Hi Jurgis - You are right that Graham's strict "value" criteria from his Magic Formula today comes up with few good candidates on a simple stock screen. There were several in 2008 and 2009.
A quick stock screen using finviz.com generates 5 companies that meet the following criteria but none catch my eye as screaming value buys.
( finviz.com )
Filters: fa_debteq:u0.5 fa_pb:u2 fa_pe:u10 ta_sma200:pb40
P/B<1, PE<10, Debt/Equity under 0.5, 200 Day SMA 40% below
1 APT Alpha Pro Tech Ltd. Healthcare Medical Appliances & Equipment Canada 51.34M 5.87 2.29 2.69% 268,330
2 CHIO China INSOnline Corp. Healthcare Medical Appliances & Equipment Hong Kg 21.97M 2.11 0.55 -0.13% 278,042
3 FUQI Fuqi International Inc. Consumer Goods Recreational Goods, Other China 327.69M 5.67 11.86 -1.41% 1,054,994
4 NTII Neurobiological Techno Healthcare Biotechnology USA 1.89M 0.58 0.07 0.00% 0
5 YTEC Yucheng Technologies Technology Business Software & Services China 74.24M 7.55 4.00 0.50% 70,779
finance.yahoo.com
From my experience, I generally perform a much broader stock screen and then pick through the balance sheet to try to find hidden or under valued assets. For example, real estate is carried on the books at cost not market value. Companies with large real estate holdings acquired many years ago will typically have an understated BV.
I did discover that Graham had some basic rules for selling which I never was aware of. I guess if one had to have a "Magic Formula" for a value investment, Graham's definition seems to fit. However, they don't come available that often.
EKS |
