Greenblatt's Value-Hunting Strategy Shows Fresh Gains in Tech and Auto Sectors - Market Update 12/11/2025

Strategic Overview: The Greenblatt Model in Action

Validea’s daily tracking system has identified two notable shifts in stock valuations based on Joel Greenblatt’s proven investment philosophy. The Earnings Yield Investor model—rooted in Greenblatt’s legendary “Magic Formula” approach—continues to filter securities through rigorous fundamental criteria. Today’s analysis reveals evolving perspectives on positions spanning industrial supply and cloud-based enterprise solutions.

Dropbox Inc (DBX): Cloud Infrastructure Play Gains Momentum

Among today’s highlighted upgrades, Dropbox Inc (DBX) emerges as a compelling opportunity within the Software & Programming sector. This medium-sized software company has seen its strategy-based rating strengthen from 80% to 90%, signaling the model’s heightened confidence in its underlying value proposition. Ratings at the 90% threshold typically indicate the strategy recognizes meaningful potential.

Dropbox operates a comprehensive suite of productivity and security tools engineered for distributed workforces. The platform spans multiple solutions: Dropbox Passwords (credential management across devices), Dropbox Backup (continuous cloud synchronization), Dropbox Sign (digital document workflows), DocSend (secure content distribution with analytics), Dropbox Dash (an AI-enabled universal search layer), and FormSwift (form creation capabilities). This diversified product ecosystem positions the company within enterprise software’s expanding intersection of collaboration and data protection.

From a Greenblatt framework perspective, the stock demonstrates balanced performance across yield and capital efficiency metrics, though both register as neutral rather than outperforming. Despite these measured readings, the overall ranking signals a “pass”—alignment with the model’s screening criteria.

Valeo SE - ADR (VLEEY): Auto Supplier Faces Strategic Headwinds

Meanwhile, Valeo SE - ADR (VLEEY), a France-headquartered mid-capitalization automotive components manufacturer, presents a more nuanced picture. The company’s rating has evolved from 70% to 80% based on adjustments in both fundamentals and valuation dynamics.

Valeo functions as a technology-driven supplier to the global automotive ecosystem, specializing in complex systems across multiple domains. The company segments its operations through four primary divisions: Comfort & Driving Assistance Systems (incorporating smart sensors, safety enhancements, and autonomous driving features), Powertrain Systems (electrical, transmission, combustion engine, and electronic subsystems), Thermal Systems (climate control, powertrain cooling, compressors, front-end components, and bus thermal management), and Visibility Systems (lighting and wiper technologies).

However, when evaluated through Greenblatt’s quantitative lens, Valeo’s performance appears constrained. Both earnings yield and return on tangible capital register as neutral, and the overall ranking designation is “fail”—indicating the security does not meet the model’s stricter investment thresholds despite the rating improvement.

Understanding the Greenblatt Approach

Joel Greenblatt’s investment philosophy, crystallized in his seminal 2005 work The Little Book That Beats The Market, distills market-beating returns to two fundamental metrics. His proprietary “Magic Formula” generated exceptional 30.8% annualized returns during its 1988–2004 back-test period—more than 2.5 times the S&P 500’s 12.4% average return. Greenblatt’s track record as founding partner of Gotham Capital, where the firm averaged 40% annualized returns across two decades, underscores the methodology’s potential when rigorously applied.

About Validea’s Research Framework

Validea maintains an investment research platform centered on systematizing the strategies of proven market outperformers. The service provides both individual stock assessments and curated model portfolios aligned with legendary investors including Warren Buffett, Benjamin Graham, Peter Lynch, and Martin Zweig. By codifying these time-tested approaches, Validea enables individual investors to access institutional-quality analytical frameworks.

Disclaimer: The views and opinions presented represent the author’s perspective and do not necessarily reflect those of Nasdaq, Inc.