It seems like I have been in hibernation for almost a year now. I should explain why this site has been neglected. I have been involved in a private equity acquisition in my professional life and alongside this I have taken on a new global role that has required a lot of attention. Now that it looks like normal service is returning, I should be able to resume posting my investment thoughts and analysis here on Share Knowledge.
Despite the lack of new posts I have not been idle. Following on from my previous portfolio experiments I have arrived at a point where I have begun to identify a much clearer investment strategy. I imagine PlasticTortoise RIP will be up there somewhere saying “Finally!”. You can see my current holdings here. My goal is to generate an overall return in excess of 10% per annum in absolute terms and to outperform the FTSE All Share Index. I have found Stockopedia to be a very useful resource and really like their StockRanks as a screening tool and also as a sanity check for my own research and analysis. In the main, I like to own stocks that provide a dividend return while also having growth characteristics. Overall, my strategy is approximately 60% mechanical, 30% company specific research and 10% intuition. Here are the mechanical criteria:
- Pays a dividend, preferably rising
- Rising EPS
- PER is reasonable to market/sector
- Rolling PEG between 0 and 1
- Low or zero debt
- Positive cashflow, preferably rising
- A high Piotroski-F score (6+)
- A Magic Formula “pass” (A-C grades)
- A high overall StockRank
- Individual StockRanks = Quality trumps Growth trumps Momentum trumps Value (at least one must be 90+)
Conveniently, this gives me a set of 10 criteria that I can use to initially screen stocks and ultimately, to act as a sanity check against my buy/sell/hold decisions. When writing about stocks in the future I plan to reference against my mechanical checklist, as above as well as sharing any insights from my company specific research and for what it’s worth, my intuition. It might also be worth readers noting that I am applying a form of ‘pound cost avergaing’ to my portfolio, typically buying more of all/most shares 2-3 times per year.
These days, I am more attracted to stocks that have quiet bulletin boards. I am not looking to invest in any more “bulletin board darlings” where the share price gets skewed by leveraged trading positions and therefore, become vulnerable to potential short attacks. For me, the true “Sound of Silence” should not be underestimated.