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  • 225 Value Stocks Ready For Review [View article]
    The intention of the last comment was to clarify a word, pim69.

    And no, Graham's warnings are not the same thing as a disclaimer.
    This issue is surrounded by misinformation, much of it intentional.

    To understand what Graham really recommended (and warned against), you will have to look up the references yourself.

    Thank you.
    Feb 3, 2015. 05:02 PM | 1 Like Like |Link to Comment
  • Here's Why Wabtec Belongs In Your Portfolio [View article]
    Benjamin Graham actually emphasized that the secret of sound investment was the "Margin of Safety". He recommended various categories of stocks - Defensive, Enterprising and NCAV - and specified precise qualitative and quantitative rules for each category.

    Earnings power was one of the rules included in his investment framework.

    For example, given below are the actual Graham ratings for Wabtec Inc (WAB), with no adjustments other than those for inflation.

    Defensive Graham investment requires that all ratings be 100% or more.
    Enterprising Graham investment requires minimum ratings of - N/A, 75%, 90%, 50%, 5%, N/A and 137%.

    Wabtec Inc - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 514.00%
    Current Assets ÷ [2 x Current Liabilities]: 115.03%
    Net Current Assets ÷ Long Term Debt: 167.36%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 95.00%
    Earnings Growth (100% ⇒ 30% Growth): 312.71%
    Graham Number ÷ Previous Close: 36.92%

    The Final Graham Assessment for Wabtec Inc is also given below.
    The Quantitative Result (Intrinsic Value ÷ Previous Close) for a stock has to be 100% for true Graham investment.

    Wabtec Inc - Final Graham Assessment
    Defensive Price (Graham Number): $31.25
    Enterprising Price (Serenity Number): $12.70
    NCAV Price: $1.00
    Qualitative Result: Good / Enterprising
    Intrinsic Value: $12.70
    Previous Close: $84.65
    Quantitative Result: 15.00%

    Since this is an Enterprising quality stock, the Intrinsic Value of this stock equals its Enterprising Price.
    Similarly, the Intrinsic Value for a Defensive quality stock equals its Defensive Price (Graham Number), and the Intrinsic Value for an NCAV quality stock equals its NCAV Price.

    Please note that not all stocks failing Graham's rules are necessarily bad investments. Graham's rules are just extremely selective. Graham designed and backtested his framework for over 50 years, to deliver the best possible long-term results.

    http://seekingalpha.co... shows how one can assess 5000+ NYSE and NASDAQ stocks by a similar exact Benjamin Graham assessment, with no adjustments other than those for inflation.
    Feb 3, 2015. 04:50 PM | 3 Likes Like |Link to Comment
  • ModernGraham Quarterly Valuation Of Fluor Corporation [View article]
    The ModernGraham website cites the following formula as one of the Graham methods applied:

    Intrinsic Value = EPS x (8.5 + 2xGrowth)

    Benjamin Graham actually gave several warnings about this formula and only used it to demonstrate why most growth-based valuations are unreliable. But due to a printing omission in recent editions of The Intelligent Investor, this formula is used often today instead of Graham's actual (and more comprehensive) methods.

    Article 1: http://seekingalpha.co... discusses the issue in detail.

    In fact, most of what Graham actually taught has been forgotten today, or is applied inaccurately.

    Another example from the above article is:
    "Adequate Size of Enterprise - market capitalization of at least $2 billion"

    Graham actually recommended "Not less than $100 million of annual sales" for this criterion. Checking for Market Capitalization instead of Sales will - all else being equal - rate overvalued stocks higher than undervalued ones. Other rules mentioned here too - such as dividend record, and PE & PB ratios - are very different from what Graham actually recommended.

    Given below are the actual Graham ratings for Fluor Corporation (FLR), with no adjustments other than those for inflation.

    Defensive Graham investment requires that all ratings be 100% or more.
    Enterprising Graham investment requires minimum ratings of - N/A, 75%, 90%, 50%, 5%, N/A and 137%.

    Fluor Corporation - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 5,470.00%
    Current Assets ÷ [2 x Current Liabilities]: 88.10%
    Net Current Assets ÷ Long Term Debt: 522.86%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 65.00%
    Earnings Growth (100% ⇒ 30% Growth): 197.61%
    Graham Number ÷ Previous Close: 75.25%

    The Final Graham Assessment for Fluor Corporation is also given below.
    The Quantitative Result (Intrinsic Value ÷ Previous Close) for a stock has to be 100% for true Graham investment.

