Post any question or comments on this page. It could be basic investing questions, investment ideas or anything you want to share.
The more brains the better and I’m hoping that readers will also be able to interact more often by answering each others questions.
Forums are a hassle to readers so I’m keeping it simple at the moment. Don’t forget you can still email me directly through the contact page.
(p.s. No putting down others or “crabbing“. Old School manners please.)
March 5th, 2009 at 9:45 pm
I’d be interested in a post discussing your research process and then analysis process. For example, once you’ve identified a company that you think is worth researching in depth what do you do, print annual reports (how many years), print the 10Q? In what order do you go thru each filing–i.e. do you look at the financial statements and notes 1st or do something else 1st. Do you use spreadsheets, simple pencil and paper or something else in order to organize the information when you go thru the reports.
March 5th, 2009 at 9:50 pm
Jae,
Kudos on your web site & the great tools for stock investing! I have been looking to improve my analysis of prospective stock purchases and am finding your site very useful.
I just downloaded the Benjamin Graham valuation sheet & noticed a small tweak: the stock name on the Graham Intrinsic Value tab at A2 is pulling from the Statements Tab at A2, which displays a fixed company name (Apple). Hope this helps, and thanks for helping with the investment tools!
March 5th, 2009 at 11:37 pm
@ Andrei
I can do a post on how I go about researching. Honestly, I’ve never actually written it down in a checklist form. Should be good to cover it.
@ Scott
Thanks for letting me know. I haven’t visited the free versions for quite a while. Enter =RCHGetTableCell(“http://www.smartmoney.com/eqsnaps/index.cfm?story=competition&symbol=”&Ticker, 3,”>Competitive Analysis”) into A2 in the statements tab.
March 7th, 2009 at 11:50 am
Jae,
A question regarding the data pulled into your premium spreadsheets. This is coming from Morningstar, but what is the original source of statement data that you’re getting from Morningstar?
Does Morningstar get this from SEC filings? Is the info provided as officially reported, or is Morningstar putting their own interpretation on the numbers?
March 7th, 2009 at 9:10 pm
My guess is that Morningstar hires people for data entry. Most probably humans going through the reports and entering it in directly which is why there are errors in some of the numbers. Always a good idea to check it when you go deeper in.
March 9th, 2009 at 1:48 pm
@ Andrei
I’ve written my fundamental analysis post for tomorrow but here are some additional answers that I did not include in the write up.
I used pen and paper with special situations as I went through the filings, then I just created a real easy template in excel.
I try to print at least 2 quarterly reports and put the financial statements side by side when I do detailed analysis but with 10-k’s I usually just read through the management discussions and other important sections.
March 9th, 2009 at 5:29 pm
Looking forward to the post tomorrow. I’m sure it’ll be a great read as usual.
March 10th, 2009 at 5:49 pm
GSIG is severely undervalued. It has a HUGE cash reserve compared to market cap. Enterprise is also negative meaning it’s excess cash makes up a huge amount. Been on my watch list and I think I’ll have to upgrade it to my to do list.
March 10th, 2009 at 8:40 pm
I’d be very careful in regards to GSIG Jae. Do your due diligence in regards to their history of cooking the books. At first glass, GSIG looks like a gold mine but with further investigation, it looks more like WorldCom to me.
March 10th, 2009 at 9:04 pm
Thanks for the tip. I’ve had it on my watchlist but have been scared off by the volatility on this one. I don’t know whether I can handle this one honestly.
Overwhelmed with all these companies to research that I’ve been putting it all off.
March 23rd, 2009 at 8:57 pm
Jae, I noticed the free intrinsic value sheet reports 2007 data. Are the premium spreadsheets updated quarterly to reflect new financial data?
March 23rd, 2009 at 11:02 pm
@ Scott
Since the data is being retrieved from Morningstar, you will have to wait till the company you are interested in files their annual reports. The intrinsic value doesn’t calculate off quarterly reports as it will make things so much more difficult. Take a look at the QSII report and you’ll see it has the 2008 annual data.
If the quarterly data is what you are after, check out the newly released financial statements spreadsheet. It displays the past 20 quarterly reports.
March 27th, 2009 at 4:10 pm
ASFI is a company that buys receivables from companies such as Visa, Mastercard and other financials at around 20c to the dollar and collects payment. Currently it is a net net and I am interested in the business and industry as it is highly fragmented with no clear dominator. However, its assets is made up mostly of receivables and there has been some big impairments in 2008.
