John Dorfman

The Robot Portfolio is a 20-year experiment in extreme value investing. Start with all U.S. stocks that are profitable, have debt less than corporate net worth and have $500 million or more in market value. From that universe, simply select the 10 cheapest.

The Pietroski F Score rates stocks on a nine-point scale, based on nine questions, such as: Does the company have a positive return on assets? Is the return on assets higher than it was a year ago? Is the company’s debt ratio (long-term debt as a percentage of assets) lower than it was a year ago?

Generally, I consider a stock to be in the value category if it sells for 15 times earnings or less. Growth stocks usually sell for 20 times earnings or more. From 15 to 20 is GARP land. GARP stands for Growth at a Reasonable Price. It’s an attempt to get some of the benefits of each of the two major stock-picking camps, growth and value.

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