    Fluor Corporation - Final Graham Assessment
    Defensive Price (Graham Number): $41.83
    Enterprising Price (Serenity Number): $32.76
    NCAV Price: $8.91
    Qualitative Result: Good / Enterprising
    Intrinsic Value: $32.76
    Previous Close: $55.59
    Quantitative Result: 58.93%

    Since this is an Enterprising quality stock, the Intrinsic Value of this stock equals its Enterprising Price.
    Similarly, the Intrinsic Value for a Defensive quality stock equals its Defensive Price (Graham Number), and the Intrinsic Value for an NCAV quality stock equals its NCAV Price.

    Please note that not all stocks failing Graham's rules are necessarily bad investments. Graham's rules are just extremely selective. Graham designed and backtested his framework for over 50 years, to deliver the best possible long-term results.

    Article 2: http://seekingalpha.co... shows how one can assess 5000+ NYSE and NASDAQ stocks by a similar exact Benjamin Graham assessment, with no adjustments other than those for inflation.
    Feb 3, 2015. 04:45 PM | 1 Like Like |Link to Comment
  • 225 Value Stocks Ready For Review [View article]
    Just to be clear, the word "academic" above is intended to convey "impractical".

    Again, interested readers are encouraged to look up the Graham references cited in the articles and decide on the facts themselves.

    Thank you.
    Feb 3, 2015. 02:40 PM | 1 Like Like |Link to Comment
  • Analysts Continue To Use Wrong Benjamin Graham Formula [View article]
    Just to be clear, the word "academic" above is intended to convey "impractical".

    The repeated assertions and long-winded arguments are distracting (perhaps intentionally) from some very simple facts.

    Again, interested readers are encouraged to look up the cited Graham references and decide on the facts themselves.
    Feb 3, 2015. 02:38 PM | Likes Like |Link to Comment
  • The Clorox Company Dividend Stock Analysis [View article]
    Please note that before being checked against the Graham Number, Benjamin Graham required that a stock first meet six other qualitative criteria.

    For example, given below are all Graham ratings for Clorox Company (CLX).

    Defensive Graham investment requires that all ratings be 100% or more.
    Enterprising Graham investment requires minimum ratings of - N/A, 75%, 90%, 50%, 5%, N/A and 137%.

    Clorox Company - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 1,124.00%
    Current Assets ÷ [2 x Current Liabilities]: 62.61%
    Net Current Assets ÷ Long Term Debt: 13.18%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 96.80%
    Graham Number ÷ Previous Close: 1.75%

    Lastly, not all stocks failing Graham's rules are necessarily bad investments. Graham's rules are just extremely selective. Graham designed and backtested his framework for over 50 years, to deliver the best possible long-term results.

    http://seekingalpha.co... shows how one can assess 5000+ NYSE and NASDAQ stocks by a similar exact 17-point Benjamin Graham assessment, with no adjustments other than those for inflation.
    Feb 3, 2015. 02:16 PM | Likes Like |Link to Comment
  • 3 Chemical Companies Benjamin Graham Would Appreciate [View article]
    Benjamin Graham designed and backtested his investment framework for over 50 years, to deliver the best possible long-term results. His framework has withstood the test of time and has been endorsed by some of the world's most successful investors.

    Warren Buffett even named his son after Graham, and describes Graham's book - The Intelligent Investor - as "by far the best book about investing ever written".

    From Buffett's preface to The Intelligent Investor:
    "To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework. This book precisely and clearly prescribes the proper framework. You must supply the emotional discipline."

    Given below are the actual Graham ratings for Cabot Corporation (CBT), with no adjustments other than those for inflation.

    Defensive Graham investment requires that all ratings be 100% or more.
    Enterprising Graham investment requires minimum ratings of - N/A, 75%, 90%, 50%, 5%, N/A and 137%.

    Cabot Corporation - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 692.00%
    Current Assets ÷ [2 x Current Liabilities]: 88.57%
    Net Current Assets ÷ Long Term Debt: 63.82%
    Earnings Stability (100% ⇒ 10 Years): 40.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 225.26%
    Graham Number ÷ Previous Close: 107.18%

    Please note that not all stocks failing Graham's rules are necessarily bad investments. Graham's rules are just extremely selective.

    http://seekingalpha.co... shows how one can assess 5000+ NYSE and NASDAQ stocks by a similar exact 17-point Benjamin Graham assessment, with no adjustments other than those for inflation.
    Feb 3, 2015. 02:07 PM | Likes Like |Link to Comment
  • The Warren Buffett Way: High Quality Stocks In Emerging Markets [View article]
    Also, do note that Buffett even named his son after Graham, and describes Graham's book - The Intelligent Investor - as "by far the best book about investing ever written".

