StockVal - Opinions?

[poormantrading]

Hi,

I'm currious to know the opinion of anyone who uses the StockVal S/W marketed by Clime, which in based on a Buffett style valuation, as described by the author in his books "A Beautiful Company at a Fair Price" & "Market Wise" (a 2 chapter excerpt explaining the valuation can be d /l from http://www.stockval.com.au/documents/Bookextract_001.pdf ). And of course promoted by Rodger Montgomery on ABC Radio 5.40pm Mon (ie. the valuation method ) and at the Traders & Investment Expos ( currently in Melb ).

I realise the program has only been around for a few years(I think) & Buffett is long term style of investing ( ie. 5-10yrs or "forever" ! ). But to anyone who uses it, how useful has it been in selecting profitable stocks. Do most undervalued stock tend to become fairly valued by the market price increasing to the valuator price? any identifiable time frame? eg 6 months, 1-2 yr etc. What about the reverse? do many become" fair valued" by the value decling to market price? How often is an undervalued stock identified using an RR of say 15% ?

Is it suitable to generate a universe of stocks to trade long term eg. 6-18 mths? Although I notice that some of the stocks in Clime's investment Fund are thinly traded

Or is it just a good way to select stocks to give to your grandkids ! ,
at the very least it seems a way to avoid dud stocks eg HIH etc. :

Any comment's or experience using StockVal would be greatly appreciated.



Regards

 

[Realist]

Hi Poorman

Do most undervalued stock tend to become fairly valued by the market price increasing to the valuator price?

Excellent companies out of favour or fashion for one reason or another often bounce back from being undervalued to be fair or overvalued.

It is hard work finding a great company with excellent propects that is undervalued though.

I doubt some software program can do it for you automatically.

any identifiable time frame? eg 6 months, 1-2 yr etc. What about the reverse?

10 years minimum! is a good aim when investing in any share. And tripling your money in that time if you reinvest dividends is highly possible.

Is it suitable to generate a universe of stocks to trade long term eg. 6-18 mths?

Well you can buy and hold longterm, you don't trade as such. This reduces taxes and brokerage fees as well.

You need to diversify across shares and sectors. Never have too much in 1 share.

Or is it just a good way to select stocks to give to your grandkids !

It depends how old you are now I suppose.

Buying "boring" bluechip stocks is not just for old retired people with too much money.

Had you bought boring old BHP, CBA and Fosters 10 years ago and reinvested dividends you'd have made a killing. More than 5 times your money.

If I was you I would not buy a software program to find stocks. I'd spend $50 on buying a book on value investing. I recommend Ben Graham's "Intelligent Investor". It is fairly heavy reading though.

 

[poormantrading]

Thanks Realist for your reply,

I doubt some software program can do it for you automatically.

... I think the core concept is finding profitable companies who reinvest their earnings back into the company, ideally at a similar high ROE, rather than neccessarily looking for high dividend payout ratio stocks. So in theory strong profitable companies are found. Also the author doesn't suggest buying on valuation alone, but to consider purchase in context of current economic circumstances & company news etc.

If I was you I would not buy a software program to find stocks. I'd spend $50 on buying a book on value investing. I recommend Ben Graham's "Intelligent Investor". It is fairly heavy reading though.

No need to I bought the above mentioned books. I think the advantage of using the s/w is that the fundamental data is not just a straight feed from say Aspect(?) Data, but they add a few custom fields of their own by trolling through the notes of Annual Reports to get a more accurate economic value of the companies. After reading the books it would be possible to construct a spreadsheet to do the valuations, but one would still need to analyse the Annual Report to get it exactly right.

According to the author Brian McNiven, Graham favoured highly capitalised companies however Buffett changed his own style away from these stocks due to their high replacements costs eating into profits eg. Airlines to companies like Coke (ie the division that made the syrup) or insurance companies (where the product is paid in advance).

This program is aparently a slight variation on Buffett style valuations.


Regards

 

[ghotib]

Did you only hear about this on the radio or other places as well?

 

[poormantrading]

ghotib

Did you only hear about this on the radio or other places as well?

Only heard RM talking about ROE on the radio & then read a few articles he had recently published on the ASX web site http://www.asx.com.au/resources/newsletters/investor_update/20060509_valuing_shares.htm
& on the clime site there is one of his Traders & Investments seminars http://www.clime.com.au/webinar.htm


Regards

 

[ghotib]

Thanks.

