Create a CDIA account with CBA/CommSec and fund your trades from there...that should trim the broker down to $20 a side...
Ok fair enough.
If you are measuring your return inclusive of dividends, then shouldn't you be benchmarking your returns against the All Ords Accumulation Index?
On Apr 25, the All Ords Accumulation Index return was 19.57% for the financial year to date...
http://www.afr.com/share_tables/
You need to select the dates you want by week and then find the Excel / CSV file for Weekly Roundup - Australian Indices.
All of the major indices are shown. If you scroll to the right it also shows the accumulation index for each.
I checked and confirm that the XJO figures for the ASX 200 match to the RBA reports.
I like this one. I don't think the risk of not growing is as much of a punt at your post alludes to. The nature of this business is that the current client base is somewhat sticky. Management pays a good div as they are not a rapidly expanding business (and I think this is also to please those with large stakes, one of whom has been selling out in big volume).
But they are at a nice point where most incremental sales are falling to the bottom line resulting in some decent margin expansion - so not very much revenue growth is needed to keep growing profits.
I don't think this one is going to shoot the lights out, but I think the business is much better than many listed <5c counterparts
Hi KTP,
Thank you for posting your test results of the Altman Z score. It seems the more distressed the business is the more likely there will be a mispricing by the market, which does makes sense. Your comparison test using the Price to Book ratio highlights to me that I need to be selective about how much weight I should apply to certain factors like the Altman Z score in my investment process. This thread (and experience) is teaching me that I need to find a realistic investment process for my IQ, temperament and my current personal commitments (a growing young family). Focus on my investment process – thank you.
IMO, this blog post is excellent and worth reading when thinking about investing strategy and process - http://guythomas.org.uk/blog/?e=27. When I look at my performance over the last few years, I cannot help but think the extract below is the way to go for me.
“Small bets on large discrepancies, superficially understood When I find a price which looks very wrong for seemingly robust reasons, I sometimes prefer to make a small bet without fully researching the company. Although I might do deeper research later, the price often corrects before I do. This is fine – I just sell and go on to the next one. By keeping positions small I keep them easy to sell, that is I preserve options to change my mind as prices and my expectations change.”
Keep it light: spend 10 mins a day reading the business news, check the 52 week lows/highs, follow some posters/threads. When I see a discrepancy make a small bet. No more big bets!
You have posted that you use ratios like Price to Book, EBIT/EV , as a guide to finding value in the market, are you not tempted to use recent market price action (e.g. 50% drop in 3 months)? Or multi-year lows?
Also, NBL is looking cheap; trading below NTA and near multi-year lows.
Cheers.
Bought LYL 500 @ 4.31
At the current price, it is acceptable to me for the profits to half and growth to resume in full after 3-5 years. Until then, I will have to weather the storm, I suspect.
The market price action is useful as well, but when you buy the cheapest companies on the market they tend to be ones that have fallen recently anyway. I may do a separate post on it, you seem to always give me some homework to do
Do you find the problem with cheap companies is that once you start reading the business profile/annual report/announcements that you are instantly repelled? It makes it difficult to buy! Best to look with one eye closed.
Cheers
Update by LYL today forecasting a H2 loss of $2.3m. From the time of your posting LYL reported $22m NPAT. So profit has unfortunately reduced by more than half.
Your thoughts and action plan?
Hi KTP,
A while back on another forum a well-respected poster analysed the share price performance of companies that respect their share capital. The poster illustrated the point by comparing EBIT growth to Issued Share Capital growth over a long time frame for a small number of companies, the results were interesting to say the least. The post really illustrated that some companies have the business model and management to grow EBIT whilst not keeping asking for money from the shareholders. If….if….I had the data and the skills, it would be fascinating to see the results for a large selection of companies. Do you know anybody with the data and skills?
Do you find the problem with cheap companies is that once you start reading the business profile/annual report/announcements that you are instantly repelled? It makes it difficult to buy! Best to look with one eye closed.
What has certainly been a mistake on my part, was to buy it at the price that I did. I paid a premium for a company that I though was the best in its sector. With a very severe downturn that the industry was about to enter, this was not a time to do so. At that valuation, bad news tends to punish a lot harder than for something that is already trading cheaply.
My understanding is that craft was referring to business fundamentals and the impact of cyclical earnings on future cash flows. I do not think he was suggesting that you should wait for the price action to steer itself even lower (but he may have referred to this as a corollary of the market valuations reverting to be more realistic of the earnings power over the entire cycle of these mining services companies).I think it was craft who mentioned a while back that he doesn't think it was yet the time to invest in these. He proved to be right, MS stocks are steadily dropping in price over the last few months, and waiting longer to buy them certainly would not have hurt me.
Hi KTP
Some quick thoughts, as some of what I *think* that you are saying may need further comment.
The language used in your comments here is a little confusing... are you using price and valuation interchangeably here? Because the foundation of your investment strategy, as it reads to me, is to come up with a valuation based on your forecasts for the company's future earnings / cash flows. As a long-term investor who uses his own valuation as a decision point, you are not being paid to consider price action! When you said that you "paid a premium" are you referring to the compression of the market multiple (price action) or are you suggesting that you made a mistake in your forecasting? My understanding is that you are referring to the former, and your valuation has not changed, but you are lamenting the foregone opportunity to buy at a lower price.
Which is dangerous in itself... because if you are over-riding your own judgment with the market's price action, are you not second guessing yourself? It makes you much, much more likely to be shaken out of the stock as a "weak hand", when as a long-term investor, if you are relying on your valuation you need to be a "strong hand" to stay in the stock through out all of the market's fluctuations (unless your business analysis thesis is broken).
My understanding is that craft was referring to business fundamentals and the impact of cyclical earnings on future cash flows. I do not think he was suggesting that you should wait for the price action to steer itself even lower (but he may have referred to this as a corollary of the market valuations reverting to be more realistic of the earnings power over the entire cycle of these mining services companies).
I don't think craft is an advocate of waiting for market signals (ie. price action) to tell him when to buy, he may correct me, but I believe his focus is more in line with what I said above, in that he interpreted that the prevailing market prices in the M/S companies overstated their long term earnings power. In other words, he thought that they were overvalued, and as happens to all overvalued companies, they eventually revert to a more sensible price.
Here is a post by him in another thread.
and today NBL is down down down..I cut my losses...
It is a very hard sector to get a gauge on going forward in my opinion. I have been reluctant to even look at it at the moment, let alone attempt to value the companies in any detail.My comments are mainly about valuation, rather than price. And the mistake I made in my valuation
It is a very hard sector to get a gauge on going forward in my opinion. I have been reluctant to even look at it at the moment, let alone attempt to value the companies in any detail.
It sounds like you are doing the right thing and trying to learn from it.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?