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Screening Strategies

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67 strategies sorted by
Richard Driehaus Screen

Richard Driehaus Momentum is a momentum investing strategy inspired by an approach used by US investor Richard Driehaus. It combines a focus on price and earnings momentum in small and mid-cap companies with strong, sustained earnings growth. Importantly, Driehaus wanted to find companies that had produced significant earnings surprises over the previous year by beating analyst forecasts. Driehaus said: "I would much rather invest in a stock that's increasing in price and take the risk that it may begin to decline than invest in a stock that's already in a decline and try to guess when it will turn around." Driehaus's fund management firm Driehaus Capital Management was reported to have delivered compound annual returns of 30% during the 12 years after it was started in 1980. Driehaus was named in Barron's "All-Century" team of the 25 most influential and powerful mutual fund managers in 2000. more »

Momentum Investing
6 Month Return: -15.7%
Martin Zweig Growth Screen

Martin Zweig Growth is a growth at a reasonable price investing strategy based on an approach explained by US investor Martin Zweig in his book, Winning on Wall Street. It combines a focus on growth characteristics, value attraction and market timing. It uses various measures of earnings and sales growth and uses the price-to-earnings ratio as a valuation tool. Zweig's strategy also looks for relatively strong price action. Zweig wrote: "I've found that investors who rely on crystal balls frequently wind up with crushed glass. I'm satisfied if I can predict a market trend, get in tune with it and stay with that trend for as long as it lasts." Zweig was a reputed US money manager back during 1990s as well as an investment newsletter writer. During the 15 years that it was monitored (1980 - 1995), his newsletter returned an average of 15.9% per year. more »

Growth Investing
6 Month Return: -16.2%
James O'Shaugnessy's Cornerstone Value

James O'Shaughnessy Cornerstone Value is a value investing strategy presented by US fund manager James O'Shaughnessy in his 1996 book, What Works on Wall Street. His extensive backtesting found that value investing works particularly well with large capitalisation stocks with above average sales and cashflow, high levels of share liquidity, which were then sorted for the highest dividend yield. O'Shaughnessy said: "Generally speaking, when things are going against you, as they inevitably will, you have to stick to the underlying strategy? Only by doing so will you be around for when it comes rebounding back." He found that this value strategy produced an annual compound return of 15% between 1954 and 1996, compared to 8.3% for the S&P 500 index. O'Shaughnessy has continued to conduct detailed analysis of Standard & Poor's Compustat database to identify the most effective investing strategies. more »

Value Investing
6 Month Return: -16.2%
Beneish M-Score Screen

The Beneish M-Score is a checklist for identifying stocks that might be manipulating their earning figures. It was created by US finance Professor Messod Daniel Beneish and presented in a paper called The Predictable Cost of Earnings Manipulation. The M-Score is a red flag indicator that is often used as part of a short selling strategy. It calculates and distils eight different accounting variables into a single score. Generally, a score greater than -1.78 (i.e. a less negative or positive number) indicates an increased likelihood of a firm being an earnings manipulator. Beneish wrote: "We show that firms with a high probability of overstated earnings have lower future earnings, less persistent income-increasing accruals, and lower future returns." The M-score strategy apparently generated a hedged return of nearly 14% per year, mostly from the short positions. more »

Short Selling
6 Month Return: -16.2%
Trading below Cash Screen

James Altucher Trading Below Cash is a bargain investing strategy loosely based on an approach described by US investor and writer James Altucher in his book, Trade Like Warren Buffett. This is a deep value strategy that Altucher found was highly effective in periods of market distress. He acknowledged that stocks that are priced at less than the value of their cash present a challenge to investors. It is difficult to get an accurate view of how much cash is actually in a business, plus they may have broken business models or dis-incentivised management. The strategy looks for stocks with a market cap below cash, low debt, sufficient cash to cover the annual burn-rate and some stability in revenues and earnings. Altucher wrote: "There is always the danger that management doesn't care about the shareholders but instead enjoys sitting on the assets of the company and using it for their personal benefit. Diversification is the tool that we can use to reduce the risk of corrupt, or at best, uncaring, management.? more »

Bargain Stocks
6 Month Return: -16.6%
Buffettology-esque Sustainable Growth Screen

