Summary
- The Piotroski-Graham long-term value portfolios have consistently outperformed the S&P 500 over two-year periods, leveraging proven academic value models.
- Current selections focus on high Piotroski F-Score stocks, enhanced with Graham criteria, and screened for liquidity, financial integrity, and deep undervaluation.
- Value stocks are currently out of favor versus growth, but a rotation back to value could drive strong gains, especially in sectors like residential construction.
- Despite recent underperformance versus growth, the Piotroski-Graham model remains one of the most robust, well-documented value strategies for long-term investors.
Top Piotroski-Graham Long Term Value Portfolio: July 2025 Selections
These top selections for the July 2025 long-term portfolio comprise the 28th portfolio since 2017 formed to test the long-term value approach of the Joseph Piotroski and Benjamin Graham’s value algorithms that remain two of the best-performing value-based selection models in peer-reviewed financial research. The portfolios are now released 2 times per year and measured for 2-years following the original measurement periods set by Piotroski and Graham.
Annual Returns
Each portfolio is measured for 2 years consistent with the original scholars’ measurement studies in the published financial literature. These value portfolios have not only beaten the S&P 500 every year since formation, but they have also generated positive returns every year since 2020 in the measured period. Another measurement question is whether we should compare annual returns or 2-year returns to the S&P 500 as intended by the scholars who made these algorithms. The last 18 portfolios stretching back to January 2019 are shown below with their closing 2-year returns and current active returns.
There are also important macro factors that investors should consider when choosing Value portfolios over Growth portfolios. Even the best models in the financial literature can underperform when market conditions are at extremes as they are now. Value stocks are greatly underperforming the Growth stocks as a % of the S&P 500 index and could come back into favor as investors move out of the most crowded growth trades.
S&P 500 Growth vs. Value – 1994 to 2025
July 2024 Piotroski-Graham portfolio
The one-year return on the July 2024 portfolio shows a dividend adjusted return of +7.3% trailing the S&P 500 +14.5% in the current buy/hold period. Again the S&P 500 is benefiting greatly from mega cap technology and semiconductor stocks most of which are not considered value stocks on the Piotroski or Graham fundamental value measures.
The two powerhouse stocks in the July 2024 portfolio have been FinVolution (FINV) up +100% and Hello Group (MOMO) up +39.5% in the past year. When these two Chinese companies were selected last year the risk in China stocks was considered unusually high and few would touch them despite the value they offered.