AEHR is another net net I must look into. The margin of safety is pretty big.
April 2nd, 2009 at 3:30 pm
Jae, I just noticed you’re from Seattle. I’m originally from their as well. I guess us seattleites think a like
Have a great weekend.
- Jim
April 3rd, 2009 at 12:35 am
It’s been raining all week yet I never see anyone using an umbrella in Seattle besides me… lol
April 8th, 2009 at 10:18 am
1. Slowly working on a list of Forbes big companies. Much like the 200 best small companies I did last year. Hope to find something good among the large caps.
2. Working through (slowly again…) a list of net nets
3. I currently have far too much cash in my portfolio. 25% of cash… But not enough fat pitches.
April 10th, 2009 at 9:29 am
Does anyone believe that as a blog owner I should be transparent with my portfolio? i.e. show people whether my money is where my mouth is?
Is a performance and portfolio update something people want to see?
I know I’ve said that I wouldn’t be in my investing philosophy but wanted to get some opinions.
April 10th, 2009 at 6:27 pm
Jae Jun, I don’t need to know what your portfolio consists of, but I appreciate when you disclose. I see your site as a collation of thoughts and readings and postings and interactions on those. On the other hand, I can’t imagine your postings without disclosing your EMAG position. While many of us follow and contribute, we are not disclosing all OUR positions (my poor little CMTL these days…) I find your bits sufficient (sold ggp til the short is over then I’m buying back in).
I think you are entitled to hold your cards as close as you have been. I think full disclosure would invite more inference of recommending positions.
I very much enjoy reading every day not only what you have to say but what other visitors have to say, and how your respond and keep a certain tone and tenor on this site. I am fine with the absence of full transparency. Keep on.
April 14th, 2009 at 3:17 pm
I agree with MKL – disclose ownership when you discuss a particular stock & whether it’s a good investment.
April 14th, 2009 at 3:21 pm
On a different note – what’s your take on Bruce Greenwald’s “Value Investing: From Graham to Buffet & Beyond” I see that you look at DCF & Ben Graham’s valuation methods & was curious whether you see benefit in Earnings Power Value, which eliminates consideration of future cash flows due to their uncertainty.
Good stuff on your site, BTW!
April 14th, 2009 at 4:21 pm
@Scott. I think Bruce Greenwald’s books are the best books ever written on the subject of value investing. You may want to check out his other book “Competition Demystified” which is a college course in finance. The Earnings Power Value is one of the most important tools in my arsenal.
April 14th, 2009 at 4:26 pm
@ MKL, Scott,
Sounds like I don’t have to change much then. But I will often disclose when I make a purchase through Twitter.
@ Scott,
I haven’t read the book yet but plan to. I’ve seen a couple of his videos and I’ve had a discussion on Earnings Power Value with Jim over on this post and there is a good explanation of the technique by myValueIdea.
Once I get to the book and understand it better, I hope I can model it into the spreadsheet so that it combines DCF, Graham and EPV.
April 20th, 2009 at 11:35 am
Including EPV in your spreadsheet, along with DCF & intrinsic value would be a knockout!! Please announce it if you do.
April 22nd, 2009 at 1:58 am
Sure will Scott. But I’ll probably keep the EPV addition exclusive to premium spreadsheet buyers.
April 27th, 2009 at 2:12 pm
You may want to look at Aswath Damodaran’s wesite. Specifically, http://pages.stern.nyu.edu/~adamodar/ which has several spreadsheets calculating EVA, DCF etc. under differing assumptions.
April 27th, 2009 at 7:02 pm
Jim, What is EVA?
-the original JIM
April 27th, 2009 at 8:48 pm
@ Jim
Thanks for the link but I’ve been to that website before and looked at the spreadsheets he provides. But the thing that differentiates my investment spreadsheets with all the others on the web is simply ease of use and presentation.
If I see a spreadsheet that is hard to read, understand with lots of input, I skip it after 5 secs.
Since I don’t invest purely on price, my spreadsheets provide a fairly good indication of what a company is worth and whether the extra effort is required to start researching.
I don’t need dividend models and complicated calculations to over complicate things. 1 input for the ticker is all I need to know whether it’s a worth studying.
Thanks for commenting.
