The Santa Cruz Sentinel has a article by Harry Domash highlighting the earnings strategy:
Here's a stock-picking strategy that doesn't require scrutinizing financial statements or checking price/earnings ratios, or even worrying about how economic ups and downs might affect a company's outlook.
Instead, it's based on picking stocks based on earnings surprises, one of the few reliable predictors of future stock prices.
An earnings surprise is the difference between a company's reported earnings and the number that stock analysts were expecting. All else equal, positive surprises reported earnings beat forecasts drives share prices up, often for extended periods. Conversely, negative surprises earnings below forecasts drive share prices down.
Hedge funds, said to rely heavily on surprises to power their computer-driven stock selection strategies, keep the details secret. But that's not the case for Pradeep Bonde, who publishes a blog called StockBeeStockBee.blogspot.com. Bonde follows a strategy based on tracking surprises that, reportedly, has been producing high double-digit annual returns for several years.