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Full 2011 Value Stock Screen Performance

January 9th, 2012 by Jae Jun

Written by

Jae Jun

Full 2011 Year End Value Stock Screen Performances

Compare with 2010 Value Stock Screens

Stock Screen Results Discussion

A much different story compared to 2010. It has been a brutal year for many investing strategies. Of the 13 value stock screens that I track, only two were positive for the year and one was breakeven. The remaining 10 value stock screeners underperformed by big margins.

I wanted to see whether it was just my strategies that did poorly but it seems like AAII didn’t have a good year as well. The most surprising difference between my screen results and AAII was the performance of the Piotroski stock screener. The standard version I have performed well again this year compared to AAII’s -36.7% return.

Screen Settings

For these performance measurements, I use just 15 stocks. On the screener pages, I list 30 just to keep ideas flowing for everyone. Certain volume and price requirements must be met and I’ve tried to weed out Chinese stocks. As always, I don’t include financial companies, REIT’s and holding companies.

Observations and Takeaways of each Stock Screener

Negative Enterprise: Companies that have negative enterprise value are always flush with cash. This criteria became a problem in 2011 when Chinese reverse mergers began popping up everywhere.

These Chinese companies were just loaded with cash and filled the screen. Since reverse mergers are not listed as ADR’s, I couldn’t find a way to weed it out. If this continues to happen, I am thinking of just deleting the screen entirely.

Altman Z Screen: Anything categorized as low quality took a big hit last year. Seems like the majority stuck with high quality stocks which Altman Z score screens for. The screen like all the others tend to focus on small caps and so a -5.8% is acceptable in my opinion.

CROIC and FCF Cows: I was surprised that these two did so poorly. Fundamentals of the companies were strong, returns high, cash flow is positive and strong. The end result was poor. I will have to take a look at the criteria and see whether I have to tweak it.

Graham Checklist & Graham Formula: Decent results. The best as the Graham checklist screen under performed and the Graham formula matched the S&P. Still did very well when compared to the others.

Graham emphasized that investing shouldn’t be rocket science and it was best to keep it simple. His methods are proving to be correct again.

Insider Buys: AAII also had a horrible year for their insider buy screen. Is it because management is over optimistic and that insiders do not analyze their own company objectively? One issue I found is that screens have a hard time of picking the difference between open market purchases and stock options.

NCAV, NNWC & NNWC incr: NCAV screen was actually a surprise this year. It was the best performer this year, partly due to the end of year run ups from PARL and other micro caps which even I find to be risky more than doubling in the year.

Seeing how NCAV did so well, I would have thought the NNWC stock screen would have done just as good, but since the companies on this screen are more asset based opportunities without a valid business model, it got crushed.

NNWC increasing stocks didn’t fair better. If tangible book value is increasing, then it is expected that the company would be able to earn a return off the increasing book value, leading to higher earnings and stock prices. Not true this year. More monitoring required on this.

Piotroski Screen: Has been a soldier. Consistent and steady. So far the screen has been able to outperform in the good years and not lose too much in bad years. Quality companies based on accounting figures seems to be working.

Share Buyback: Any stock that got hit hard bought shares. Some went onto to further losses. Remember what they say. “Just because it is cheap, doesn’t mean it can’t get cheaper.” How very true. A difficult lesson for me in 2011.

Low Expectations: The market may be expecting little from these companies, but as a contrarian strategy, it certainly did meet my expectations. Healthcare stocks which I would have avoided due to regulatory risk were some of the best performers. These cheap companies in out of favor industries looks like a good strategy to further enhance.

I have not published the low expectations screen yet. It’s on my todo list. Let’s see how these stock screens handle 2012.

Posted in Featured, Investing Strategy | 6 Comments »

Buffett’s Portfolio Strategy Secret to 31% Annual Gains

October 14th, 2011 by Jae Jun

Written by

Jae Jun

I was going over Buffett’s old letter to shareholders during his partnership years, and it blows me away the level of success he was able to achieve. For 11 years from 1957 to 1968, Buffett not only beat the market, he never had a down year. On a cumulative basis, his partnership achieved 2610.6% gains at a compounded rate of 31.6%!

Clearly no one has been able to follow suit, and a clear reason why we should stop fooling ourselves, because we are not Warren Buffett.

How did Buffett do it?

There are so  many books on the types of companies Buffett likes to buy and how his holding period is forever, but few mention his strategy from the early days of his partnership where operations were run differently to today.