I hold shares in Clime Capital and I've just subscribed to StockVal, so you won't be surprised to hear that I've got a lot of time for Roger Montgomery and I pay a lot of attention to his opinions, including what he says about the thinking and investments of Buffet and Graham.

About the software, I'd like to defer commenting for a couple of months. Two reasons: 1. There's a new version coming out in about 8 weeks. I know it has a different interface but I don't know what else is changing, so I'd like to see that before I say anything much. 2. I'd like to work with it for a while and be more certain about what it's telling me before I start trying to tell anyone else.

I can say immediately that it's not a black box - but you already know that. I can also say that the notes for IVEE, accessible from the link you gave in an earlier post, are highly relevant.

I can also say that it's intended to identify businesses rather than stocks. You've probably heard Montgomery making this distinction, following McNiven, Buffet, and Graham. Even though in practice I'm actually buying or selling stocks, I find this distinction profoundly useful in thinking about investments; much more meaningful than technical vs fundamental analysis, or long-term vs short-term.

Hope this helps. Feel free to ask more about StockVal; I'm happy to answer what I can, I just don't feel quite ready to give opinions yet. And DEFINITELY not advice.

Ghoti

 

[ghotib]

... Do most undervalued stock tend to become fairly valued by the market price increasing to the valuator price? any identifiable time frame? eg 6 months, 1-2 yr etc. What about the reverse? do many become" fair valued" by the value decling to market price?

As I understand it, both things tend to happen over the long term. This is the message in Benjamin Graham's remark about the stock market being a short-term voting machine but a long-term weighing machine. I can't think of any reliable way to predict the time frame.

A question you didn't ask is whether intrinsic valuation can change. The answer is yes, and the change might cost you. An awful lot of Buffet's writings are about his mistakes.

Fun isn't it!!

Ghoti

 

[poormantrading]

Ok thanks ghotib for the reply

"new version" .... I didn't know about that ...looking forward to see if there any significant changes.

I can also say that it's intended to identify businesses rather than stocks.

I found looking at stocks from that perspective interesting.... a lot of food for thought.
intrinsic valuation can change .... yes I'll probably look more into that.

Feel free to ask

okeydokely!

I tried the demo, but it expired before I got a chance to understand how it works. Is the following correct?

- In one of the books it mentions 300 stocks in the database. Is that all there is?? If so do you know what is the selection criteria to be included in the database?
- the fundamental data is not just a straight feed from say Aspect(?) Data, but they add a few custom fields of their own by trolling through the notes of Annual Reports to get a more accurate economic value of the companies.

How frequently are undervalued stocks identified?

Have you seen any historical valuations generated by SV to compare to current prices?

Despite what Buffett & FA's might say I would think it would he useful to use TA to manage the trade/investment ... maybe none of them have read the posts here on ASF to understand how to apply TA! I don't want to fully subscribe to the cult of Buffettology! :sheep:

Regards

 

[Realist]

Ghoti, what stocks (companies) does it recommend?

What stocks/companies have you bought recently or would you recommend now yourself?

Just interested as you follow Grahams methodologies - as I try to. See if we are thinking the same things.

The last "value" stock I bought was CDO. What do you think of them?

 

[ghotib]

Sorry about the delay. Damn soccer gets in the way of a lot of things eh?

I tried the demo, but it expired before I got a chance to understand how it works. Is the following correct?

- In one of the books it mentions 300 stocks in the database. Is that all there is??

I haven't counted them, but that looks about right. You can add your own and delete some of theirs if you want. I certainly will.

If so do you know what is the selection criteria to be included in the database?

No I don't know, though I have guesses about some. At the moment, in the brief times between watching or recovering from soccer I'm working my way through the financials I can find for some of the stocks in the database to see where and why I come to different results and what information they've used that I can't find. You might not need or want to go through this process; I'm doing it because I have a LOT to learn about reading company accounts.

- the fundamental data is not just a straight feed from say Aspect(?) Data, but they add a few custom fields of their own by trolling through the notes of Annual Reports to get a more accurate economic value of the companies.

That's right, though I wouldn't put it quite that way. The "custom fields" are either for data from the financial reports or are calculations based on the data. Some people on this forum have built their own systems with custom fields that suit their investing/trading systems. That's what StockVal is.

How frequently are undervalued stocks identified?

Erm... I'm not sure what you're asking with this. Do you mean, how many undervalued stocks are there in the database? The answer is "it depends", not just on prices but also because you might want to use different figures in some of the calculations. When you're working from value calculations you can't just update information from stockmarket activity.

