Sorry sultan but not really looking at sharing my spreadsheet and hard work with someone who has just joined with 1 post. I'm more then happy to discuss my methodology or valuation techniques and equations. But not going to just hand out my spreadsheet.
Students of Roger Montgomery's (Buffett's) intrinsic valuation method
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no spread sheet can ever match years of experiance,
Value investing is not just about crunching numbers ( though the numbers are very important). you have to have a good understanding of alot of factors that can never be explained to you in any thread, post or book.
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I agree. It's a combination of those things and more. Using Roger's book, the lessons he teaches AND the formula he gives (which I have put in my own spreadsheet) has allowed me to make a 23% gain in 3 months on a handful of 'value' stocks.
If anyone thinks there is a magic answer, spreadsheet, trading plan or strategy they are kidding themselves. If there were such a thing a) that person would keep it to themselves or b) if they didn't, everyone would have it so there would be no losers.
My spreadsheet is simply to identify value stocks that I should look into in more depth first. Not all of them will be good investments, nor will all of them currently be at a good entry price. As you say Tyson, there are a number of factors at play which there is no program or spreadsheet that can cover them all.
For those of you interested in finding out the full formula behind Montgomery's Valuable and Richard Simmon's explained and fully detailed, see the link in my signature of this post.
Quite interesting explanation that goes on to take the formula apart and explain the logic behind it.
You can then see the pro's and con's to that specific formula as a method of filtering.
DeCal
Quite interesting explanation that goes on to take the formula apart and explain the logic behind it.
You can then see the pro's and con's to that specific formula as a method of filtering.
DeCal
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The formula is a good starting point to filter out the companies you don't want.
Then when you find companies that appear to have a good discount to intrinsic value you need to do more research yourself.
The formula is what it is and it gives a guesstimate of the intrinsic value of a company at a particular time. There are of course always a lot of unknowns and no formula is perfect or even close to perfect. But if it enables you do consistently outperform the general market return then you should be happy.
The whole idea of the Buffet/Montgomery approach is to lessen the risks and increase the returns.
i.e. take as little as risk as possible and try to get a good return.
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Kermit, I don't blame you. Your comment re someone who has just joined with 1 post amused me. FYI, I have developed my own S/S over thirty years. I misinterpreted your post and I wrongly assumed you needed a critique of your spreadsheet. My humble apologies for trying to help. I trust you are doing better than 40% on your portfolio. Good fortune.
haha i sense your sarcasm sultan. I'm more than happy to discuss my method/spreadsheet via PM and bounce some ideas/thoughts but not really looking to have my spreadsheet 'critiqued' per se. Anyway, if you'd like to discuss via PM I would be more than happy to talk about ideas, my screen, strategy, stocks or valuation etc etc.
Cheers (I didn't mean to come off as an ass, just not that keen on releasing my spreadsheet into the wild without having some communication with the person first)
ok everyone, have a bit of a question/task for those who are interested to see what they think.
I've been looking at ACR for quite some time now and as the special dividend payment draws closer, i'm thinking of taking an entry.
I've ran some numbers and although the current SP is $3.45 I was thinking that you could buy in now and get the 60c dividend, the SP may drop by 60c however based on my calculations the future intrinsic value POST the 60c dividend is still $3.90 to $4.10.
So either way, if the SP drops I still think it will return to the mid/high 3's, or if it hardly reduces post special dividend, you've still made a return on the dividend with still some upside.
Thoughts? anyone else looked at the company/financials and have an approx IV?
I've been looking at ACR for quite some time now and as the special dividend payment draws closer, i'm thinking of taking an entry.
I've ran some numbers and although the current SP is $3.45 I was thinking that you could buy in now and get the 60c dividend, the SP may drop by 60c however based on my calculations the future intrinsic value POST the 60c dividend is still $3.90 to $4.10.
So either way, if the SP drops I still think it will return to the mid/high 3's, or if it hardly reduces post special dividend, you've still made a return on the dividend with still some upside.
Thoughts? anyone else looked at the company/financials and have an approx IV?
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Kermit I have been tempted by ACR also but have held off because I thought it was close to full value. Margin of safety is not large enough for me to jump in now.
I'm looking at CCP. It has had quite a run and I'm wondering if anyone has an IV. I haven't crunched the numbers yet but plan to.
The market in general- ASX/ DOW- seems due for a pullback don't you reckon? BRW published an issue recently and they expect a 10-15% pullback soon. Worryingly they also expect commodity prices to tank (a sentiment I have heard on on Sky Biz also).
Thoughts anyone? (besides the obvious- a pullback in a value company is a chance to buy more at a better price)
I'm looking at CCP. It has had quite a run and I'm wondering if anyone has an IV. I haven't crunched the numbers yet but plan to.
The market in general- ASX/ DOW- seems due for a pullback don't you reckon? BRW published an issue recently and they expect a 10-15% pullback soon. Worryingly they also expect commodity prices to tank (a sentiment I have heard on on Sky Biz also).