He had immaculate control and allocation of his positions and when he found a no brainer, was not afraid to dump 40% of the portfolio into a single company such as American Express following the salad oil scandal. Although the partnership results suggest that Buffett was able to find a no brainer once a year to go all in, I doubt that is true. What Buffett was kind enough to do was to provide his method of operations in most of his yearly letter to partnership shareholders.

Buffett’s Method of Operations

In the 1969 letter (pdf), there is a section showing the portfolio makeup of different categories. It goes like this.

What are these Categories?

An explanation of each of the categories is provided in the 1965 letter (pdf) to shareholders which I’ll reproduce here.

1. Generals – Private Owner Basis

A category of generally undervalued stocks, determined by quantitative standards, but with considerable attention paid to the qualitative factor. There is often little or nothing to indicate immediate market improvement. The issues lack glamour or market sponsorship. Their main qualification is a bargain price; that is, an overall valuation of the enterprise substantially below what careful analysis indicates its value tot he private owner to be . Again, let me emphasize that while the quantitative comes first and is essential, the qualitative is important. We like good management – we like a decent industry – we like a certain amount of “(ferment)” in a previously dormant management or stockholder group. But, we demand value.

2. Generals – Relatively undervalued

This category consists of securities selling at prices relatively cheap compared to securities of the same general quality. We demand substantial discrepancies from current valuation standards, but (usually because of large size) do not feel value to a private owner to be a meaningful concept. It is important in this category, of course, that apples be compared to apples – and not to oranges, and we work hard at achieving that end. In the great majority of cases we simply do not know enough about the industry or company to come to sensible judgements – in that situation we pass.

As mentioned earlier, this new category has been growing and has produced very satisfactory results. We have recently begun to implement a technique which gives promise of very substantially reducing the risk from an overall change in valuation standards; e.g. we buy something at 12 times earnings when comparable or poorer quality companies sell at 20 times earnings, but then a revaluation takes place so the latter only sell at 10 times.

This risk has always bothered us enormously because of the helpless position in which we could be left compared to the “Generals – Private Owner” or “Workouts” types. With this risk diminished, we thing this category has a promising future.

3. Workouts

Theses are securities with a timetable. They arise from corporate activity – sell outs, mergers, reorganizations, spinoffs etc. In this category we are not talking about rumors or “inside information” pertaining to such developments, but ti publicly announced activities of this sort. We wait until we can read it in the paper. The risk pertains not primarily to general market behavior (although that is sometimes tied in to a degree), but instead to something upsetting the applecart so that the expected development does not materialize. Such killjoys could include anti-trust or other negative government action, stockholder disapproval, withholding of tax rulings, etc.

The gross profits in many workouts appear quite small. It’s a little like looking for parking meters with some time left on them. however, the predictability coupled with a short holding period produces quite decent average annual rates of return after allowance for the occasional substantial loss. This category produces more steady absolute profits from year to year than generals do. In years of market decline it should usually pile up a big edge for us; during bull market it will probably be a drag on performance. on the long term basis, I expect the workouts to achieve the same sort of margin over the Dow attained by generals.

To learn more about workouts, here are some links you will be interested in.

I haven’t participated in any workouts for a couple of years now. A small portfolio, and only being able to get involved in one at a time makes it very difficult as there certainly will be blowups. Having a basket of workouts is required for safety, but with just one or two, it could lead to serious damage.

4. Controls

These are rarities, but when they occur they are likely to be of significant size. Unless we start off with the purchase of a sizable block of stock, controls develop from the general – private owner category. They result from situations where a cheap security does nothing price wise for such an extended period of tie that we are able to buy a significant percentage of the company’s stock. At that point we are probably in a position to assume a degree of, or perhaps complete, control of the company’s activities. Whether we become active or remain relatively passive at this point depends upon our assessment of the company’s future and the management’s capabilities.

Why Buffett is a Pure Investing Genius

He determined every investment into probabilistic terms. Rather than focusing on an absolute method of investing like Graham by just buying a basket of companies passing certain fundamental criteria, Buffett was much more opportunistic, probabilistic and circumstantial.

What I mean by this is that Buffett is not limited to a one dimensional investing process. He is fluid like water. To be able to hold such a large position in workouts and go activist in his control positions is not something everyone can do. The fact that Buffett was profiting so handsomely from special situations in his prime shows how far ahead he was from the rest of the pack. In terms of chess, Buffett would be ranked as a grandmaster capable of thinking 2-5 moves ahead in any situation.

