Best Of November Nugget FestMike
If you missed the nugget fest during November, here’s the summarized list.
The best of the best.
There’s a lot in there, but something for everyone.
“Pure” value strategies continue to struggle in 2018. The dip in November hasn’t helped.
At the end of Nov:
- the Altman Z screen is -8.9% compared to 2.9% for the S&P.
- CROIC has also taken a punch to the chin, ending the month with a YTD performance of -9.2%.
- FCF isn’t a sexy investment at -4.44%.
- Greenblatt’s Magic Formula is also down -4.27%.
The only positive screener that has consistently done well over time despite market conditions has been the Piotroski Score.
End of Nov results show it at 8.32% vs 2.9% for the S&P.
It’s one of the reasons why we place heavy emphasis on using the Piotroski score to filter and help rank our universe of stocks at Old School Value.
We use it as a proven way to cut down the stocks that are purely speculative, hasn’t shown improvements or getting caught playing fundamental games.
If you are not using the Piotroski Score in your analysis and investment flow, you are missing out.
We’ve also made it easier to drill down each company, by allowing users to filter based on each of the 9 conditions of the Piotroski Score.
It’s one of my first go to analysis tools. A super quick and easy way to get a narrative of the company.
Check out Tesla’s.
Let’s ignore the stock price for a second.
Actually, try and ignore that this is TSLA to begin with and look at the chart.
There are more troublesome years than good ones. From this, the narrative that I get based on my knowledge of how Piotroski works is that:
- company is very cyclical
- potential cash flow and accrual issues
- likely problems with debt
- margins are weak
Now I pull up something like AMZN.
- Piotroski hasn’t been great historically but has been getting better since 2013.
- Signs of better profit
- Better cash flow
- Decrease in debt
- Improving margins
Not all points are correct, but it’s an example of how a single chart using the Piotroski Score can help you decide whether something is worth digging into.
Have time for one more?
Check out GE. With such a low score from 2017, there was a big deterioration starting in 2016.
- Profits have dropped
- Margins have dropped
- ROA has dropped
- Debt has increased
Pretty much everything you don’t want to see happening in a business.
Check it out for yourself on the demo and see how you can use the Piotroski Score in your workflow.
What We’re Reading in the Media
- How the Eggheads Cracked
- Oaktree Insights: Cycles with Howard Marks, Julio Herrera, Jordon Kruse and Robert O’Leary
- Overfitting & Underfitting – Machine Learning in Equity Investing
- An In-Depth Primer For The Staffing Industry– Check out RHI for free on the OSV DEMO. Well run sourcing company.
- Trying Too Hard (PDF)
- Sears Reshaped America, From Kenmore to Allstate
- Q Ratio and Market Observation – Oct update
- Making Sense Of Multiples: Mauboussin On EV/EBITDA
- Size Matters: How Market Structure Favors Small Funds Part I: Japan
- Hussman Market Comment – The Heart of the Matter
- Goehring & Rozencwajg Q3 2018 Natural Resource Commentary
- KELLOGG COMPANY | K – UPDATE
- A Value Investor’s Guide to Growth Stock Investing
- Goehring & Rozencwajg Interim Special Report on the Oil Sell Off
- GE Credit Crunch Ripples Across Wall Street (registration required)
- These Chinese Bondholders are Being Paid in Ham Instead of Cash
- How This All Happened – The story of how America evolved from 1945 to 2018 (PDF)
- Where is the Bottom? Putting the Bitcoin Crash into Perspectiveand Cryptocurrency mining on your own is no longer profitable
- Aswath Damodaran – Laws of Valuation: Revealing the Myths and Misconceptions (FULL PRESENTATION video)
- Value Investing Isn’t Dead Yet, Just Wounded
- Universa Investments – Not All Risk Mitigation is Created Equal (PDF)
- Grim Stock Signals Piling Up as Wall Street Mulls Recession Odds
- JPMorgan – The Growing Amount of Private Equity Dry Powder (PDF)
About Old School Value
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