Warren Buffett Sustainable Growth is a quality investing strategy inspired by an interpretation of Warren Buffett's investment approach by Mary Buffett and David Clark in their book, The New Buffettology. It is a strategy that combines Buffett's focus on value and business quality. To work out whether the stock is reasonably valued, the strategy forecasts sustainable earnings growth; the higher that growth rate is, the more likely it is that the company has a durable competitive advantage. The strategy also looks for low debt and a growing earnings yield, return on equity and return on capital employed. In The New Buffettology, Mary Buffett and David Clark explain: "Consistency is everything. Warren is not after a company that occasionally has high returns on shareholders' equity, but one that consistently earns high returns." Remember, Buffett is famous for looking beyond financial measures when examining the quality of a business franchise. more »

Quality Investing
6 Month Return: -17.5%
Buffettology-esque Historical Growth Screen

Warren Buffett Historical Growth is a quality investing strategy inspired by an interpretation of Warren Buffett's investment approach by Mary Buffett and David Clark in their book, The New Buffettology. It is a strategy that combines Buffett's focus on value and business quality. To work out whether the stock is reasonably valued, the strategy uses historical earnings growth; the higher that growth rate is, the more likely it is that the company has a durable competitive advantage. The strategy also looks for low debt and a high earnings yield, return on equity and return on capital employed. In The New Buffettology, Mary Buffett and David Clark explain: "Historical per share earnings that are both strong and show an upward trend indicate a durable competitive advantage." Remember, Buffett is famous for looking beyond financial measures when examining the quality of a business franchise. more »

Quality Investing
6 Month Return: -18.2%
PYAD Screen

PYAD is a value and dividend income strategy devised by UK investor and writer, Stephen Bland. It focuses on finding value stocks with relatively high yields and no debt. PYAD is the acronym for the strategy's four filters, which include the Price to Earnings ratio, Yield, Assets (Price to Book Value) and Debt. Specifically, the strategy looks for companies with a Price to Earnings ratio of two-thirds that of the market and a Yield that is 50% above the market average. Stephen Bland says: "My principal aim in this was firstly to minimise the downside before I considered any trading upside to a share. I knew it wouldn't work in every case, there was bound to be the odd failure, but I reckoned that overall it would perform well. I was right and it did, producing handsome returns over the years." The PYAD strategy became well followed by Motley Fool readers. more »

Income Investing
6 Month Return: -18.2%
John Templeton Bargain Screen

John Templeton Value is a value investing strategy based on the rules used by US investor Sir John Templeton. It combines value and growth factors to identify stocks trading at cheap prices but with a positive long-term outlook. The value components include the price-to-book and price-to-earnings ratios, while the growth rules focus on strong earnings and margins, and low debt. Sir John wrote: "Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell." His Templeton Growth Fund delivered a 13.8% annualised return from 1954 to 2004, versus 11.1% by the S&P 500 over the same period. Sir John also put a great deal of importance on qualitative factors, such as quality products, cost controls, and the intelligent use of earnings by management. more »

Value Investing
6 Month Return: -18.2%
Piotroski F-Score Price to Book Value Screen

The Piotroski F-Score P/B is the classic value strategy by famous finance academic Joseph Piotroski. Originally published in a 2000 research paper titled "Value Investing: The use of historical financial statement information to separate winners from losers", the strategy hunts for the highest quality shares amongst a deep value basket. In this version of the screen, the cheapest 20% of the market by their Price to Book ratio are first selected, and filtered further to find those with the most improving fundamental health trends using the Piotroski F-Score. Piotroski developed the F-Score system after observing that: "In that mix of bargain companies, you have some that are just stellar. Their performance turns around. People become optimistic about the stock, and it really takes off. However half of the firms languish; continue to perform poorly and eventually delist or enter bankruptcy." Piotroski's back-tests over 20 years showed that his formula could improve the returns from typical value investing strategies by at least 7.5% annually and is especially effective amongst small caps. Investors should beware the low liquidity shares in this screen can be expensive to trade. more »

Value Investing
6 Month Return: -18.3%
The Screen of Screens

The Screen of Screens is a blended investment approach devised by Stockopedia. It picks stocks that are appearing most frequently across all the 'Guru Screens' tracked by Stockopedia - be they quality, value, momentum, growth or income (excluding short-selling strategies). A stock must be appearing on at least four strategies before it can qualify for the Screen of Screens. Ed Page Croft, CEO of Stockopedia, says: ?One benefit of a blended approach such as the Screen of Screens is that it builds a portfolio exposed to many driving factors of stock returns at once.? By definition, this strategy tends to highlight a list of relatively defensive stocks because they exhibit good fundamentals across a wide range of investing disciplines. The strategy was highlighted in an Financial Times feature by David Stevenson titled: "Stock screens to net the ones that get away". In it he said: "You need to use a website or system that can run the screens for you, and then identify the stocks that come up most often in each of them, which is exactly what Stockopedia has done." more »