Think about your portfolio makeup and investing strategy. I certainly have and I can identity that I have lots of things to improve. Especially my portfolio allocation. What about you?

Posted in Investing Strategy | 8 Comments »

For You, a 40 Point Stock Checklist.

September 26th, 2011 by Jae Jun

Guest post by

Tim du Toit

Eurosharelab

The Use of Checklists

I recently came across an interesting article in The New Yorker magazine called The Checklist written by a multi-talented surgeon who is also the author of an interesting book I am reading called “Complications: A Surgeon’s Notes on an Imperfect Science”.

The article is quite long but it boils down to that in spite of strong evidence to the contrary, highly trained people think it’s below them to use check-lists as they know what to do and working through a check-list is an insult to them.

From the article:

But this time he found few takers. There were various reasons. Some physicians were offended by the suggestion that they needed check-lists. Others had legitimate doubts about Pronovost’s evidence.

This was in spite of these findings:
Within the first three months of the project, the infection rate in Michigan’s I.C.U.s decreased by sixty-six per cent.
The typical I.C.U.—including the ones at Sinai-Grace Hospital—cut its quarterly infection rate to zero.
Michigan’s infection rates fell so low that its average I.C.U. outperformed ninety per cent of I.C.U.s nationwide.
In the Keystone Initiative’s first eighteen months, the hospitals saved an estimated hundred and seventy-five million dollars in costs and more than fifteen hundred lives. The successes have been sustained for almost four years, all because of a stupid little check-list.

All this from a checklist with steps as simple as “wash hands with soap”.

Check-lists work best in a complex environment where the performing of certain steps is critical. In flying it is taken as a given that highly trained pilots work through check-list for virtually every eventuality.

An aeroplane is a complex entity, so is medical procedures and I want to argue so is investing.

When evaluating a company there are so many factors that are beyond your control. You however, through empirical research, know what increases the probability of you making profitable investment decisions.

What is thus important is that you focus on what you can control in your research and analysis.

My 40 Point Checklist

As part of my evaluation process I work through the following check-list:

  1. Can I in one sentence say exactly what the company does? (Thanks Cristina)
  2. Is operating cash flow higher than earnings per share?
  3. Is Free Cash Flow/Share higher than dividends paid?
  4. Debt to equity below 35%?
  5. Debt less than book value?
  6. Long Term debt less than 2 times working capital?
  7. Is the debt to EBITDA ratio less than 5? (Thanks Guy)
  8. What are the debt covenants?
  9. When is the debt due?
  10. Are Pre-tax margins higher than 15%?
  11. Is the Free Cash Flow Margin higher than 10%?
  12. Is the current asset ratio greater than 1.5?
  13. Is the quick ratio greater than 1?
  14. Is there growth in Earnings Per Share?
  15. Is management shareholding > 10%?
  16. Is the Altman Z score > 3?
  17. Does the company have a Piotroski F-Score of more than 7?
  18. Is there substantial dilution?
  19. What is the Flow ratio (Good < 1.25, Bad > 3)
  20. What are management’s incentives?
  21. Are management’s salaries too high?
  22. What is the bargaining power of suppliers?
  23. Is there heavy insider buying?
  24. Is there heavy insider selling?
  25. Any net share buybacks?
  26. Is it a low risk business?
  27. Is there high uncertainty?
  28. Is it in my circle of competence?
  29. Is it a good business?
  30. Do I like the management? (Operators, capital allocators, integrity)
  31. Is the stock screaming cheap?
  32. How capital intensive is the business?
  33. Does management have the ability to naturally re-invest in the business at a high return?
  34. Is the company highly profitable?
  35. Has it got a high return on capital?
  36. Has the business got an enormous moat?
  37. Is there room for future growth?
  38. Does the business have strong cash flow?
  39. What has management done with the cash?
  40. Where has the Free Cash Flow been invested?
    1. Share buybacks
    2. Dividends
    3. Reinvested in the business

I also have an analysis spreadsheet for companies I have come across through the Magic Formula Screen from Joel Greenblatt.

For these companies I use these additional check-list items:

  • Are there any Magic formula value outliers?
  • Is the company in a bubble industry over the last 5 years?
  • Does the cash belong to the company?
  • Is EBIT / Assets > 20%

I have put this checklist together over a period of more than 20 years and often make changes as I gain new information and insights.

