Transcript C G V I - Lainie

Rather than take notes all the information on this method is
found on www.sharesguru.com/forum/index.php
Free to register and then information can be sighted by a
click on the Reference Section, then find & click on New
Investor Guide. It is a great Shares information source.
To Download copy of this presentation look for CGVI on
http://www.lainie.com.au/sharesguru/index.html
* Email this address to a friend to help their Investing *
cgvi040705
DISCLAIMER
1. NOT Financial Advice & Not A Financial Adviser
2. Only an exercise in F/A Type Share Price Analysis
3. I Accept No Responsibility for your use of Concept
4. Only a training guide to help understand Basic Share
Data and some ways you are able to use that data.
5. You should always seek the Applicable Professional
Advice suitable to your situation Plans & Needs.
6. Presentation is mainly for The New Investor in shares.
“CGVI“
A “COMPARATIVE GROWTH &
VALUE INDICATOR”
FOR SELECTING SHARES
“If you can’t calculate a “CGVI” for
a share then you are Speculating”
A Jodi Robertson Scientific Business Slide Presentation
A Method of Selecting Shares for
Pension Endowment & Family Trust
• Method is for The New Investor Based On
• FORBES Business Magazine June 1988
• Method Gives a single Comparison Value
• Allows calculation of a price at 3 Levels
Is There A Single Value Indicator
To Give Guidance
• Scanning 1500 shares is a large Task
• A Comparison Filter Value is required
• Is “ CGVI ” that numeric Filter indicator
• 14 Years Using the Method says “ YES !“
By Presentation End You Will
Understand how to
•
•
•
•
•
•
•
Calculate a Comparison Value for Shares
Understand How and When to use CGVI
Compare two shares CGVI Values
Find Shares worth further Consideration
Resist buying shares where Price is too high
Avoid Shares that may not Grow in Value
Release Shares that may not Grow in Value
Now Have you ever. . . . . .
•
•
•
•
•
•
•
Consulted an Expert & USING their advice:
Bought shares that went down
Bought shares that went nowhere
Bought shares that went bust
Bought shares that tripled in price
Bought shares that went up five times
Wondered if YOU could know more & do better ?
Adding 3 Important Share
Indicators gives a “CGVI”
• The Earnings Yield = EPSc / $ Share Price
• ( Above is Inverse of the PE the Price Earnings Ratio )
• The Dividend Yield = DPSc / $ Share Price
• The Re-Invest Rate = (EPSc – DPSc) / $ NTA
• CGVI : Remember “Bigger usually Better”
•
THE “CGVI” FORMULA
EPSc + DPSc
EPSc - DPSc
CGVI % = ------------------ + -----------------$ SHARE PRICE
$ NTA Backing
EPSc = Earnings Per Share in cents
DPSc = Dividend Per Share in Cents
$ NTA = Net Tangible Assets Backing Per Share
$ Share Price. All data in Daily Financial review.
Warning: If first part of calc is less than 9.3 or second
part less than 7 then this share’s calcs may be suspect
CGVI TYPE Filter was for Small
to Medium USA Enterprises &
•
•
•
•
•
•
•
•
Four Years Min. Data History available
Profitability increase of 10% p.a. 4 years
So Don’t bother to analyse a share if:$NTA figure is just too low or
DPSc to EPSc ratio is just too low
As CGVI Levels & Prices may be misleading
Exclude abnormal one offs in DPSc & EPSc
It has been Excellent for “All ” ASX shares
Using NAB National Bank as Example
DATA: NAB $28.88. DPSc 166 NTA$ 10.34. EPSc 270
1. Add EPSc to DPSc & divide result by $ Share price.
Step 1 270 + 166 = 436 divide by $28.88 = 15.09
2. From EPSc take DPSc and divide by $NTA
Step 2 270 - 166 = 104 divide by $10.34 =10.05
3. Add these two numbers to get a share’s CGVI.
Step 3 CGVI = 15.09 + 10.05 = 25.14
CGVI of 25.1 equates to Optimum Buy Price of $ 31.30
Accumulate to Price of $ 43.90. BUT Check The Trend.
Quick & Easy Data Source
The Daily Financial Review
•
•
•
•
•
•
We look at the Data Tables columns
Find Entry for SUNCORP 27th Aug 2004
In the Columns:Last Sale DPSc NTA EPSc
$14.80
70
$5.45 123
No need to buy Fin. Review daily but at the
two 6 monthly reports it is worthwhile.