    From Buffett's preface to The Intelligent Investor:
    "To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework. This book precisely and clearly prescribes the proper framework. You must supply the emotional discipline."
    "Follow Graham and you will profit from folly rather than participate in it."

    Any study of investing the Warren Buffett way cannot be complete without an examination of Graham's methods.
    Jan 30, 2015. 08:13 AM | 1 Like Like |Link to Comment
  • Ford Motor: The Shocking Reality [View article]
    Serenity's screeners list more than 500 stocks selling under their Graham Numbers today.
    But before being checked against the Graham Number, Benjamin Graham required that a stock first meet six other qualitative criteria.

    Given below are the actual Graham ratings for Ford Motor Company (F), with no adjustments other than those for inflation.

    Defensive Graham investment requires all the ratings to be at least 100%.
    Enterprising Graham investment requires the ratings to be at least - N/A, 75%, 90%, 50%, 5%, N/A and 137%.

    Ford Motor Company - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 29,384.00%
    Current Assets ÷ [2 x Current Liabilities]: 102.23%
    Net Current Assets ÷ Long Term Debt: 101.06%
    Earnings Stability (100% ⇒ 10 Years): 50.00%
    Dividend Record (100% ⇒ 20 Years): 10.00%
    Earnings Growth (100% ⇒ 30% Growth): 208.27%
    Graham Number ÷ Previous Close: 139.03%

    The Final Graham Assessment for Ford Motor Company is also given below.
    The Quantitative Result (Intrinsic Value ÷ Previous Close) for a stock has to be 100% for true Graham investment.

    Ford Motor Company - Final Graham Assessment
    Defensive Price (Graham Number): $20.10
    Enterprising Price (Serenity Number): $11.31
    NCAV Price: -$6.04
    Qualitative Result: Good / Enterprising
    Intrinsic Value: $11.31
    Previous Close: $14.46
    Quantitative Result: 78.22%

    Since this is an Enterprising quality stock, the Intrinsic Value of this stock equals its Enterprising Price.
    Similarly, the Intrinsic Value for a Defensive quality stock equals its Defensive Price (Graham Number), and the Intrinsic Value for an NCAV quality stock equals its NCAV Price.

    Please note that not all stocks failing Graham's rules are necessarily bad investments. Graham's rules are just extremely selective. Graham designed and backtested his framework for over 50 years, to deliver the best possible long-term results.

    http://seekingalpha.co... shows how one can assess 5000+ NYSE and NASDAQ stocks by a similar 17-point Benjamin Graham assessment, with no adjustments other than those for inflation.
    Jan 29, 2015. 03:26 PM | Likes Like |Link to Comment
  • LeapFrog Is Selling Below Its Liquidation Value [View article]
    True, William Greenfield.

    Serenity's calculated value is based on the last data feed on LF.
    That may change as you have indicated with the next feed in February.

    You're also right about the diversification.
    If you see Serenity's Graham tutorial (the link in the first comment), the section on NCAV stocks clearly states a minimum of 30 NCAV stocks, or not more than 3.3% of one's portfolio per NCAV stock.

    Thanks again!
    Jan 29, 2015. 03:16 PM | Likes Like |Link to Comment
  • LeapFrog Is Selling Below Its Liquidation Value [View article]
    Hello William Greenfield,

    Thank you for your kind words!

    Graham required an NCAV stock to also have a positive EPS figure to be eligible for investment.

    This is a requirement that most NCAV analyses today don't include.
    Serenity's NCAV categorization includes this check and LF does have a positive TTM EPS.

    A company with a net positive EPS can decrease its NCAV only by:
    a. Increasing its fixed assets more than its total liabilities, or
    b. Paying high dividends.

    In either case, there is no downside to owning an NCAV stock the way Graham recommended.
    Jan 29, 2015. 01:43 PM | Likes Like |Link to Comment
  • The Warren Buffett Way: High Quality Stocks In Emerging Markets [View article]
    Since you're quoting Graham, have you considered applying Graham's methods for the purpose of studying emerging markets?

    Graham recommended various categories of stocks - Defensive, Enterprising and NCAV - and specified precise qualitative and quantitative rules for each category.

    http://seekingalpha.co... shows how one can assess 5000+ NYSE and NASDAQ stocks by an exact 17-point Benjamin Graham assessment, with no changes other than adjustments for inflation.
    Jan 28, 2015. 05:11 PM | 1 Like Like |Link to Comment
  • ModernGraham Quarterly Valuation Of Cigna Corporation [View article]
    The ModernGraham website cites the following formula as one of the Graham methods applied:

    Intrinsic Value = EPS x (8.5 + 2xGrowth)

    Benjamin Graham actually gave several warnings about this formula and only used it to demonstrate why most growth-based valuations are unreliable. But due to a printing omission in recent editions of The Intelligent Investor, this formula is used often today instead of Graham's actual (and more comprehensive) methods.

