatt purchased 339,301 shares of the company, giving it 0.43% portfolio weight. The stock's first-quarter share price averaged $83.

VF Corp. has a market cap of $32.74 billion; its shares were traded around $82.75 Tuesday with a price-earnings ratio of 26.34 and price-sales ratio of 2.39. The trailing 12-month dividend yield of VF Corp. is 2.35%. The forward dividend yield of VF Corp. is 2.43%. VF Corp. had an annual average earnings growth of 1.80% over the past 10 years.

Microchip Technology Inc. (MCHP)

Greenblatt purchased 263,746 shares of Microchip Technology, giving it 0.32% portfolio weight. The stock's first-quarter share price averaged $83.

Microchip Technology Inc. has a market cap of $18.75 billion; its shares were traded around $79.11 Tuesday with a price-earnings ratio of 55.72 and price-sales ratio of 3.94. The trailing 12-month dividend yield of Microchip Technology Inc. is 1.84%. The forward dividend yield of Microchip Technology Inc. is 1.82%. Microchip Technology Inc. had an annual average earnings growth of 8.60% over the past 10 years. GuruFocus rated Microchip Technology Inc. the business predictability rank of 4-star.

Stanley Black & Decker Inc. (SWK)

Greenblatt purchased 146,864 shares of Stanley Black & Decker, giving it 0.29% portfolio weight. The stock's first-quarter share price averaged $130.

Stanley Black & Decker Inc. has a market cap of $19.6 billion; its shares were traded around $129.37 Tuesday with a price-earnings ratio of 30.39 and price-sales ratio of 1.41. The trailing 12-month dividend yield of Stanley Black & Decker Inc. is 2.0%. The forward dividend yield of Stanley Black & Decker Inc. is 1.99%. Stanley Black & Decker Inc. had an annual average earnings growth of 9.80% over the past 10 years. GuruFocus rated Stanley Black & Decker Inc. the business predictability rank of 3-star.

See Joel Greenblatt (Trades, Portfolio)'s portfolio here.

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This article first appeared on GuruFocus.