His theory is that by analyzing the holdings of top mutual funds, and then determining how they differ most from the index, you can then emulate the mutual fund's performance.
You can even improve on the performance of mutual funds because you can follow their strategy in a more consistent fashion and because you can reduce their strategy to its essential elements. Often even good fund managers are not entirely consistent.
An example of a strategy is: from the stocks with
12 month EPS gain >20% and
26 week % price change>20% and
Last Qtr EPS % chg > 20% and
Valueline Timeliness Rank <=5
Pick the ten stocks with highest estimated EPS growth for next year .
He explains how to do all this in detail and derives some good looking strategies. Risk is taken into account and proves to be a very useful measure of the reliability of a strategy.
You can use the same techniques to evaluate your broker's recommendations, and the advice from books and newletters. Do they follow a strategy or is it just random tips and hunches?
He also showed how various fund managers changed strategy quite radically without announcing it eg Magellan in the early 1990s.
There are some good tips on how to avoid common traps when using quantitive strategies eg using single variable strategies.
He also explores combining various strategies and shows how to build your own.
He did not really prove his theory which is that noone really makes money by individual stock picks, it is all strategy.
As a final caveat, if you don't like numbers you will not like this book. But it seems you cannot succeed in investment without being very friendly with numbers.
