Intelligent Investments: Weekly Summary: Good!

Friday, February 23, 2007

Weekly Summary: Good!

The portfolio creamed the S&P 500 holding to my theory that I tend to outperform only on volatile weeks for the indices. My portfolio gained 0.88% ($2,232.15) for the week while the S&P 500 lost 4.5 points (0.30%) resulting in 118 basis points of outperformance. The portfolio also thrashed the Russell 1000 but not the Russell 2000 which gained 1.04% for the week.

My best gainers were MHJ and GYI which both reported stellar earnings which boosted their stocks. The portfolio was dragged down by RAND which lost most of the gains I unrealized over the past 3 months. Most other holdings were slightly up or slightly down. The funds did well, especially the Fidelity Leveraged Company Growth which has done remarkably well over the past 3 years.

A new holding to report: Key Tronic. I came across this stock off another blog and did some digging of my own. It has everything I normally look for in a micro cap stock. Low Price to Book and Price to Sales. Enterprise value greater than market cap. Strong ROE and low institutional ownership. Current Ratio over 2. The company makes computer peripherals and other electromagnetic manufacturing services.

1 comment:

QUALITY STOCKS UNDER FOUR DOLLARS said...: The market will go where it wants to go.; January 3, 2013 at 12:22:00 PM PST

Buffett's Value Formula (?)

Warren Buffett hasn't exactly published his formula for what he calls the intrinsic value of a company, but he has dropped a number of hints. He apparently multiplies estimated future earnings by a confidence margin between zero and a hundred percent (a bird in the bush being worth 0.5 birds in the hand, and all that; bush birds are the earnings you hope for, and hand birds are the earnings you're confident will materialize). He then compares these probable earnings with something he has total confidence in, by using a U.S. treasury yield as his discount rate. In calculator form it looks like this:

This calculator doesn't use fancier math than the original one did. Its advantage is that it forces you to be explicit about your earnings expectations. It also automatically provides you with a hard-headed investment strategy: always invest in government bonds, unless you can find something else you are confident will yield more cash.

One other hint that Buffett has dropped over the years is that he can estimate value in his head in about five seconds; so whatever he does he keeps it simple, slugger.