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Jae Jun
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Founder of Old School Value ( Fundamental Stock Analyzer & Valuation Tool for Value Investors to Save Time & Make Money ======================== - Are you spending a lot of time manually gathering and inputting data into spreadsheets? - Are you finding it... More
My company:
Take Full Control of Your Investments
My blog:
Old School Value
My book:
The Ultimate Guide to Stock Valuation
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  • Portfolio Review and my Favorite Stock of the Year

    The past two months makes me want to believe that the economic recovery is looking good. Markets have consistently been rising, and so has my portfolio so I am not complaining.

    I've put a lot of cash to work over the past 2 months. Cash made up about 35% at one point of the year, but that has been drastically reduced down to 8% by the end of October.

    My Portfolio YTD and Monthly Performance Stats

    The portfolio certainly has come a long way from the bottom of -20% mid way through the year.

    I'm aiming to break even. It doesn't matter whether or not I beat the market every year, as long as I don't lose money because I know that in the long run, I will beat the market.

    Transactions in Sept & Oct

    Bought ADBE

    Couldn't resist buying ADBE when it dropped 20% following earnings. ADBE stock valuation and reasoning here.

    Bought YNGFF

    I first came across this valuable idea from Pakiya Funds. Sat on my bum taking my time while the stock was at $0.37. Now it is over $0.80 already.

    I'm not an expert on precious metal producers but after reading as much as I can on the company, YNGFF is clearly cheap on a cash flow basis. Next year should be exceptional with the anticipation of production hitting estimated targets.

    To learn about YNGFF begin by reading the following links.

    Above Average Odds has come great material as well.

    There is also more learning material in the forum on precious metal miners.

    Sold BOLT

    Reduced the position slightly to free up some cash. No other reason.

    Bought MMPIQ

    I thought I was finished with bankrupt stocks but MMPIQ looks to be a very good prospect. A very small portion of the portfolio with a floor around 25c and upside much higher.

    A quick read up can be found on the MMPIQ stock analysis by AQ Value. More info on MMPIQ can be found at AQ Value.

    Bought SUNH

    SUNH will soon be completing its spinoff. Spinoffs are always good opportunities but I am especially eager about the spun off child Sabra. Sabra will become a standalone healthcare REIT.

    Read these links (Thanks to Stock Spinoff Blog)

    Bought RDI

    An investment with a catalyst.

    Reading International operates movie theaters as well as own land. The company has a presence in Australia, New Zealand and USA.

    Having lived in Australia for most of my life, and having been to many of Reading Cinema's and knowing the land location of a few of its properties, RDI looks to have a big margin of safety.

    Fund manager Andrew Shapiro has been following RDI for years and has plenty to say about the company on his Seeking Alpha page.

    This is an opportunity based on discount to assets. People against the idea have been arguing that cinemas will die but that point is completely off track from the investment thesis.

    Sold INSM

    Simply needed to free up cash. INSM was one of my biggest positions but I cut it down as better ideas came along.

    Bought RHDGF

    Most definitely my favorite investment of the year.

    Cheap on a sum of the parts valuation. Huge margin of safety. Clearly plenty of upside potential with low risk.

    Read about it before Wall Street catches on.

    Looks like somebody else has written about RHDGF. Good article but very similar to the linked pdf.

    Sold APNC

    My growth expectations were incorrect. Made a mistake and selling at a loss of about -23%.

    What I'm Reading

    Made to Stick: Why Some Ideas Survive and Others Die

    Fantastic book on how to package your ideas in order to make it stick in the minds of people. Useful in everyday life as well as investing.


    Go read it.

    The link is an Amazon affiliate link. I'll receive 50c or so for referring you. If you can't stand the idea of me receiving 50c, still make sure you purchase it by searching the title yourself.


    Long all positions except APNC.

    Disclosure: Long all stock mentioned except APNC
    Nov 09 10:34 AM | Link | Comment!
  • Piotroski Stock Ideas and Screen Performance
    Stock Screen Strategy and Backtest Series Piotroski Score Screen Performance

    Following on with the Piotroski score and Altman score theme lately, let’s take a look at how the Piotroski score can help strengthen your portfolio.

    Joseph Piotroski is an academic professor who published a paper in 2002 titled, Value Investing: The use of historical financial statement information to separate winners from losers.

    The paper itself is a great read, but can be simplified down to the following criteria a company should exhibit in order to receive high marks based on his studies.

    Piotroski Criteria


    • 1. Positive return on assets in the current year (1 point)
    • 2. Positive operating cash flow in the current year (1 point)
    • 3. Higher return on assets (ROA) in the current period compared to the ROA in the previous year (1 point)
    • 4. Cash flow from operations are greater than ROA (1 point)

    Leverage, Liquidity and Source of Funds

    • 5. Lower ratio of long term debt to in the current period compared value in the previous year (1 point)
    • 6. Higher current ratio this year compared to the previous year (1 point)
    • 7. No new shares were issued in the last year (1 point)

    Operating Efficiency

    • 8. A higher gross margin compared to the previous year (1 point)
    • 9. A higher asset turnover ratio compared to the previous year (1 point)

    The neat thing about going through the Piotroski score is that, it doesn’t require any higher degree of mathematics. This makes it that much more effective and easier to customize and analyze.

