5/13/09-Since the last entry, no hypothetical portfolio assets have been held at least a year, so no new sales are appropriate at this time.
My top-ten equities for mention today are: AMPH; BRK/A (BRK/B); ESV; GHM; GIFI; MOS; MUR; NOV; PTP; and SYNL.
The focus this time is on a new Classic Value (CV) selection, Graham Corp. (GHM) (recent price $13.80). GHM's trailing price to earnings ratio is 7.81. The estimated forward P/E is 34.50. Its PEG ratio is 0.71. The asset's market-capitalization size is nano-cap: $139.73 million. Graham Corp. has a 0.50% dividend, with a dividend payout ratio of 0.03. The price to sales ratio is 1.57. GHM's price to book value is 2.41. The shareholders equity to total assets ratio is 0.69. There is positive free cash flow, with a price to cash flow of 7.70. Return on equity is 33.54%. Debt to equity is 0.00. The current ratio is 3.71. This stock has low P/E, P/CF, and D/E ratios in its favor. It meets Benjamin Graham's bargain stock safety and value criteria.
Graham Corp. will be added to our CV tracking portfolio, as well as our own nest egg, at its early market price tomorrow, 5/14/09.
5/25/09-Since the last entry, our Classic Value (CV) pick, HCC, purchased on 5/19/08, has been held over a year. It will be sold at the market price early Tuesday, 5/26/09. It will then be removed from the CV open positions portfolio, and its closed position info recorded, based on the 5/19/08 to 5/26/09 per share performance. Through the close of trading on 5/22/09, after subtracting a commission (while not counting any dividends), HCC had been down 0.33% in the past 12(+) months.
My top-ten equities for mention today are: ACET; ATI; BRK/A (BRK/B); ESV; GHM; MUR; NOV; PTP; SPAR; and SYNL.
The focus this time is on a new Classic Value (CV) selection, Aceto Corp. (ACET) (recent price $5.27). ACET's trailing price to earnings ratio is 8.45. The estimated forward P/E is 6.43. The asset's market-capitalization size is nano-cap: $130.53 million. Aceto Corp. has a 3.80% dividend, with a dividend payout ratio of 0.32. The price to sales ratio is 0.37. ACET's price to book value is 0.94. The shareholders equity to total assets ratio is 0.70. There is positive free cash flow, with a price to cash flow of 7.60. Return on equity is 11.37%. Debt to equity is 0.00. The current ratio is 4.00. This stock has low P/E, P/CF, P/S, and D/E ratios as well as a healthy dividend in its favor. It meets Benjamin Graham's bargain stock safety and value criteria.
Aceto Corp. will be added to our CV tracking portfolio, as well as our own nest egg, at its early market price tomorrow, 5/26/09.
5/27/09-No hypothetical portfolio assets have been held a year or more since the last entry, so sales are not indicated at this time.
With this message, I am beginning a new feature of the site: my top-five low price to book value stocks. To save myself time, I shall not keep a portfolio of these assets unless they also crop up in my regular top-ten Classic Value (CV) equities lists. Nor shall I go into detail about why I like them. I shall leave further selection research to the reader. In general, though, to be included the low P/Bk assets must have, as a minimum, debt to equity of .33 or below, some dividend, with a dividend payout ratio of 0.5 or below, and a price to book value of less than one.
Each time I refer to the current top-five low P/Bk assets, I shall list their stock symbols and also provide my pick among them for actual purchase.
This time, then, my top-five low price to book value equities are: AIZ; CSS; RFIL; UNAM; and VVI.
My favorite among them is Viad Corp. (VVI) (recent price $14.61). It meets Benjamin Graham's bargain stock safety and value criteria.
Viad Corp. will be added to our nest egg early tomorrow, 5/28/09.
5/28/09-No hypothetical portfolio assets have been held a year or more since the last entry, so sales are still not indicated at this time.
In last night's entry I introduced a new category of our assets, stocks purchased with low price to book value as a minimal criterion.
In thinking about what has been provided here over the past four and a half years, it first became clear that the Classic Value (CV) approach, as researched and recommended by Ben Graham, was substantially superior to a momentum driven and low price to sales, or Leapin' Lizards (LL), approach.