Have you seen any historical valuations generated by SV to compare to current prices?

Not within SV. I have seen some of Roger Montgomery's examples; The Reject Shop and ABC Learning are two that he uses a lot, as you probably know.

Despite what Buffett & FA's might say I would think it would he useful to use TA to manage the trade/investment ... maybe none of them have read the posts here on ASF to understand how to apply TA! I don't want to fully subscribe to the cult of Buffettology! :sheep:

At least one person on the forum uses intrinsic value in a trading system. I think all these ferocious distinctions get pretty fuzzy when you put them into practice. I've decided that for now I'll worry about establishing a method that works for me; checkpoints and guidelines are much more important to me than what it's called.

Ghoti

 

[ghotib]

Hi Realist,

Ghoti, what stocks (companies) does it recommend?

It doesn't. The program does calculations based on data and opinions. The subscription provides the data and opinions for a number of companies, and includes information about how the data is derived. e.g. if there's more than one class of shares there's a note about what is included in the field for number of shares on issue. It doesn't make recommendations. It's a tool for developing your own informed opinions.

What stocks/companies have you bought recently or would you recommend now yourself?

I sure as heck wouldn't recommend anything except ignoring any of my recommendations. I *might* warn a good friend against something; I certainly wouldn't suggest that they put money into anything.

I'm still on training wheels as an investor, and I'm working with a stake of less than $10K to which I'm adding at the princely rate of $30 per week. I figure that I'll learn the principles and how to apply them at this scale and then add a zero when I'm ready.

My vast portfolio consists of one LIC (Clime Capital) and one industrial (PCH Holdings). I bought PCH before I bought StockVal. I did look at the historical financials, but I can't say I analysed them with anything approaching Ben Graham-like rigour.

I've recently sold Timbercorp at a nice profit, some of which I used to buy StockVal. This is against my thinking when I bought, but I sold it because it would take me a very long time to build up a decent stake unless the price comes way down. Also because I kept reading the thread here about Great Southern Plantations and got uneasy about my original assessment of the company. That should prove that my recommendations aren't worth a dirty sock; I don't even stick to them myself.

Just interested as you follow Grahams methodologies - as I try to. See if we are thinking the same things.

As you suggested elsewhere, I've gone back to Graham this week. I think that discussion belongs in a different thread.

The last "value" stock I bought was CDO. What do you think of them?

I don't have a first-hand opinion. Some people whose opinions I often find useful think it's a solid company.

Ghoti

 

[poormantrading]

Thanks 4 the info ghotib, I'll look again into Reject Shop and ABC Learning.

Sorry about the delay. Damn soccer gets in the way of a lot of things eh?

.. fully understandable!


Regards

 

[Charlie]

Thanks 4 the info ghotib, I'll look again into Reject Shop and ABC Learning.

.. fully understandable!


Regards

be aware, he uses ABC as an example of what NOT to buy, and compares it to Telstra. Remember when all the analysts were saying Telstra was a "$10 -$20 dollar stock"?

 

[ggumpshots]

What is the learning curve on Stockval software?
How intuitive is it?
HOW DILIGENTLY DO YOU NEED TO FOLLOW THE MANUAL
I have never used any share investment analysis software? But I do have a heap of investment books.
If you have a better recomendation for someone not interested in learning softwarwe but very interested in investing , please advise.

As a corolloray , I have little interest in knowing how carbon fibre Tennis racquets are made but I am interested in playing tennis.

Is this good software to assist in getting information to select a stock?

there is a free download for 5 days I have been told but the only link I can find is a reuteurs site,. I must be in the wrong place

this software has a connection to R. Montgomery of clime capital.

 

[ghotib]

Hi ggumpshots - any relation to Forrest?

If you've read this thread you'll know that I've had a subscription to StockVal for about 3 months. You'll also know that there's a new version due Real Soon Now.

The learning curve for the software is barely noticeable. However, the learning curve for what it does is long. The program looks to me as if it's built on a spreadsheet, probably Excel, which performs the calculations and displays the results. You can't modify the formulae, but you can enter your own data. The learning curve is in understanding what data goes in so you understand what the calculated valuations are about. If you're already comfortable with company accounts and intrinsic value calculations, I think you'd learn StockVal very quickly. If you don't, I think it would be difficult to learn those things well enough to from StockVal alone.

