Seeking Alpha

Serenity

View as an RSS Feed
View Serenity's Comments BY TICKER:
ABX, CL, CVR, EMR, ETN, FB, GIS, GRPN, HFC, IBM, K, LMT, LNKD, MMM, MPC, MSFT, ORCL, OREX, PEP, PSX, RTN, T, VZ, WM
Latest  |  Highest rated
  • Invest In Stocks With A Margin Of Safety To Reduce Risk And Enhance Returns [View article]
    Hello Dan,

    You're right in that a low price alone is never a good enough reason to buy.

    Even for NCAV stocks - stocks selling under their net current asset value (effective cash value) - Graham still required that they at least have positive earnings in the last 12 month period before investing in them.
    Sep 14 03:07 AM | 1 Like Like |Link to Comment
  • Invest In Stocks With A Margin Of Safety To Reduce Risk And Enhance Returns [View article]
    Hi rizzardi23,

    Graham recommended 3 different types of stocks for investment - Defensive, Enterprising and NCAV - and 16 criteria for finding them.

    Defensive and Enterprising stocks require dividends but NCAV stocks don't.
    The Graham Number calculation that you correctly mention, with the 7 other criteria, is for Defensive stocks.

    To see all criteria and learn how to apply them apply them today, see "How To Build A Complete Benjamin Graham Portfolio": http://seekingalpha.co...
    Sep 14 02:59 AM | Likes Like |Link to Comment
  • Invest In Stocks With A Margin Of Safety To Reduce Risk And Enhance Returns [View article]
    "From this there has developed the general notion that the rate of return which the investor should aim for is more or less proportionate to the degree of risk he is ready to run. Our view is different. The rate of return sought should be dependent, rather, on the amount of intelligent effort the investor is willing and able to bring to bear on his task. "

    From "Chapter 4: General Portfolio Policy: The Defensive Investor" of Benjamin Graham's book "The Intelligent Investor".
    Sep 14 02:53 AM | 4 Likes Like |Link to Comment
  • Invest In Stocks With A Margin Of Safety To Reduce Risk And Enhance Returns [View article]
    One of Graham's core principles is to never use estimates of any sort. Past numbers are objective and the same no matter who analyzes them. Future estimates are subjective and can vary from source to source.
    Sep 14 02:42 AM | 2 Likes Like |Link to Comment
  • Invest In Stocks With A Margin Of Safety To Reduce Risk And Enhance Returns [View article]
    Ben Graham actually gave 3 different intrinsic values for a stock - Defensive, Enterprising and NCAV - and 16 criteria for arriving at them them.

    For details, see "How To Build A Complete Benjamin Graham Portfolio":
    http://seekingalpha.co...
    Sep 14 02:33 AM | 2 Likes Like |Link to Comment
  • Invest In Stocks With A Margin Of Safety To Reduce Risk And Enhance Returns [View article]
    Absolutely, David!

    Ben Graham's first recommended strategy for the Defensive investor was "buying the same amounts of all thirty of the issues in the Dow-Jones Industrial Average."
    Today, that translates to investing in an Index fund.

    From "How To Build A Complete Benjamin Graham Portfolio":
    http://seekingalpha.co...
    Sep 14 02:28 AM | Likes Like |Link to Comment
  • Invest In Stocks With A Margin Of Safety To Reduce Risk And Enhance Returns [View article]
    Great article, Chuck!
    A detailed discussion of Ben Graham's Margin of Safety principle has been long overdue.

    In the Preface to the Fourth Edition of The Intelligent Investor, Warren Buffett says
    "If you follow the behavioral and business principles that Graham advocates—and if you pay special attention to the invaluable advice in Chapters 8 and 20—you will not get a poor result from your investments."

    And in Chapter 20. “Margin of Safety” as the Central Concept of Investment, Ben Graham says
    "The margin-of-safety idea becomes much more evident when we apply it to the field of undervalued or bargain securities. We have here, by definition, a favorable difference between price on the one hand and indicated or appraised value on the other. That difference is the safety margin"

    You can find stocks meeting Graham's own Margin of Safety calculations today on Serenity's screeners.
    Sep 14 01:22 AM | Likes Like |Link to Comment
  • 10 Stocks Meeting Benjamin Graham's NCAV Criteria In May [View article]
    Thank you, 31October!

    One of Graham's core principles is to never use estimates of any sort. Past numbers are objective and the same no matter who analyzes them. Estimates are subjective and can vary from source to source.

    So Graham's 16 criteria use far more basic values - like EPS, Book Value, Dividends, Assets, Liabilities etc - that are also harder to manipulate over extended periods of time.

    Graham's criteria are also backtested over a period of decades, some for even up to 50 years.
    Sep 7 07:45 AM | 1 Like Like |Link to Comment
  • 10 Stocks Meeting Benjamin Graham's NCAV Criteria In May [View article]
    Hello 31October,

    Thank you for your comment!

    Creative accounting has always been the investor's biggest challenge, and the financial analyst's job has always been to see through them.

    Graham's Defensive and Enterprising criteria are designed to check far back enough to compensate for any recent fraudulent accounting. The NCAV criteria are designed to leave the largest margin of safety possible when buying the stock.

