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We start with proven strategies that have produced exceptional long term returns over decades then perform due diligence on each stock and search for additional characteristics which will boost returns & increase the number of winning stocks.
Assets are the bedrock of value so it makes sense that we focus on them. We call our strategy "Ultra".
Schloss claimed that the lowest priced stocks relative to net tangible equity produced very high returns long term. We exclude intangibles to focus on the company’s hard assets.
Long Term CAGR Target of 20 - 25%
Advocated for by Walter Schloss
Size: Micro and Nano Caps
For portfolios smaller than $1 Million USD
Warren Buffett loved buying 'cigar butts' in his early days and some of these companies were trading below the cash they had in the bank, less all liabilities. One modern approach to this type of investing is Negative Enterprise Value investing. Buying firms for less than cash net of total debt is an enormously high returning strategy which is why we've adopted it at The Broken Leg.
Long Term CAGR Target of 25%
Modern Approach to Buying Cigar Butts Below Net Cash
Size: Micro and Nano Caps
For Portfolios Smaller Than $500 Thousand USD
We cover two fantastic earnings-based value strategies: Our Simple Way 2.0 strategy and Tobias Carlisle's Acquirer's Multiple strategy. Both produce the highest returns of any earnings-based value investing strategy.
The Acquirer’s Multiple concentrates on the highest yielding EV/EBIT or EV/EBITDA stocks1. Hat tip to Tobias Carlisle for his work on the strategy. While similar to Greenblatt’s “Magic Formula” stocks, Acquirer’s Multiple stocks actually have higher returns.
Long Term Target CAGR of 20 to 25%
Better returns than Greenblatt’s "Magic Formula"
Size: Micro and Nano Caps
For portfolios smaller than $1 Million USD
Net net stocks stocks were Graham’s favourite and best performing investment strategy but not all net nets perform the same way. We select dividend paying net nets… and for good reason.
Graham developed his Simple Way strategy in 1975 and said it reliably beat the Dow by 100%. We built on his original strategy, decreasing risk and more than doubling the original strategy's performance.
Long Term Target CAGR of 20 to 25% including dividends
Very consistent returns
Size: Small, Mid and Large Caps
For all sized portfolios
Dividend paying net nets have very good long term returns but perform amazingly well during market downturns. How well? My study has shown that these stocks produce positive returns on average during smaller market downturns and suffer half the market’s drawdown during a big bear market.
Long Term Target CAGR of 20%
Outstanding bear market protection
Size: Micro and Nano Caps
For portfolios smaller than $1 Million USD
Canada :: The USA :: The UK :: Europe :: Singapore :: Hong Kong :: Japan :: Australia
We'll walk you through portfolio construction step by step, so you can take advantage of these powerful investment strategies effectively. We'll also include key mindsets and expectations that you have to have to succeed as an investor. Few if any books cover these crucial topics from a value investing perspective.
We love Ben Graham so built on his classic investment strategies, reducing risk and improving performance. We've also added additional bonus criteria to boost returns even further.
Our Bird's Eye View Investment Guides walk you through each strategy, highlighting their origin, how each was put together, and the criteria we use to propel returns even higher. We also include and comprehensively discuss the scorecards we use to select our stocks.
We will send you one investment letter with 3 investment analyses. Each analysis is a full investment profile on the company that we selected.
Yes, each month we will send you one Cheap Assets stock, one Cheap Earnings stock, and one Pay Daddy stock. All of these stocks are rated “buys” and are intended for your purchase.
We want you to be completely happy as a subscriber so, if you're not impressed with The Broken Leg Investment Letter, notify us within 30 days that you would like to cancel and we'll provide you with a full refund.
We mostly cover Micro and Nano Cap stocks. The only strategy that we cover that looks at Small, Medium and Large Cap stocks is our Simple Way 2.0 strategy. This coverage achieves the highest CAGR.
Simply Graham's original Simple Way strategy, with a few key upgrades. We look for: A Price to Current Year's Estimated Earnings of 10x or less, an Equity to Assets Ratio of 50% of more, a Price to Book Value less than 1.5%, and a greater than market dividend yield. As with all our strategies, we also add bonus criteria to pick the best stocks.
The Acquirer's Multiple refers to two strategies: buying Low EV/EBIT and Low EV/EBITDA stocks. We add additional criteria such as insider buys or the presence of angry activists to help boost returns and the percentage of winning stocks. Tobias said these stocks returned 21.5% over 50 years, but we think we can do better.
We buy tiny companies that are cheap on a hard assets basis, after all of the firm's liabilities have been subtracted. These firms aren't just cheap, they're trading at less than 40% of Net Tangible Assets. In addition, we use a range of criteria such as avoiding debt to boost returns. This is the same strategy that Walter Schloss turned to after net nets dried up.
Yes. We provide our Bird's Eye View Portfolio Construction Guide to help you build and manage your portfolio. We want you to earn the best returns possible so we will walk you through how to think about this sort of investing so you can succeed long term.
See for yourself! You can download your free sample edition of The Broken Leg Here.
We start with strategies which have shown the best CAGR over time then check the numbers, adjust for Off Balance Sheet items, and note additional characteristics that should improve the chance of value realization. This improves returns and the chance of picking winning stocks.
This really depends on the investor. I personally buy most of the net nets that I write about and other investors may buy for their own account depending on their own financial situation. We include a disclosure in each analysis to tell you whether we have purchased the stock or not.
The Broken Leg Investment Letter is run by Evan Bleker at The Broken Leg. Contact The Broken Leg at [email protected] with any questions about this offer, your subscription, or anything else having to do with The Broken Leg.