By your analogy, if you've already an expert tennis player then you don't have much to learn when you pick up your new carbon fibre racquet, but you might need to adjust your technique to make the most of it. If you got the new racquet for your first ever tennis lesson, then you have to learn the rules of the game, how to make strokes, all the physical skills and co-ordination, tactics, shot percentages, court behaviour etc. etc. using the racquet is only a small part of all that.

Is this good software to assist in getting information to select a stock?

It doesn't scan the market, if that's what you mean. The licensed version contains data for about 300 companies, and that data is updated periodically (not daily). The data is not only figures; it's also analysts' notes, including comments on the figures, but the analysts are not identified. You can enter data for as many other companies as you want, but finding the data is up to you. The most frequently updated data is share price (obviously - nothing else changes so fast). I don't know if StockVal updates share price for companies that it doesn't provide other data for; easy to test but I haven't done it yet.

Does that help???

Ghoti

 

[ggumpshots]

Hi ggumpshots - any relation to Forrest?

If you've read this thread you'll know that I've had a subscription to StockVal for about 3 months. You'll also know that there's a new version due Real Soon Now.

The learning curve for the software is barely noticeable. However, the learning curve for what it does is long. The program looks to me as if it's built on a spreadsheet, probably Excel, which performs the calculations and displays the results. You can't modify the formulae, but you can enter your own data. The learning curve is in understanding what data goes in so you understand what the calculated valuations are about. If you're already comfortable with company accounts and intrinsic value calculations, I think you'd learn StockVal very quickly. If you don't, I think it would be difficult to learn those things well enough to from StockVal alone.

By your analogy, if you've already an expert tennis player then you don't have much to learn when you pick up your new carbon fibre racquet, but you might need to adjust your technique to make the most of it. If you got the new racquet for your first ever tennis lesson, then you have to learn the rules of the game, how to make strokes, all the physical skills and co-ordination, tactics, shot percentages, court behaviour etc. etc. using the racquet is only a small part of all that.
It doesn't scan the market, if that's what you mean. The licensed version contains data for about 300 companies, and that data is updated periodically (not daily). The data is not only figures; it's also analysts' notes, including comments on the figures, but the analysts are not identified. You can enter data for as many other companies as you want, but finding the data is up to you. The most frequently updated data is share price (obviously - nothing else changes so fast). I don't know if StockVal updates share price for companies that it doesn't provide other data for; easy to test but I haven't done it yet.

Does that help???

Ghoti

Hi Ghotib,
Im Woody, my older brother is forrest.

I am really interested in this but I keep getting a Reuters link. This
product is in conjunction with Montgomery from clime ....right???
Maybe its because am I not located in OZ I cant get the demo.....is there one.
Can you assist with a free demo link?


What stands out about your reply is that you don't comment on how
successful or unsuccessful the $1200 is ,you have spent on getting the
software and data.
Is it worth it?
I thought about 2 companies a day were being added and there were 400
companies now…is that incorrect?
Is that enough companies for me to loose million or make a million? hahahaha
Some have commented to me that it is mathematically flawed, but then
they tried to sell me their product!

Is it good for you?

Has it helped you to invest better?

Have youfollowed the advice and or invested and things went sour?

Were you at a level where this software is going to make aminimal difference to you.

If you could would you buy something diferernt or do the same agan?

In the end it is a tool, but how useful has it been to you.

In terms of understanding financial statements I am lousy, however I
would like to.
I have a few Ben Grahams books and read a lot of Buffet
type books previously
and am not a novice to investing...just not successful on the
ASX or NASDEQ. sh!?
Would this software help someone not completly familar with the financials.
Can I just select the parameters even though I may not undesrtand every single input exactly.

Does it at the end of the day recommend a stock ,
if you put in several parameters.
Thanks for your long reply.

 

[poormantrading]

ggumpshots,

Have you read this extract from the book Marketwise?? It basically explains the concepts of StockVal, indeed if your Excel savy you could probably reproduce the core of Stockval's calculations eg Table 5.3. The hard part is getting the data & then trolling through Annual Reports etc, to pick out the bits mentioned in the notes to fine tune the database. This is what I expect you are paying for, the database is probably just maintained by a PA (with analyst's comments) , following a few rules.

I haven't bought it yet, (bit too expensive....I think you need to have a rather modest capital account to justify it) but I expect it's best used as to find undervalued stocks & use them for a watchlist & trade them according to your trading rules.