Result of This Calculation
Suncorp is a worthy BUY Study
•
•
•
•
•
•
•
•
** PROGRAM FOR SCIENTIFIC ANALYSIS For (MERGER/ACQUISITION/TAKEOV
* SCREEN 1.RECNO. 817 * COMPANY ** SUNCORP FYR **
** Selected Record Data held in PRVCALCF File
* Previous data record No 817 Company: SUNCORP FYR Date: 08-27-2004
* Previous buy price of share
$ 14.80 1 Times Optimal Buy level
* Dividend cents/share (12mths rolling) 70.00* D:E Pay 57 % ff nCGV= 26.6
* Net tangible asset backing per share $ 4.75
* Earnings cents/share (12mths rolling) 123.00 Exclude Abnormal
•
* Comparative Growth & Value Rating is= 24.20 YLD= 4.7%pa. Ef ff= 6.8%pa
•
* PROG: CV100205 24 LOOKS FOR A SHARE WITH A CGVI GREATER THAN 24 * & *Y
•
* Ist STAGE FILTER SELECTS SUNCORP FYR CGVI= 24.20% A BUY STUDY *
•
•
* CALC Opt= 15.0 4.7y. Acu= 21.8 3.2y. Hld= 33.0 2.1y.
Probability & Kelly Optimization &
Stop Loss
•
•
•
•
•
•
•
* COMPANY: SUNCORP FYR * CGVI = 24.19843
* THEORETICAL OPT BUY TO $15.03 Accum to $ 21.83 AMf!. Hold to $ 33.03 PPMg=123 %*
*PRICE $14.80 $15.15 $15.50 $15.85 $16.20 $16.55 $16.90 $17.25 $17.60
*YIELD* 4.73% 4.62% 4.52% 4.42% 4.32% 4.23% 4.14% 4.06% 3.98%
*CGVI% 24.20 23.90 23.61 23.33 23.07 22.82 22.58 22.35 22.12
*STUDY WAIT? ACCUM ACCUM ACCUM ACCUM ACCUM ACCUM ACCUM ACCUM *LEVEL*
* UDR = 0.70. W/L RATIO: 23.3% OF PREFERRED ?. LAST PRICE MOVE: DOWN?
•
•
•
•
•
* Subjective Probability look for count of 10 next two lines.
*PE 12.0 AAR 13.8% Y Pgm 0.87 Y Nfm 1.5 Y EYL 8.3% Pge 1.45 N Nfe 1.1 Y YES= 3
*PCI 35 Y UDR 1 Y CCV 24 Y MOS% 2 Acc% 47 Y Hld%123 Y V12 3 Y YES=!! 6
ENTER PRICE TREND FOR 3 & 12 MNTH Eg DD UD
U = UP F = FLAT D = DOWN ?
•
•
•
* S/PROB MODIFIED CV= 21.78 OK AS STILL >20
* WARNING: PRICE DOWN WARNING Check Price Trend
* Sectional Portfolio Pool = $70k One seventh = $10k. share: SUNCORP FYR
•
* Count= 9 PROB.= 90 %. KELLY%= 80 %. Inv= $ 8000 ORDER: 541 Shares *
* STOP LOSS IF Trend Down:= $ 12.73 TO Prof Maximise: $ 13.70 NO IFS / BUTS *
New single Screen display of CVGI
Calculations
When Should I Use CGVI.
Historical Review may Surprise
• Shares / Personal Investment Magazine
• Brokers Recommendation Sheets
• Twice Yearly at Six Monthly Reporting Time
• Write CGVI on these media for History / Review
Two Uses for CGVI
•
•
•
•
•
•
•
1. Compare two shares in similar Sector
TOL [ 15.03 %] & PRK [ 16.97 % ]
SUN [ 18.04 %] & SGB [ 14.84 % ]
2. Compare two shares Different Industries
NAB [ 24.41 %] & BSL [ 21.73 % ]
BKW [ 33.59 %] & SOL [ 25.48 % ]
( Data is from Financial Review 5th June 2004 )
Interpretation of CGVI Levels
CGVI Level
STUDY Action
• CGVI >30 A Special Buy
• Verify & Special Study
• > 24 TO 30 Optimal Buy
• Study further re Buy
•
20 to 24 Accumulate To
• Accumulate if we hold
•
17 to < 20 Hold To
• Keep Holding & look
•
12 TO < 17 stay out
• Price probably too high
Conversion of a CGVI Level to a
NOTIONAL PRICE
• Having found a CGVI for a share you can
equate that level to a Price
• Forbes says “Market Average” is about 17
• We will Fix this as a “Hold To” point
• Forbes shows “Optimum Buy” as level 25
• We will Fix this as our best BUY point
• Lets Fix 20 as an “Accumulate To” point
CGVI 17 is Equilibrium Level
•
•
•
•
•
•
•
Price tends to move to an Equilibrium Level
Dps NTA Eps data changes six monthly
Between reports Price is the only change &
For a Share to MOVE towards a CGVI of 17
If it’s CGVI > 17 It’s Price tends to rise
& If it’s CGVI < 17 It’s price tends to fall
New data can change CGVI dramatically
CONVERT CGVI% to $ PRICE
• These are a little trickier see the FORUM explanation
• OPB = ( EPSc +DPSc ) /(ABS ( 25 -(( EPSc - DPSc) / NTA$)) )
• ACC = ( EPSc +DPSc ) /(ABS ( 20 -(( EPSc - DPSc) / NTA$)) )
• HLD = ( EPSc +DPSc ) /(ABS ( 17 -(( EPSc - DPSc) / NTA$ )))
• Low NTA or Poor Payout ratio can give aberrational
or even nonsensical pricing results at all levels.