    Article 1: http://seekingalpha.co... discusses the issue in detail.

    In fact, most of what Graham actually taught has been forgotten today, or is applied inaccurately.

    Another example from the above article is:
    "Adequate Size of Enterprise - market capitalization of at least $2 billion"

    Graham actually recommended "Not less than $100 million of annual sales" for this criterion. Checking for Market Capitalization instead of Sales will - all else being equal - rate overvalued stocks higher than undervalued ones. Other rules mentioned here too - such as dividend record, and PE & PB ratios - are very different from what Graham actually recommended.

    Given below are the actual Graham ratings for Cigna Corporation (CI), with no adjustments other than those for inflation.

    Defensive Graham investment requires all the ratings to be at least 100%.
    Enterprising Graham investment requires the ratings to be at least - N/A, 75%, 90%, 50%, 5%, N/A and 137%.

    Cigna Corporation - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 6,476.00%
    Current Assets ÷ [2 x Current Liabilities]: 0.00%
    Net Current Assets ÷ Long Term Debt: 0.00%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 127.55%
    Graham Number ÷ Previous Close: 65.57%

    Please note that not all stocks failing Graham's rules are necessarily bad investments. Graham's rules are just extremely selective. Graham designed and backtested his framework for over 50 years, to deliver the best possible long-term results.

    Article 2: http://seekingalpha.co... shows how one can assess 5000+ NYSE and NASDAQ stocks by a similar exact Benjamin Graham assessment, with no adjustments other than those for inflation.
    Jan 28, 2015. 04:51 PM | 1 Like Like |Link to Comment
  • LeapFrog Is Selling Below Its Liquidation Value [View article]
    Graham's framework is designed to - among other things - identify troubled companies that are excessively undervalued by the market. Graham also designed his framework to work regardless of industry or business model.

    But if you're looking for a great business that has no problems and is also selling at great prices, good luck!
    Jan 28, 2015. 03:11 PM | 1 Like Like |Link to Comment
  • ModernGraham Quarterly Valuation Of Motorola Solutions Inc. [View article]
    The ModernGraham website cites the following formula as one of the Graham methods applied:

    Intrinsic Value = EPS x (8.5 + 2xGrowth)

    Benjamin Graham actually gave several warnings about this formula and only used it to demonstrate why most growth-based valuations are unreliable. But due to a printing omission in recent editions of The Intelligent Investor, this formula is used often today instead of Graham's actual (and more comprehensive) methods.

    Article 1: http://seekingalpha.co... discusses the issue in detail.

    In fact, most of what Graham actually taught has been forgotten today, or is applied inaccurately.

    Another example from the above article is:
    "Adequate Size of Enterprise - market capitalization of at least $2 billion"

    Graham actually recommended "Not less than $100 million of annual sales" for this criterion. Checking for Market Capitalization instead of Sales will - all else being equal - rate overvalued stocks higher than undervalued ones. Other rules mentioned here too - such as dividend record, and PE & PB ratios - are very different from what Graham actually recommended.

    Given below are the actual Graham ratings for Motorola Solutions Inc (MSI), with no adjustments other than those for inflation.

    Defensive Graham investment requires all the ratings to be at least 100%.
    Enterprising Graham investment requires the ratings to be at least - N/A, 75%, 90%, 50%, 5%, N/A and 137%.

    Motorola Solutions Inc - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 1,740.00%
    Current Assets ÷ [2 x Current Liabilities]: 109.01%
    Net Current Assets ÷ Long Term Debt: 154.66%
    Earnings Stability (100% ⇒ 10 Years): 40.00%
    Dividend Record (100% ⇒ 20 Years): 15.00%
    Earnings Growth (100% ⇒ 30% Growth): 24.74%
    Graham Number ÷ Previous Close: 48.11%

    Please note that not all stocks failing Graham's rules are necessarily bad investments. His rules are just extremely selective. Graham designed and backtested his framework for over 50 years, to deliver the best possible long-term results.

    Article 2: http://seekingalpha.co... shows how one can assess 5000+ NYSE and NASDAQ stocks by a similar exact Benjamin Graham assessment, with no adjustments other than those for inflation.
    Jan 26, 2015. 12:08 PM | 2 Likes Like |Link to Comment
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