@ Jim-the original
I think he means Economic Value Added
http://www.investopedia.com/university/EVA/
May 11th, 2009 at 4:29 pm
Note on TRID. With the purchase Micronas expected to be complete June 2009 the follow statement was made in the quarterly reports.
I wonder how this will affect operations in the short term. Good chance of going down before it goes up?
May 11th, 2009 at 8:30 pm
Jae, that TRID info has been out for a while now. I’ve calculated the stock to be diluted approximately $0.20 per share after the shares are issued. Not enough to impact the net net value or overall asset value of the company. At the same time, they will be producing an extra $35 Million in Revenue on a quarterly basis that they never had before which will take care of that $0.20 dilution. I’ve written about it on my blog. valueinvestortoday.com
If Mr. Market gets irrational because of a $0.20 per share dilution, I’ll be waiting to buy more. The company has been very open and forthright concerning their operations. I put a high level of trust into their competence.
May 11th, 2009 at 9:48 pm
Jim,
I’ll have listen to the conference call to get a feel for management and their style. I followed your calculations and I’m not quite sure how you got a CROIC of 15%. I get 1%. Anyways, left a comment on your blog. Will discuss TRID with you over there.
June 17th, 2009 at 9:09 am
Jae,
A couple of questions for you regarding Price vs. Value tab on the 5-yr DCF-and-Graham spreadsheet:
I just entered Valero Energy (VLO) and on the graph it appears the Historical Price, $16.84, is in line with the Buy Price. However, the top of the tab indicates intrinsic value is ($3.70) and buy price is ($1.85). Is there a discrepancy?
In contrast, the Graham Intrinsic Value tab indicates Share Value is $61.10 and Actual DC% of 72%. Which is the better indicator of whether this stock is a value stock or not?
Thanks!
–Scott
P.S. I’ve saved the file in its current state if you want to take a look.
June 17th, 2009 at 9:25 pm
Hi Scott,
I’ve looked into VLO previously myself.
The reason why the intrinsic share value is negative is because the latest FCF number from the statements tab show it as -2445. So the DCF formula will use this negative value as the starting point.
As for the Graham number, it is always overly optimistic. It is best to consider it as the optimistic of the optimistic number because it uses earnings and makes straight line regression.
So for VLO, you will have to figure out what the normalised FCF number should be in cell K18 of the DCF valuation worksheet.
I never liked VLO because the industry as a whole is capital intensive and based on commodities. The margin of safety was around 60% when I looked at it last year and I felt that all oil companies (BP,Exxon, Shell) were undervalued but my opinion is that their value will drop before their share price goes up that much.
If you are after the dividends however, that is a different story and besides it’s all in your hands.
June 19th, 2009 at 12:22 pm
Really enjoy your site. I have recently been introduced to Benjamin Graham via Mary Buttett’s “Buffettology” book series. I am still reading Intelligent Investor and have a copy of Security Analysis sitting there waiting for me as well. Do you know when you might attempt getting the sheets working on Mac? I am using Office 2004 for Mac. I purchased your Premium package none-the-less. I think I might be able to get it working; however, I don’t have the time right now so I’ll be dusting off my old windows laptop in the meant time. Thanks again.
June 19th, 2009 at 7:27 pm
@ dakotaglory
Thanks for the purchase and support
I did look into ways to get it working on Mac but Microsoft proprietary information is the problem. The addins just wont run on Mac. Since I didn’t write the code for the backend, it’s really tough for me to get it working on other operating systems. Had excel been more open source it would have made compatibility much easier.
I will have to look around for methods though. But I’m not hoping for much.
September 16th, 2009 at 9:32 am
FYI regarding spreadsheet updates.
For 1 year from the date of purchase you receive free updates to everything I do and release.
I email it directly to everyone on my premium buyers mailing list.
October 12th, 2009 at 8:27 am
Just purchased the premium package. going thru some trials to get used to the spreadsheet. How do you screen for potential candidates?
October 12th, 2009 at 9:17 am
I screen by reading and just manually doing things. I just go through company after company after company. People offering me their ideas also make it easier.
January 29th, 2010 at 8:02 pm
Jae Jun I would disclose all your positions. It will help you not hurt you. It allows people to get a sense of how successful you are and it helps avoid foolishness. However if a point is reached where you are capable of affecting the stock price then stop being transparent.