I also do not have a formula that if a company fails X amount of points on the check-list I do not consider it.

The checklist however gives me an indication of what problem areas the company has and where I have to do further analysis.

Feel free to use the above points in your analysis process and let me know if you have any additional points I can add in the comments below.

About the Author

Tim du Toit is editor and founder of Eurosharelab. On his website he reveals what more than 20 years of equity investment have taught him – sometimes at considerable cost. To discover how you can avoid costly mistakes and enjoy greater profits, sign up for his free newsletter “Investing that makes sense” at Eurosharelab.

Posted in Guest Posts, Investing Strategy | 9 Comments »

This Low Expectation Screen is Outperforming by 13% YTD

June 20th, 2011 by Jae Jun

Jae Jun

Graham assigned a PE of 8.5 for Zero Growth Companies

According to Benjamin Graham’s formula from The Intelligent Investor, he assigned a PE of 8.5 to a company with zero growth. However, if you have used my stock valuation spreadsheet or read the article on how to value stocks using the Benjamin Graham formula, you would have noticed that I assign a PE of 7 for a no growth stock.

With that in mind, I wanted to know how a stock considered by the market to have no growth potential would perform.

If the PE is too low, then there is a high probability that there really is a fault with the business. But if the company is borderline, there is a good chance that the business is sound and healthy but just misunderstood by the market or affected by macro factors outside of the company’s control.

The PE range of No Growth Stocks

What I tried to do was to find that range of borderline no growth PE’s. Keep in mind that lower expectations make the upside return that much more impressive as David Dreman has emphasized heavily in his books.

Through trial and error, I found that a PE range of 7 to 8.5 yielded the best results, but to be certain that I was getting quality companies, I included an additional criteria of ROE greater than 13%.

With the addition of ROE, the results are very impressive.

Low Expectations Stock Screen Results

YTD the screen has returned a price return of 14.3% compared to 1.1% for the S&P500.

In a year where the majority of funds are under-performing, the screen selection is doing extremely well.

Here are the stocks that are being tracked from the beginning of the year.

As you can see from the list, the majority are all very well capitalized and healthy businesses, but the reason why I’m impressed with the results can be visualized from the performance graphs below.




Compared to my other stock screener backtest performances, the low expectations screen isn’t as explosive, but the stability and the downside protection this screen provides is very impressive.

Since a screen does not have any intelligence, if you were to monitor these stocks a little closer and sell when you felt it was becoming overvalued, I’m sure the results would be even better.

15 Stocks with Low Expectations but Ready to Break Out

Any of these companies catch your eye? Tell me in the comments below.

Disclosure: None.

Posted in Featured, Investing Strategy | 12 Comments »

How to Find Ideas based on Industry & Competitors

February 15th, 2011 by Jae Jun

During the day, I am a test engineer and what I have experienced during my years of testing and engineering is that an issue is rarely isolated. A little extra digging reveals a minefield of issues.

The same goes for investing and finding ideas. Finding that first idea is tough, but once you do, a little digging often reveals a goldmine of potential investment candidates.

To find that first investment, Buffett has suggested to start with the A’s in the Edgar database. F Wall Street has also done the same thing, along with Geoff Gannon, and Value Uncovered is doing the same with the OTC exchange.

I think the furthest I’ve ever made it up to was the C’s :)

But the point of this article is not to go through finding that initial idea. For that, you can reference my previous how to find value stocks and ideas as well as how to find special situation stocks.

The point of this article is that once you have a stock idea, don’t let it go to waste by just stopping there and analyzing that single company. You are likely to find more if you follow the tips below (not in any particular order).

1. Visit the Company Website

You should be able to download investor presentations from most company websites. These are not recommended study material as it is always over promotional but often, there will be a discussion of the industry and the competitors.

Make notes of the industry if you are not an expert as well as the names of the competitors.

The reason that you need to go through the competitors is that for every Coca Cola there is a Pepsi. For every Michael Jordan, there is a Scotty Pippen. Good things come in two’s at least. In niche industries, there is more.

2. Find Competitors

A quick way to find competitors is to check Yahoo Finance or other relevant sites.

Smartmoney Competitor comparison

Enter the ticker and then select the compare tab.

Google Finance Competitors

Yahoo Finance Competitors

Of the main sites, these are the main three I use to look at competitors.

Already you have a good list of competitors you can benchmark against the stock that you are looking at.

3. Find Competitors Based on the Industry

You can find even more competitors based on the industry. But keep in mind that the number of quality companies will vary based on the industry.

