Let me introduce you to one of Wall Street's worst stock pickers. I'll fill you in on the caveats as we go along.

Joel Greenblatt of Gotham Capital says he knows the "magic formula" to beat the market, claiming a 30.8% annual return over 17 years and 96% accuracy on his stock picks. Our CAPS service tracks his picks, so we can put the strategy to the test. As it turns out, Mr. Greenblatt isn't doing so good at the moment. Have a look at a few of the picks we're tracking on his behalf.


CAPS Rating

Joel's Score

Check Point Software (NASDAQ:CHKP)



PW Eagle



United Online (NASDAQ:UNTD)



Jakks Pacific (NASDAQ:JAKK)



PortalPlayer (NASDAQ:PLAY)






Frontier Oil (NYSE:FTO)



Westwood One




No rating



No rating


Data from Motley Fool CAPS as of 10/9/2006.

What it all means
Joel's overall score is very low right now, and you can see his four biggest misses in the table above. He's the 10th-worst performer out of the 98 Wall Street players we track. But here's the thing to remember about his approach: It's all about value investing. These picks have been active for a mere six months with a stated investment horizon of one year or more. Value investing takes time and patience, as the whole trick is to find companies on sale before the rest of the market catches on.

If you look a bit closer, you'll notice that the CAPS community tends to agree with Mr. Greenblatt on most of these picks. Five out of his 25 picks are rated five stars, while only three of them have garnered a one-star or two-star rating. That's less than the number of picks that have yet to earn a star rating at all. Feel free to weigh in with your own opinions on FTD or Sigmatel -- his best and near-worst performers -- so we can get them fitted with proper ratings.

The fact that Joel's methods generally agree with the analysis of a community of Fools shouldn't surprise longtime readers. My fellow writers oftencitehim as a source of good ideas and analysis, and David Gardner interviewed him for the NPR radio show many moons ago. We may have a kindred spirit here, folks. It's up to the market to put the proper price on his recommendations, and CAPS is tracking every move for you.

There are a lot more brains to pick where this one came from. To see how your favorite -- or least favorite -- Wall Street stock picker is doing, click into Motley Fool CAPS . Or, even better, add your own takes . Everyone's ideas help make the system smarter.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. He's currently the 17th-ranked CAPS pitcher and aspires to do better. You can check out Anders' holdings if you like. Foolish disclosure is your friend.