And by now it is clear as well that CV in general is a satisfactory way to handle a quite severe economic and equities downturn. Considering the closed positions, the most reliable portion of the hypothetical portfolio from which to draw conclusions since for them we have all the relevant info (while for the open positions the closing prices of course remain a matter of speculation), CV has on average at least remained in positive territory. Both through the end of the last quarter and the current date, the combined performance of CV assets held for a year and a day or more or until a merger, whichever first, has been over 1% a year. Including a conservatively estimated average yield, the annualized total return results in 4.5 years, which have included the worst stock market declines since the Great Depression, have been about 3% per annum. A large proportion of my wife's and my assets were invested in the CV holdings before the meltdown that began last September. They were not unaffected by the recent crisis in equities. However, overall they helped cushion the portfolio from the worst market losses. Thus the CV results were a significant part of the reason our nest egg lost less than 18% in 2008 and were up for the period as a whole since early October, 2004.
But now I am wondering if there might be a way of refining what works within CV. Also, I am, as mentioned here often in the past year or so, no longer comfortable with the CV sale date having been set at around a year and a day after purchase. Nor do I find it that useful to be dealing in only hypothetical portfolios.
Accordingly, effective with the shares bought on 5/14/09 of GHM and continued with the ACET shares bought on 5/26/09, all the assets suggested here will be ones I am investing in myself, and the prices recorded for buys and sells and for commissions will be the actual ones applicable to our nest egg, whereas heretofore I bought and sold only selectively among the recommended assets.
Further, I shall keep track, again beginning on 5/14/09, of CV assets bought in two main categories: 1. 5-Star Stocks (classic value type assets that, as a minimum, have a Motley Fool Caps Rating of 5 at the time of purchase); 2. Low P/Bk Stocks (classic value type assets that, as a minimum, have a P/Bk of less than 1). There will, of course, be a few of the assets in each category that are both MF Caps Rating 5-Star stocks and have price to book value ratios below 1, but overall there will be divergence around those two criteria.
Meanwhile, I shall not simply abandon the record of the CV positions already in our hypothetical portfolio. While no new assets shall be added to that portfolio's open positions, they shall continue to be followed and reported on, including quarterly analyses of both open and closed position results, until all open position assets have been moved (after merged or after a year and a day from purchase) into the hypothetical CV closed position portfolio.
The question may arise as to why I plan to use a low P/Bk criterion instead of low price to so-called net net current assets. The problems I have with the latter type equities are that they usually tend to have too small a candidate population from which to choose ones of relative quality; they are too volatile (going up marvelously at times but also going down precipitously at others; and it is among them difficult to find ones that meet certain safety criteria I employ, such as that they have a dividend but with a dividend payout ratio of 0.5 or below, etc.
Although I am feeling good about the two main CV categories (above) I shall be following here now, I have as yet not come up with a new set of sell criteria. I would rather hold assets generally longer than a year and a day, unless they are earlier acquired by other companies through merger; and/or their price to value changes significantly and is now (at time of sale) higher than at the time of purchase. Except for those two considerations, I think a roughly two year hold may be more appropriate. I hope to refine those guidelines in the weeks and months to come.
Another change I shall be making here is that I expect with most entries now to cite my choices of just 5 favorite stock symbols, rather than 10 as before.
5/30/09-No hypothetical portfolio assets have been held a year or more since the last entry, so sales are still not indicated at this time.
Currently my top-five low price to book value equities are: AWH; CSS; MIGP; TSC; and VVI.
My favorite new one among them is Mercer Insurance Group, Inc. (MIGP) (recent price $15.25). It meets Benjamin Graham's bargain stock safety and value criteria.
Mercer Insurance Group, Inc. will be added to our nest egg early on Monday, 6/1/09.
With this selection, our nest egg will have an equal number each (2) of the two types of Ben Graham classic value assets now being followed: Five-Star Stocks and Low Price to Book Stocks. Accordingly, from now on I anticipate alternating the purchase of stocks for these two categories, at least so long as I have enough candidates for both and have not yet determined that either significantly outperforms the other.
Disclaimer and Disclosure Statement
Neither I nor Investor's Journal will be responsible for losses by anyone who obtained ideas from this site.
This diary is intended for personal interest and general information only. You are advised to do your own research (as well as to consult highly compensated professionals) before spending money on anything.
I know of no reason anyone should take my financial musings seriously. At best I am a dedicated amateur providing a bit of investment-related insight and entertainment, at worst an amusing diversion.
My wife, Fran, and I may at times own shares of some of the assets mentioned here. But neither of us receive any benefit from reference to them, unless you count the mutual misery when we get it wrong, or the opportunity to gloat when we get it right.