If you are like boring industries or niche industries where there is no dominant leader, you have a very good chance of finding a handful of quality companies

A quick way is to use Reuters to look up the ticker followed by the industry.

My example of BOLT results in 78 companies within the same industry.

The reason why this is a good method is that since you are already interested or know about the particular sector, it makes it easier to go through a list of stocks opposed to if the list of companies were completely random.

Using BOLT as the example, the very first page lists the following companies.

Considering that you are even given international competitors to compare against, this method of digging will surely help you find at least another good company to watch out for.

4. Search in Reverse. Industry First, then companies.

Often, it is even better to look at industries first. Find the unloved industry and go through the list of stocks.

Reuters again makes things very easy by organizing and listing all the sectors and industries.

My interest has been in the paper packaging industry of late and so if I click on Paper Packaging followed by Company Ranking as shown above in the Reuters example, I get a list of 20 companies.

Immediately I can see that an Indian company called Paper Products has some potential. Simple key stats show a ROE of 17.3% with a dividend yield of 5.5% at a trailing PE of 7.5. Looks much cheaper than what is available on the US markets at the moment.

However, being able to purchase these companies is another matter.

Disclosure: Long BOLT.

P.S. A reader has provided another link to see which industry is most unloved. View the Market Watch Industry page.

Posted in Featured, Investing Strategy | 10 Comments »

2010 Value Stock Screen Performances

January 14th, 2011 by Jae Jun

2010 Old School Value Screens

The 2010 Old School Value Screen performance results are finally in.

Having had the screen up from the beginning of last year, I am excited about the progress made by the screens because it helps me to understand whether the strategies I have come up with work or not in the market. It gives me an opportunity to further test and fine tune my research as well as challenging whether the screen deserves to exist.

The screens and backtests have gained a lot of popularity over the past year and I will take this opportunity to answer a few of the most frequently asked questions.

1. The screens are based on personal research and while I will share the overall method and concept, in order to keep the screens free, the exact criteria and methods will not be shared. It helps to keep it as effective and proprietary as possible.

2. Screens are updated a couple of times a week. I do not have the resources to be able to run it in real time. So far it is all manual work.

3. Because the screens are configured and maintained manually, there is no way to allow for user input.

2010 OSV Passive Portfolio Performance

In December 2009, I decided to create and test a passive/mechanical portfolio based on companies I deemed to be cheap. Cheap is defined as trading below intrinsic value as calculated by DCF, Graham’s formula and EPV using my stock valuation spreadsheets.

The above performance graph is taken from tickerspy.com where I am tracking the stocks. The dotted line is the S&P500 (price return).

At the end of 2010, the performance for the OSV passive portfolio was up close to 38%. (Sorry but tickerspy has a horrible method of displaying results so I can’t figure out the exact number)

I had a few reasons why I started this.

1. I wanted to see whether a company valued cheaply based on DCF, Graham’s formula and EPV really was undervalued

2. To see whether a new mechanical method based on valuation rather than ratios would work

3. To verify whether the way I see and value stocks and use my valuation spreadsheets was correct

So far the portfolio is a success but 1 year of performance is not enough to conclude anything concrete. Especially when the market has been rising so steadily.

All I can say is that I really should have more conviction in the way I value stocks :)

The portfolio currently has 19 stocks. In the past year, I only sold 7 stocks total so the turnover and activity has been very low, which is what it was designed to be like.

The biggest gainer of the year was TWIN at 136.5%. The worst performer is BAMM at -22.8%.

In order to make this test realistic, I am not selling and replacing all the stocks now that we have hit 2011. I will be continuing with what I have and selling and buying according to what my numbers tell me.

2010 Value Screen Performance Results

An important point to note with the results is that my screen is unable to calculate dividends for total returns which would mean the actual screen results would be roughly 1-2% higher. However, I have just kept it at the price return vs the S&P500 and Russell 2000 total return. I’m giving the index a little advantage, but that is ok. Aiming for a higher goal is always better.

Overall, I am pleased and impressed with the performance. A bit jealous that an automated screen outperformed my 2010 results but happy my research is correct (so far).

Value Screen Explanations

Negative Enterprise Value (Cheap Stock Screen)

One of the very first screens I created. I wanted to find cash rich companies with little to no debt.