Warning on the Use of CGVI in
Relation to Prices
•
•
•
•
When we calculate price levels of “Optimum Buy”
“Accumulate To” or “Hold To” we are not
SAYING these Prices have to be met.
What we find is that for a share to move to a new
CGVI & Level it’s Price will have to change
while the current 6 month EPSc DPSc & NTA$
data is constant; of course Price can change daily
• The changed CGVI level only gives a guide &
• Not a guarantee of Value or what may happen!.
Other Uses For CGVI +
•
•
•
•
•
•
•
So Without Further Data Input you can set:
An “Optimum Buy” Price level
An “Accumulate To” & “Hold To” Price Level
A Stop Loss or Profit Max. price level for a share
A “Subjective Probability” for Investment Success
A “Kelly Portfolio Optimization ” of $ To Invest
For the latter two read “The Essential Buffett”
Independent Back-Testing Study
using METASTOCK shows
• From our Experience That In a majority of studies
• Hi CGVI + shares Outperform Low CGVI shares
• In Long Term Holding & In Short Term Trading
• And L/T Holding Outperforms S/T Trading
• Hi CGVI + Shares are of real interest to the Investor
The Great Portfolio Builders
High CGVI + Shares Tend To
• Feature in Takeovers More Often
• Issue Splits/Bonus Par or Premium Shares
• Have Price moves Generally Upwards
• Prompt Profit Maximize rather than Stop Loss
• ( But you should always calculate these & Be Ready )
HAVING A HIGH CGVI IS
JUST NOT ENOUGH
The Share Price Trend is Still
A Most Important Indicator
• CGVI is not enough
• Further Study required
• Need to look at Chart
• Look for clear TREND
• IS Trend Up / Down
• Never Buy on DOWN
• Is Trend sideways
• Wait on TREND Change
Best Source of Information is The Co’s. Annual Report
Even If CGVI is HIGH must Check PRICE TREND
National Australia Bank NAB
NEVER BUY WHILE PRICE TRENDS DOWN
ION Ltd. Had a High CGVI but
Trend Gave a Warning
SFC Schaffer Corporation Ltd A CGVI Find
This is Type of Share You may find very early
Paid $1.20 dividend pa for years, 2004 & 2005.
PROFIT MAXIMISATION ~ OUT AT THE TOP
As High as $15.35 & CGVI= 21.07
FELL to under $5. You Need to
Have STOP LOSS Limit Ready
dependant on your average cost.
At $3.75 & CGVI = 50 (was worth a Try)
Timing Is Important. Remember: Blue over Red ~
Blue over Red ~ Red over Blue & Green
Does CGVI really work for the NOVICE or Investor?
• One Analysts experience in researching High CGVI Shares &
price progress from first finding. Last column is for 08/04
•ALS . . $ 3.02 . . $ 4.50 . . 49 % . . . .$ 5.39 . . . 78 % . $8.52
CEY . . $ 1.30 . . $ 2.30 . . 77 % . . . $ 2.64 . . . 103 % . $3.01
COF . . $ 1.90 . . $ 3.85 . . 103 % . . $ 4.41 . . . 132 % . $4.60
FUN . . $ 0.60 . . $ 1.36 . . 127 % . . . $ 1.69 . . . 181 % . $2.15
FWD. . $ 1.55 . . $ 3.51 . . 126 % . . . $ 4.60 . . . 196 % . $7.60
NBL . . $ 0.72 . . $ 1.31 . . 82 % . . . . $ 1.68 . . . 133 % . $1.28
SDI . . $ 1.00 . . $ 5.30 . . 430 %. . . . $ 6.95 . . . 595 % .$9.45
SFC . . $ 4.25 . . $13.95 . . 228 % . . $12.55 . . . 195 % .$13.69
SHV . . $ 2.00 . . $ 4.12 . . 106 % . . . $ 5.38 . . . 169 % . $6.60
14 Years Experience Shows Value
of So Simple a Concept
• You may find some NEW Shooting Stars
COF SHV SFC SGN CEY SUN NAB GNS FWD
( More recently WES SMS BSL BKL SOL BKW )
• You may be saved from Non Optimal buying
( BIL MAY LLC AMP LEI ) Until Data Changes
CGVI Maybe even greater help in preserving your portfolio
• So Simple. Just 4 bits of Data & a little effort
Happy Investing But Don’t
Forget To Smell the ROSES
THE END
Example of a ”CGVI Plus”
calculation and it’s usage on a
Computer may follow.
One word of caution is that anything
displayed is not a recommendation to
BUY nor Sell, It is a demonstration of
what we can do with financial data in
better understanding Share Investment.