Thursday, March 28, 2013

Easter

Easter, flower, yellow


Easter is coming up and I will this time spend it with my family. I will have to see if I can manage to read the annual report from Commerzbank which I should have done last weekend but after flipping it through I found it so uninteresting that I really need to find an utterly boring moment in my life to read it through. I will try to squeeze it in during the flight.




Instead of reading the report I started working on something a bit more serious. What I have done is an excel sheet were I will keep the quarter earnings running which gives a running P/E value and I there also mix in the book value from the annual report and P/E*P/B which should be a value below 22.5 for a cheap company according to Benjamin Graham. I also include R&D for the company because of Fisher and pure and simply because it makes sense to me being myself a scientist working intensively with R&D. I do not remember who it was but someone said (might have been Fisher) that five years from now 40% of the revenue is coming from what is being developed today. I do not know if that is true but I know from my own work and experiences how important it is to do R&D. Many companies do not separate it in the balance sheet but for the companies that do I extract it and put it into my table.

I will see how I can publish that later on and how to keep it up.. especially with the watch list. Because it is pretty intensive work to go through all the quarter reports so the updates on the watch list will probably only be when I feel that I should buy one of them to then take a closer look at the company again. Future will tell how it goes.

When I started to make this list I realised how many companies have broken years and what is even worse... especially in Europe the companies love to add up the quarters so to see the real profit/loss of the quarter you have to make your own calculation. The really nasty companies then also have an excellent Q1, then Q2 & Q3 status quo and then in Q4 they publish a heavy loss which makes the year barely go round.

Either way by looking at a running quarter I hope to be able to see companies that are turning around their losses. Such as Blackberry, Nokia, Sony, Commerzbank etc. etc. Because in the end... the best moment to buy a cheap company is not really at the moment they did become cheap. The best moment is to buy them when they have started to manage to get back on their feet again and the market still has not started to value them accordingly.

Happy Easter!

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