Robot Stocks

Robot Portfolio is a simple yet effective mechanical stock picking strategy created by John Dorfman (Thunderstorm Capital). It is a classical Value Investing Strategy.
Let’s use the stock screening process to analyze it.

Investing Universe

Dorfman eliminates very small Cap and focuses on US Stocks.

  • Market Cap ≥$500 Million.

Primary Theme

Several mechanical value screens do not use any primary theme. The Value Investing style is emphasized by the Ranking criterion (which then plays the role of the Primary Theme). This is the case for Robot Stocks: see Ranking below.

Secondary Theme Go back to Top

The Secondary theme in stock screening is used to reduce risk in your investing.

The 2 criteria used by Dorfman are typical of Value Investing: they improve the chance of a value stock recovering. Many Value screens use these criteria.
  • 12 months Earnings >0

  • Debt/Equity <1

Ranking and Rebalancing Go back to Top

Dorfman buys the 10 lowest Price/Earnings (PE) Stocks passing the above criteria. The "Earnings >0" used in the secondary theme ensures that PE will also be >0 (Many stock screeners can show PE <0).

Stocks from the Robot portfolio tend to be small-mid cap. In this case, 10 stocks will be quite volatile. Robot Stocks are therefore recommended for part of your portfolio only.

Dorfman uses annual rebalancing which is well adapted to Value Investing.

Robot StockS Screen Go back to Top

Here is a summary of the Robot Stocks strategy:

Screening Theme Robot Stocks
Investing Universe Market Cap≥500M
Primary Theme  
Secondary Theme(s) EPS>0
Debt/Equity<1
Ranking PE ratio
Number Of Holdings 10
Holding Period 1 year


Dorfman started Robot stocks in 1999 and the strategy has always outperformed the S&P500 except for 2006 and 2007. Despite severe losses in 2007 (-32%: see note below), the strategy returned 18% annualized over 9 years (1999 to 2007) while the S&P500 returned less than 5% annualized over the same period.

Note: Back in December 2006, when he issued the list of Stocks for 2007, Dorfman mentionned that he was uncomfortable with the high number of Homebuilders and Home Building related companies in the 2007 portfolio. With only 10 stocks in the portfolio, it is a good idea to check that it is not overweight (say <20%) in any one industry. In this case, you may simply select the next best ranked stocks in a different industry (see also the Tips for Low Number of Stocks in a Screen).

Check the Robot stocks with MSN Deluxe screener to get a list of stocks passing the screen.

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