    For example, I could easily modify the requirements to compare each criteria to the previous 2 or 3 years, instead of just accepting an increase from the previous year.

    Piotroski’s paper demonstrates that simple accounting knowledge and fundamental analysis can prevent many mistakes but also outperform. In other words, the point of the Piotroski strategy is to identify the healthiest companies at cheap prices.

    Piotroski Screen Performance

    The screen first looks at companies with low price to book ratios from the latest quarter and returns the top 20 stocks with the highest Piotroski score. Emphasis is placed on smaller cap companies and the screen assumes that a position is rebalanced every 6 months.

    Breaking the screen performance into multiple time periods, the results are as follows.

    The yearly performance numbers do not start from January and end at December. I started the back testing series around March, so I’ve kept the start and end points as March to try and be consistent. Not perfect, but the point is to see how Piotroski performs.

    Piotroski Stock Ideas based on TTM

    To calculate the Piotroski automatically, you can download and use the free Piotroski stock spreadsheet to calculate the numbers quickly as well as be able to compare previous years. The premium stock value calculator will also save you a ton of time by automatically performing 3 different types of valuations and immediately displaying fundamental data and analysis. Will cut your workload exponentially.

    You can also get more Piotroski stock ideas from the Piotroski stock screener.

    Disclosure: None
    Jun 15 11:19 PM | Link | Comment!
  • Book Review: Active Value Investing
    Active Value Investing Book Review

    Active Value Investing is written by Russian born value investor Vitaliy Katsenelson. I’ve been a reader of his blog Contrarian Edge and his content is insightful and stock analysis is wonderful. His analysis of American Express in 2008 was probably the best one out there for why AXP was cheap.

    So that’s how I knew about Vitaliy, but it’s only now that I finally got around to reading his book, Active Value Investing: Making Money in Range-Bound Markets (Wiley Finance).

    Range Bound Markets

    The reason why it took me so long to get a copy of this book was the title “Active Value Investing” and the price tag. I figured the book would be dry and read much like a text book. Thankfully I was wrong.

    The first part of Active Value Investing is all about the economic and historical performance of past markets. Before reading the book, I had always thought the market went up, down or sideways. The author expands on the idea of secular bull, bear markets as well as introducing the “range bound market” which includes bull and bear markets that trade within a range.

    I’m not much of an economist or market analyst so until this book, I avoided this type of reading, but surprising, Vitaliy’s case was very clear and the supporting evidence even helped me to understand what the heck it was all about.

    Active Value Investing

    The rest of the book is comprised of value investing concepts, fundamentals, valuation and strategy.

    This second part goes through the QVG (Quality, Value, Growth) framework. It’s very much like my own spider graphs, but simplified with three axes.

    Quality of an investment discusses topics such as

    • Competitive advantage
    • Management
    • Predictable earnings
    • Strong balance sheet
    • and significance of FCF

    In the Growth section, the vital point made by the author is that you need to understand the company and the industry it is in to determine the growth rate. This is exactly what I preach when it comes to choosing a growth rate for the premium stock valuation calculator users. There are many engines to drive growth and while I prefer to take a conservative stance in my growth calculations, the book covers various aspects that I had not considered before.

    Up to this point, I was breezing through the content but the Valuation section is what caught my attention. There are several of pages on margin of safety, diversification and discounted cash flow explanations that I skimmed through. It’s when discussions of relative and absolute valuation methods came up that really interested me.

    I’m a sucker for learning new valuation methods and in the investing world, it seems like it’s mostly just refined to DCF and multiples. At least in the value investing world, we have additional methods such as Graham’s NNWC and Greenwald’s EPV.

    Vitaliy provides his own method called the Absolute P/E Model.

    I won’t get into the details of the absolute P/E model, but it certainly is interesting and while not perfect (what is?), it definitely is a welcome new addition to my toolbox. There is even a model to incorporate margin of safety.

    I’ll eventually include this in the premium stock analysis tools and provide working examples as I grasp a better understanding of how to use it effectively.

    If you can’t wait so long for me to post about it, I recommended you read this section of the book yourself.

    The Process

    The final chapters of book bring everything together and deals with the process of finding ideas, buying, selling, risk and diversifcation.

    • Learnt more about the way the market works
    • Good review of value investing principles and fundamentals
    • Great discussion of valuation and the process of active value investing.

    Get a copy of Active Value Investing: Making Money in Range-Bound Markets (Wiley Finance) through Amazon.


    I received a complimentary copy of Active Value Investing. I was not paid to write this review. Links to Amazon are affiliate links.

    Disclosure: None
    May 11 10:57 AM | Link | Comment!
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