I'm no expert in FA, so I can't verify the accuracy of the valuations,(they claim it's only a slight varriation of Buffett stlye valuation) but I listen to him on the ABC & read the book & it all seems sensible & logical.....but then there is the market ..... which seems to behave anything but.

Maybe email clime to get the trial if you still haven't got it... I think that's how I got it...can't remember!

Regards

 

[ggumpshots]

I know what it is supossed to do but does it do it and how reliable.
Yes I have read the links you provided actuallly prior to posting and clime didnt reply. Unable to find anty demo links
Ghobit , I await your informed comments

 

[ghotib]

Hi Ghotib,
Im Woody, my older brother is forrest.

Hi Woody

I am really interested in this but I keep getting a Reuters link. This
product is in conjunction with Montgomery from clime ....right???
Maybe its because am I not located in OZ I cant get the demo.....is there one. Can you assist with a free demo link?

I had a bit of a look but it's changed since I got my copy. Sorry.

What stands out about your reply is that you don't comment on how
successful or unsuccessful the $1200 is ,you have spent on getting the
software and data. Is it worth it?

FWIW, I bought it on a special offer to Clime shareholders; I didn't pay $1200. It's worth the money to me. I will not make any recommendations, either for or against, for anyone else, but I will say that I'm glad to have it because I'm using it to ensure that when I buy I buy low enough to protect my capital.

I thought about 2 companies a day were being added and there were 400 companies now…is that incorrect? Is that enough companies for me to loose million or make a million? hahahaha
Some have commented to me that it is mathematically flawed, but then
they tried to sell me their product!

This sounds ridiculous, but I don't know how many companies there are and I don't really care. Every few days I open it up and download the update. Then I sort by valuation less price and maybe take a look at things that appear to be priced below valuation. Generally I find I'm not interested in them at any price, but I have bought into one company that I hadn't thought about before. StockVal valued KRS at 17c, and I bought it for 17c a couple of months ago. That's contrary to theory: I should be buying for less than valuation. OTOH the valuation assumes a 16% rate of return, so I'm still pretty safe. Just at the moment I'm also very comfortable - SP is 22c, they're in an on-market share buyback (which I presume is affecting the SP), and they've just declared a 1c dividend with increased profit on decreased revenue.

However, StockVal is about long term investing. It's too soon for me to say for sure that it's worth the money as an investment tool. Like everything I'm doing at the moment, I'm using it primarily for learning and I still have a long way to go.

In terms of understanding financial statements I am lousy, however I
would like to.
I have a few Ben Grahams books and read a lot of Buffet
type books previously
and am not a novice to investing...just not successful on the
ASX or NASDEQ. sh!?
Would this software help someone not completly familar with the financials.
Can I just select the parameters even though I may not undesrtand every single input exactly.

Does it at the end of the day recommend a stock ,
if you put in several parameters.
Thanks for your long reply.

You sound about the same as I am - confused?

StockVal will not make decisions for you and it will not find stocks for you. It does not "recommend a stock". If you put in several parameters, it will give you a result. But if you didn't understand every single input exactly, you're taking a thumping great risk that you don't understand the result. In practice, you never understand every single input because reports don't tell you everything - even when no one is being deliberately misleading there's always wiggle room somewhere. But all that means is that you look for questions and figure out what uncertainties you can live with. StockVal has made me think of some questions I wouldn't have asked otherwise, including some I still don't know how to answer. It's also programmed some calculations that would take me a very long time to set up and test. That's good for me.

I'm sorry if this sounds really non-committal and boring. Maybe it'll help if I talk about my experience with Clime. I bought into Clime largely because I liked Roger Montgomery on the radio, which is a really pathetic "reason" to outlay money but you have to start somewhere. I'm very happy with Clime's performance, but if you look at the price chart you'd wonder why. It listed at $1 in 2004 and it closed yesterday at $1.05 - not impressive. However just on share price I'm showing a 15% profit because of dividend reinvestment (in effect averaging down) and a bonus issue. In addition, the NTA is over $1.30, and I've learnt a bucket about corporate law and edgy sharemarket practices because a well-known sharemarket creep is active in the company. I still don't know how to input all that into StockVal, but I'm learning and I'm happy.

Wotcha going to do? Have you decided?

Ghoti

 

[ggumpshots]

ghotib wrote

If you put in several parameters, it will give you a result.



Do you mean it will spew out a list of companies in order of preference.

I also sent you a PM