    Would you care to share some details about which stocks you had such an experience with and what methods you used to evaluate them?
    Sep 4 11:22 AM | Likes Like |Link to Comment
  • AT&T Dividend Stock Analysis [View article]
    To be checked against the Graham Number, Benjamin Graham required that a stock have uninterrupted earnings for the previous 10 years, uninterrupted dividends for the previous 20 years, and meet 4 other Defensive criteria.

    Given below are the individual ratings for each of Graham's defensive criteria for AT&T Inc (T).
    (A rating above 100% indicates that the stock clears that criteria).

    Sales: 25,486.00%
    Assets / Liabilities: 35.72%
    Assets / Debt: 0.00%
    Earnings Stability: 40.00%
    Dividend Record: 100.00%
    Earnings Growth: 81.46%
    Graham Number / Price: 0.00% (AT&T Inc has a negative Tangible Book Value and hence a Graham Number of Zero)
    Sep 4 11:14 AM | Likes Like |Link to Comment
  • 3 Stocks True Value Investors Will Love [View article]
    To be checked against the Graham Number, Benjamin Graham required that a stock have uninterrupted earnings for the previous 10 years, uninterrupted dividends for the previous 20 years, and meet 4 other Defensive criteria.

    Given below are the individual ratings for each of Graham's defensive criteria for the above three stocks (a rating above 100% indicates that the stock clears that criteria).

    Apollo Investment Corp (AINV):
    Sales: 19.72%
    Assets / Liabilities: 0.00%
    Assets / Debt: 0.00%
    Earnings Stability: 30.00%
    Dividend Record: 50.00%
    Earnings Growth: 74.40%
    Graham Number / Price: 154.26%

    Fortegra Financial Corp (FRF):
    Sales: 58.33%
    Assets / Liabilities: 0.00%
    Assets / Debt: 0.00%
    Earnings Stability: 60.00%
    Dividend Record: 0.00%
    Earnings Growth: 0.00%
    Graham Number / Price: 0.00% (Fortegra has a negative Tangible Book Value and hence a Graham Number of Zero)

    Lear Corp (LEA):
    Sales: 2,914.00%
    Assets / Liabilities: 75.75%
    Assets / Debt: 264.51%
    Earnings Stability: 30.00%
    Dividend Record: 15.00%
    Earnings Growth: 162.32%
    Graham Number / Price: 127.38%

    Serenity's screeners list all defensive ratings, as well as the results of a complete 16-step Graham analysis, for all 4700 NYSE and NASDAQ stocks.
    Aug 29 04:19 PM | 1 Like Like |Link to Comment
  • Ben Graham Did Not Give Up On Value Investing In Theory [View article]
    Excellent answers to both questions!

    One could add to the second answer that Graham's later book "The Intelligent Investor" marks a significant shift in strategy from Graham's earlier works such as "Security Analysis". Graham himself explained the change in paradigm as:

    “The thing that I have been emphasizing in my own work for the last few years has been the group approach. To try to buy groups of stocks that meet some simple criterion for being undervalued-regardless of the industry and with very little attention to the individual company................. I found the results were very good for 50 years. They certainly did twice as well as the Dow Jones. And so my enthusiasm has been transferred from the selective to the group approach."
    Aug 14 04:29 PM | 1 Like Like |Link to Comment
  • Tweaking Benjamin Graham's Stock Selection Criteria [View article]
    Hello Brinkstruck,

    The data used on Serenity's stock screeners is sourced from multiple feeds since no single repository has all the 40 fields required for a complete Graham analysis.

    Also, there is no restriction based on market capitalization on Serenity. The 4700 stocks screened span a range of market capitalization figures both above and below $100 million.

    Hope that answers both your questions.
    Thank you!
    Jul 19 10:38 PM | Likes Like |Link to Comment
  • Colgate-Palmolive Dividend Stock Analysis [View article]
    While Colgate-Palmolive Co (CL) does not have a tangible book value and thus does not fall within any of Graham's grades of stocks, it does pass 4 of Graham's 7 criteria for defensive investment.

    From http://bit.ly/11YGbx5

    A percentage rating by each of Graham's Defensive criteria.
    Sales: 3,418.00%
    Assets / Liabilities: 60.97%
    Assets / Debt: 16.65%
    Earnings Stability: 100.00%
    Dividend Record: 100.00%
    Earnings Growth: 151.69%
    Graham Number / Price: 0.00%

    Defensive Price (Graham Number): $0.00
    Enterprising Price: -$4.64
    NCAV Price: -$14.21
    Graham Grade: Ungraded
    Current Price: $58.36
    Jul 18 12:32 AM | Likes Like |Link to Comment
  • 7 Stocks Showing Deep Value On A Benjamin Graham NCAV Screen [View article]
    For a stock to qualify as a "Bargain Issue, or Net-Current-Asset Stock", Benjamin Graham required that a stock clear both the below criteria:

    1. "price less than the applicable net current assets alone - after deducting all prior claims, and counting as zero the fixed and other assets."

    2. "eliminated those which had reported net losses in the last 12-month period."
    Jul 18 12:27 AM | Likes Like |Link to Comment
COMMENTS STATS
294 Comments
109 Likes