Seeing how the formula I use for Enterprise value is

Enterprise Value = Market Capitalization + Total Debt – Excess Cash

where

Excess Cash = Total Cash – MAX(0,Current Liabilities-Current Assets)

if the Enterprise value of a company is negative or well below the market cap, then it shows that the company is loaded with excess cash.

Recently, I have been informed that there is an error with the negative enterprise value screen. If you look at the compilation of companies listed in the results, you will notice that they are mostly international companies. The issue is that although the market cap may show up in US dollars, the balance sheet figures are not always converted to US dollars but remains in the local currency.

This leads to the numbers from the balance sheet being inflated when used in the formula and screen.

Altman Z Screen (Quality Screen)

The Altman Z screen is a quality factor screen and has performed admirably in 2010.

I never did a formal backtest of the Altman Z screener but it has been discussed previously along with a free Altman Z spreadsheet for you to play around with.

CROIC Screen (Profitability Screen)

I first came across this ratio from F Wall Street (read the book if you haven’t) and use it constantly. One of my favorite investing ratios to determine the profitability of the company. A company is eligible in this screen if its CROIC has increased for the past 3 years.

You can also view the CROIC screen backtest and discussion.

FCF Cow Screen (Cash Flow Screen)

Good ol’  FCF did not disappoint. A simple cash based screen to find cash rich companies with reduction in debt.

Graham Checklist Screen (Cheap Stock Screen)

I launched this new screen recently after the lengthy study and trial and error after having read Benjamin Graham’s paper on stock selection. Graham had a checklist of things to look for in a stock which I backtested in order to narrow down the best performing criteria.

Although the screen beat the S&P500 index, 2010 was a difficult market for Benjamin Graham based screens because there really were not that many that companies that could fully satisfy his conditions.

Graham Formula Screen (Valuation Screen)

My very first stock valuation based screen. I am using my modified version of the Benjamin Graham formula from The Intelligent Investor.

Stocks trading at 66% or lower to the Graham formula shows up on the screen.

Insider Buys (Shares Screen)

Insider buying is a great indicator of undervalued stocks.

Stocks are bought for purely 1 purpose, to make money. Had you simply followed the insiders with their purchases, you would have still beaten the S&P by a large 4.6% margin.

NCAV and NNWC Screen (Asset Screen)

According to my results, these two screens performed the worst. There were a couple of companies in the screens that paid off a large dividend which sent the stock price down, and seeing as how my screens do not account for dividends, it is considered to be a price drop. Thus causing the large decline in performance.

Due to the size of the companies in this list, it also ends up having a big effect on the total performance. I will have to adjust some parameters in order to filter out these types of stocks.

I also use the NCAV and NNWC screen as a barometer of market conditions. In 2008-2009, there were plenty of stocks making the list, but today, there are less than 5 stocks in each of the NCAV and NNWC screen. A true testament that the market is  not cheap.

NNWC Incr Screen (Asset Screen)

The second highest performer in 2010. Unlike the NCAV or NNWC screen where you are looking at companies trading below their asset value, this screen focuses on companies where cold hard assets have been increasing.

IFON is a stock where the NNWC has been increasing. Hint Hint. Chroma Investing has been following the stock since April 2010.

Oh and here is another free NNWC spreadsheet for you.

It would be interesting if the CROIC screen was combined with this one. Increasing profitability with increasing assets.

Piotroski Score Screen (Quality Screen)

The Piotroski Screen is one that I’ve come to appreciate greatly as the companies that show up on this screen are fundamentally very good. I found UFPT from the Piostroski screen which is a buy if it ever comes down to my $10 target level.

Learn more about Piotroski and download the free companion Piotroski spreadsheet as well.

Share Buyback Screen (Shares Screen)

If a company reduces their share count, the earnings will be divided by a lower number resulting in higher EPS. A higher EPS equates to joy on Wall Street.

Seems like there was something to be joyous about because the screen was able to beat the S&P500.

Screens Currently In Progress

I have some other screens that are a work in progress.

One of the ones I find most interesting is the screen to detect distressed stocks. I am trying to emulate the GGP’s, PIR, VVTV’s, CPW and now BGP’s. It isn’t perfected yet as it is still producing plenty of garbage stocks but progress is being made.

The magic formula screen is also one that people ask regularly about which I will try to create. Based on what I’ve seen, Greenblatt’s magic formula is definitely not as easy to replicate as I thought it to be. I’m sure he is hiding some details from the book. But not to worry, reverse engineering problems has always been my specialty.

Posted in Featured, Investing Strategy | 10 Comments »

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