John Neff

John Neff

John Neff joined Wellington Management Co in 1964 after working as a securities analyst. While he was there, he was portfolio manager of the Windsor, Gemini and Qualified Dividend funds, and managed to beat the S&P 500 Index by 3.1% per annum. The value investor presents his strategies in his book John Neff on Investing. 

Summary

Neff believes in portfolio concentration as opposed to diversification and in finding “good companies, in good industries, at low price-to-earnings prices”. Neff is open to buying stocks of all sizes as long as the P/E ratio is low. He suggests buying stocks after they have taken a dive due to bad news or in finding so-called ‘indirect paths’ to stocks in popular industries. Before investing, Neff likes to meet a company’s management to assess their integrity and value personally. This will be difficult for many investors, but his well thought out and detailed analytical techniques for investigating a company’s financial status can be used by all investors.

Success Formula Contrarian Value

  1. MktCapM is >= US$ 600 million (basis year 2000) adjusted yearly
  2. Latest filing P/E ratio is between 40% and 100% of industry average
  3. Average 5-year EPS growth % is between 7% and 20%
  4. 1y EPS growth rate % is > 6%
  5. Neff's Sales growth criteria:
  6. Neff's EPS growth and Dividend yield criteria:
  7. TTM Free Cash Flow per share is > 0

Hypothetical performance back-tested

Data source: Bloomberg, Calculations: meetinvest

Disclaimer

Hypothetical performance is not necessarily indicative of future results. No representation is being made that any action will achieve profits or losses similar to those displayed. The result may be overstated as neither transaction costs nor bid/ask spreads nor slippage have been considered. Output equally weighted with maximum 5% allocation per position and rebalanced monthly. Holdings are systematically replaced when the screening criteria are not met anymore. No additional buying or selling rules (technical analysis) have been employed.

Historical monthly relative performance

How to read this graph:
A green bar shows how much the guru strategy outperformed the benchmark index in a particular month. A red bar shows how much the guru strategy underperformed the benchmark index in a particular month.

Data source: Bloomberg, Calculations: meetinvest

Disclaimer

Hypothetical performance is not necessarily indicative of future results. No representation is being made that any action will achieve profits or losses similar to those displayed. The result may be overstated as neither transaction costs nor bid/ask spreads nor slippage have been considered. Output equally weighted with maximum 5% allocation per position and rebalanced monthly. Holdings are systematically replaced when the screening criteria are not met anymore. No additional buying or selling rules (technical analysis) have been employed.

Historical portfolio turnover

Data source: Bloomberg, Calculations: meetinvest

Books

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