# What filters do you have when looking at shares?



## bloomy88 (18 November 2009)

Just looking for a general run down on what other investors look for in a company...

For me, 
I look for a company with some gearing but not excessive amounts (generally a D/E of less than 67%)

A company a can understand, and the annual report isn't too confusing

Strong operating cash flows (generally on an upward trend) and these cash flows are more than 40% of current liabilities

EBIT at least 5 times interest expense

EPS growth over time (generally 10%+ pa)

These are just a few of the things I look for in a company, obviously there are more, but it's generally a starting point....

Cheers


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## Julia (19 November 2009)

Hello Bloomy,

Do you consider what the share price is doing?


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## So_Cynical (20 November 2009)

I look for in no particular order


A value entry (low or falling SP)
A sound business with substantial cash flow (or very high probability of that) relative to market cap 
A business that is a dominant player in its market
A business that doesn't have to compete with similar business in China etc


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## ASXNoob (20 November 2009)

So_Cynical said:


> A value entry (low or falling SP)




Not shares that are trending up?


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## bloomy88 (20 November 2009)

Julia said:


> Hello Bloomy,
> 
> Do you consider what the share price is doing?




Gday Julia,

Yeah of course I will look at the SP, I will usually compare the P/E with other similar companies, look for companies with low SP to NTA (Under 67% satisfies one of Buffets most important measures) and the current trend of the SP and what could be the causes of the trend.

I was just trying to start a bit of a thread to see what other people look for...

Cheers


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## Julia (20 November 2009)

Thanks, bloomy.  What sort of trend would you be looking to buy into and which to avoid?


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## So_Cynical (20 November 2009)

ASXNoob said:


> Not shares that are trending up?




No never....and i have a 100% success rate since October 2008...but that's not saying much really.


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## Julia (20 November 2009)

So_Cynical said:


> No never....and i have a 100% success rate since October 2008...but that's not saying much really.




Just looking at the XAO, it began to rise steadily from March 09.
So do you mean you only bought stocks between Oct 08 and March 09?
Or perhaps you picked out downtrending stocks between Oct 08 and the present time?

Can you say what constitutes a 100% success rate?

i.e. do you simply mean all the stocks you bought back then are worth more now than you paid, or all of them have achieved 100% or more profit??

How many stocks are you talking about?

I'd be interested to know more about why you do what you do.

Thanks.


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## So_Cynical (21 November 2009)

Julia said:


> Just looking at the XAO, it began to rise steadily from March 09.
> So do you mean you only bought stocks between Oct 08 and March 09?
> Or perhaps you picked out downtrending stocks between Oct 08 and the present time?
> 
> ...




Julia the XAO low was March but the bottom for many of the gold producers and miners in general was Sept to Nov 08 so as these miners tanked i was able to pick up a few shares in LGL and IAU at close to there bottoms. (average downs so not new positions)

As the miners picked up a little, gold in particular i was able to exit LGL & IAU with small % profits in late Feb 09 then switch that money into more main stream, dividend paying stocks as we hit the March low.

The next 4 months there was still plenty of stocks i had been watching, continuing to fall or flat line and i was able to cycle my money thru about 8 stocks leaving in my profit and about 10% of my original buy in. In August i was running out of money due to all my positions so decided to park most of what i had left in HDF as it was having a substantial dip...turned out to be a good move.

So in summary since Oct 08 i have entered 11 new positions..in order


CPU - Computershare $7.10 took 15% profit that was left in with 10% of original capital now $10.50
ALL - Aristocrat $3.38 total exit at 3.54 a week later (my first and only panic sell) 
ILU - Iluka $2.95 took 19% profit that was left in with 10% of original capital, now $3.40 
VRL - Village roadshow $0.82 took 9% profit that was left in with 10% of original capital, now $1.80
CSL - Csl $30.10 took 9% profit that was left in with 10% of original capital, now $31.53
PFL - Patties $0.69 took 11.5% profit that was left in with 10% of original capital, now $1.28
KSC - K&S Corp $2.12 & $1.75 took 15% profit that was left in with 15% of original capital, now $2.80
HDF - Hastings fund $0.84 still all in, now $1.03 and returning over 14% in divis
ARJ - Ark fund $0.49 still all in (small) now $0.62 and paying over 11% divis
CLV- Clover $0.19 took 10% profit that was left in with 15% of original capital, now $0.20
SND - Saunders $0.30 took 12% profit that was left in with 15% of original capital, now $0.33

All paying divis except ILU, all exits in profit and all remaining in profit...some better than others but all in profit, so a 100% success rate.


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## Julia (21 November 2009)

So Cynical, many thanks for detailed explanation.  It's always interesting to see different approaches.

So do you never just let your profits run, but always take smaller profits out?


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## bloomy88 (23 November 2009)

Julia said:


> Thanks, bloomy.  What sort of trend would you be looking to buy into and which to avoid?




Personally, I don't really look at the current trend of the stock. I have a price that I am willing to buy in at and if it hits that I will buy. 
That's why I bought BHP at $22 and AMP at $3.80
Almost 12 months ago there was a lot of panic selling which presented many opportunities to buy good companies cheaply.

Cheers


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