This 'No-Brainer' Strategy Has Crushed The Market Since 1982
Nearly 20 years ago, I took a class taught by legendary investor John Griffin and guest speaker Julian Robertson. The class was held at my alma mater -- the McIntire School of Commerce at the University of Virginia.
I had no way of knowing it at the time, but a talented classmate of mine would go on to write several bestselling financial books, including The Ivy Portfolio and Shareholder Yield .
His name? Mebane Faber.
His friends call him "Meb." But when it comes to the stock market... experts around the world are calling him a genius...
#-ad_banner-# "Of the many books I've read on investment strategies over the past decade, I put [the Ivy Portfolio] at the top of the class." -- Doug Short, Advisor Perspectives
"The most useful book could be [the Ivy Portfolio] by money manager Mebane Faber. He offers a simplified model that regular people can adopt." -- BusinessWeek
"If he keeps up what he's doing, he's going to be famous someday... He simply has too many good ideas." -- Stansberry Research.
Put simply, Mebane Faber is an up-and-coming star in the financial world. And for good reason.
Thanks to a groundbreaking academic study he published last year, Mebane has introduced the financial world to a new way of investing -- one that has delivered market-crushing capital gains since 1982.
This simple strategy, which we're calling "Total Yield," looks at the three ways companies can actively return money to their shareholders.
Companies can return wealth by:
1.) Paying dividends
2.) Buying back stock
3.) Reducing their debt load
By back-testing the Total Yield strategy from 1982 to 2011, Mebane found that companies returning the maximum amount of wealth through these three channels consistently beat the overall market.
About a year ago, Mebane launched a brand-new fund based on this Total Yield strategy. It's called the Cambria Shareholder Yield ETF (NYSE: SYLD ) . Since then, investors have poured nearly $200 million into this fund.
And they haven't been disappointed...
-- 24 of the top 25 companies in Mebane's fund have at least doubled (or more) the S&P's return as of last November.
-- Some of the fund's top holdings gained as much as 105%... 124%... even 224%... in less than a year .
-- Since the fund's inception last May, it's handily outperformed the S&P.
The results speak for themselves. No wonder Bloomberg recently rated Mebane's new fund the "#1 ETF launch of 2013."
His fund didn't earn that title for nothing. To see what I mean, take a look at the table below.
It's a snapshot of all of the 25 largest portfolio holdings in Mebane's new exchange-traded fund ( ETF ) as of late 2013. You can see that every one of these stocks made money. Three picks were up over 100%. One was even up over 224%. His "worst" pick was even up 40% -- that beats the S&P's stellar 31% gain last year by 9 percentage points.
And back-testing Mebane's strategy -- over three decades -- clearly shows these results aren't a fluke. As I showed you earlier, going all the way back to 1982, academic research shows that Mebane's strategy consistently outperforms the S&P 500.
This strategy even outperformed the S&P in the past three bear market years. It eked out a 0.9% gain in 2001 when the S&P 500 lost 12%, and it outperformed the S&P by an average of 9 percentage points per year when the market got crushed in 2002 and 2008.
While no magic formula can protect investors from all market turmoil, Total Yield would have helped shelter investors from the worst of these downturns.
So what's the secret to his success?
It's simple. The reason Total Yield outperforms is because it looks at ALL of the ways a company distributes money back to its shareholders.
While dividends, share buybacks and debt reduction are all shareholder-friendly moves on their own... Total Yield accelerates wealth accumulation by combining all three into one profit-maximizing strategy.
I could talk all day about Mebane Faber and this highly-successful Total Yield strategy, but there's no better substitute than getting the details straight from the creator himself.
That's why we recently had one of our most experienced analysts, Nathan Slaughter, sit down to talk to the very man who wrote the book on this wildly successful investment strategy.
I'd like to share our exclusive interview with Mebane Faber with you today.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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