Thoughts anyone? (besides the obvious- a pullback in a value company is a chance to buy more at a better price)
Despite not knowing much in general about CCP itself or its practices...
just crunched some quick numbers on CCP and have come to an IV of 3.71. However this is on a ROE from the previous 2 years. where as previously you can see from 10 yr data they have achieved much larger levels of ROE. Which would result in a significantly higher IV.
Another unrelated to IV calc ive done has given me the figure to investigate/monitor the company below 4.66 Which is obviously above where there trading at now.
I think i need to do some reading on this company to provide any further information. But it appears they fell off the face of a cliff during the GFC (sp went from 12 to 0.40 !)
Once again, ACR is a company i havnt been familiar with, a quick look at the financials makes me think this is still very much a speculative stock and not something i'd be comfortable putting money in ... However, future results could be promising indeed, ACR statements say a lot of the value in the company moving forward will be generated by royalties from Axiron, talk of royalties potentially up to 1 billion over the period to 2026. So looking at income somewhere between 50 - 100 million per year generated from royalties if the product is a commercial success.... not bad. Also say they are eligible for milestone payments up to around 200million
But of course the product has not actually yet been launched. But is set to be early 2011 in the States. One for me to watch I think.
Acrux expects the royalties to provide a substantial part of the total value of
Axiron. - http://imagesignal.comsec.com.au/asxdata/20101209/pdf/01130988.pdf
If the product is a success, and royalties/milestone payments are achieved, you'd expect there current earnings to double from there current point. But you'd really want them to be able to develop further streams of revenue from there.
For Myself i'd probably wait to see how successful there product is commercially and if they can cross the line from being an "R&D" company to a consistent profit making company before looking at investing.
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Hi all,
I am currently working on some software to calculate IV over time and compare it to the market price. I have included a plot for ORL - take it with a grain of salt since it the program is still in development. It gives you an idea of what I am trying to do. Also, I think the 2011 IV is highly inflated because commsec thinks the payout ratio will decrease for ORL.
Which brings me to this question: How do you calculate the payout ratio? Now, when ROE is very high, the payout ratio affects the IV a lot!
So I am looking at JBH at the moment.
For 2010 we have DPS = 66c and total shares of 108m = $71.28m of dividends paid. BUT, in the statements of cash flows, the dividends paid = $67.083m.
This means a payout ratio of 66 / 108.4 = 60.8% or a payout ratio of 67.083m / 108m = 56.5%?
For 2009 we have DPS = 44c and total shares of 108m = $47.52m of dividends paid. BUT, in the statements of cash flows, the dividends paid = $33.217m.
This means a payout ratio of 44 / 87.6 = 50.2% or a payout ratio of 33.217m / 94.4m = 35.2%? Clearly, that bigger difference in payout ratio has a massive effect on the IV!
Roger says to use the "Dividends paid" value but my question is: why the discrepancy? And why does that discrepancy change from year to year?
I am currently working on some software to calculate IV over time and compare it to the market price. I have included a plot for ORL - take it with a grain of salt since it the program is still in development. It gives you an idea of what I am trying to do. Also, I think the 2011 IV is highly inflated because commsec thinks the payout ratio will decrease for ORL.
Which brings me to this question: How do you calculate the payout ratio? Now, when ROE is very high, the payout ratio affects the IV a lot!
So I am looking at JBH at the moment.
For 2010 we have DPS = 66c and total shares of 108m = $71.28m of dividends paid. BUT, in the statements of cash flows, the dividends paid = $67.083m.
This means a payout ratio of 66 / 108.4 = 60.8% or a payout ratio of 67.083m / 108m = 56.5%?
For 2009 we have DPS = 44c and total shares of 108m = $47.52m of dividends paid. BUT, in the statements of cash flows, the dividends paid = $33.217m.
This means a payout ratio of 44 / 87.6 = 50.2% or a payout ratio of 33.217m / 94.4m = 35.2%? Clearly, that bigger difference in payout ratio has a massive effect on the IV!
Roger says to use the "Dividends paid" value but my question is: why the discrepancy? And why does that discrepancy change from year to year?
Attachments
Has the number of total shares fluctuated over the course of the year ? Could that possibility contribute to any discrepancy ?
skc
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With JBH dividends for the prior financial year are paid in Sept the following financial year. Cashflow statements reflects the dividend paid date so you will find that the total dividend paid out in cash terms for FY10 was (29c + 33c) x 108m shares = ~$67m.
For valuation purpose however the payout ratio is (33c + 33c) x 108m shares / earnings.
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just wondering why we should use the calendar years dividends (I know comsec does it this way), when we are basing the valuation on the financial year?
I try and use the dividends paid in each financial year, which is annoying when using commsec data...although once im ready to extend into an indepth analysis of a chosen company...I will forecast my own dividends rather than use commsec data.
I try and use the dividends paid in each financial year, which is annoying when using commsec data...although once im ready to extend into an indepth analysis of a chosen company...I will forecast my own dividends rather than use commsec data.
