{"id":207395,"date":"2024-05-30T10:45:00","date_gmt":"2024-05-30T14:45:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=207395"},"modified":"2024-05-31T04:21:05","modified_gmt":"2024-05-31T08:21:05","slug":"inside-the-investment-strategy-of-john-neff","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/stocks\/inside-the-investment-strategy-of-john-neff\/","title":{"rendered":"Inside the Investment Strategy of John Neff"},"content":{"rendered":"\n

Who is John Neff?<\/strong><\/h2>\n\n\n\n

John Neff was the legendary manager of Vanguard\u2019s Windsor Fund from 1964 to 1995. During his three-decade tenure, the fund averaged a 13.7% annual return, beating the S&P 500 by an average of over 3 percentage points per year. That track record made him one of the greatest investors of all time. Neff\u2019s approach was, in his own words, \u201crelatively prosaic, dull, [and] conservative.\u201d He focused on beaten-down, unloved stocks with low price-earnings ratios. Neff believed that as long as a company was fundamentally sound, a low P\/E meant it had been oversold and was due for a rebound. Neff detailed his low P\/E approach in his book John Neff on Investing. Originally published in 1999, it provides a straightforward look at how Neff used a combination of low multiples and fundamental strength to find winning stocks again and again.<\/p>\n\n\n\n

The Neff-Based Validea Model<\/strong><\/h2>\n\n\n\n

Validea used John Neff on Investing and other public sources to build a quantitative model that encapsulates Neff\u2019s approach. The model looks for stocks with the following characteristics:<\/p>\n\n\n\n