Quality Investing
6 Month Return: -18.8%
Benjamin Graham NCAV Bargain Screen

Benjamin Graham NCAV Bargain is a deep value 'bargain' investing strategy based on rules suggested by legendary investor, Benjamin Graham, who wrote The Intelligent Investor. This is a simple value approach that looks for companies with a market capitalisation that is less than their net current asset value. NCAV is the calculation of current assets minus current liabilities. Ben Graham wrote: "You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right." In a study by Henry Oppenhemier in the Financial Analysts Journal, the mean return from discounted net current asset stocks over a 13-year period was 29.4% per year versus 11.5% per year for the NYSE-AMEX Index. Ben Graham advocated buying stocks that, if they were to collapse tomorrow, should still produce a positive return because of the underlying asset backing. To reduce exposure to individual failures, he also looked for a margin of safety of about 33% and suggested diversifying between at least 30 stocks. more »

Bargain Stocks
6 Month Return: -19.2%
Benjamin Graham Defensive Investor Screen

Benjamin Graham Defensive Investor is a demanding, deep value 'bargain' investing strategy based on rules suggested by legendary investor, Benjamin Graham, who wrote The Intelligent Investor. The strategy focuses on value stocks with good quality financial characteristics. It uses price-to-earnings as a valuation measure and looks for larger companies with a consistent track record of earnings and dividend growth, manageable debt and a high current ratio. Ben Graham wrote: "An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative." Defensive Investor is a stricter approach than Ben Graham's enterprising strategy, which look for unpopular companies, special situations and 'bargain' issues. more »

Bargain Stocks
6 Month Return: -19.8%
Earnings Upgrade Momentum Screen

Earnings Forecast Upgrades is a momentum strategy set out by US academics Phillip McKnight and Steven Todd in research that examined how analyst forecasts affect share prices. It focuses on finding momentum stocks by highlighting those that are receiving the highest levels of upgraded earnings forecasts from analysts. It looks at both the number of analysts that have raised their forecasts on a share over the past month, and the overall percentage earnings-per-share increase among the consensus of analysts. McKnight and Todd claimed: "Stocks with the greatest number of upwards revisions in earnings, net of downward revisions, earn significantly higher returns than otherwise similar stocks." The researchers examined a portfolio of European shares and found that the 20% with the highest net upward revisions outperformed the lowest 20% by over 16% a year. Earnings upgrades are one way of finding stocks with 'earnings momentum'; those that have received upward earnings revisions are likely to do so again in the future. more »

Momentum Investing
6 Month Return: -20.2%
Benjamin Graham Net Nets Screen

Benjamin Graham Net Nets Bargain is a demanding deep value 'bargain' investing strategy based on rules suggested by legendary investor, Benjamin Graham, who wrote The Intelligent Investor. This value approach looks for stocks that are trading at such a cheap price that you could buy the whole company and sell off all the assets at a profit with near minimal risk. It does that by finding shares with a market capitalisation of less than net net working capital. The calculation makes allowances for the fact that in a fire sale of assets, only a proportion of owed cash and inventory value would be recovered. Ben Graham explained: "No proprietor or majority holder would think of selling what he owned at so ridiculously low a figure? In various ways practically all these bargain issues turned out to be profitable and the average annual result proved much more remunerative than most other investments." Remember, risky and potentially troubled companies will be found using the Net Net rules. Ben Graham suggested diversifying between at least 30 stocks. more »

Bargain Stocks
6 Month Return: -20.7%
Negative Enterprise Value Screen

Negative Enterprise Value is a deep value bargain strategy inspired by the writings of investment writer, Jae Jun. It looks for companies that are priced so cheaply by the market that their cash balance is worth more than their enterprise value (the sum of the company's market cap and total long term debts). On paper, these stocks present an arbitrage opportunity: you could buy all of the debt and equity using the company's cash to cover the cost and simply pocket the difference. Jae Jun says: "If done correctly, it looks like this strategy is hugely profitable, but it does come with a lot of volatility." Jae Jun's back-testing for the US market exhibited significant outperformance over a 10 year period. A word of warning: company cash balances change all the time, so it's essential to know precisely how much cash a company has got. Likewise, make sure all debts are taken into account when it comes to calculating enterprise value. more »

Bargain Stocks
6 Month Return: -21.0%
Benjamin Graham Enterprising Investor Screen

Benjamin Graham Enterprising Investor is a deep value investing strategy based on rules suggested by legendary investor, Benjamin Graham, who wrote The Intelligent Investor. The strategy focuses on value stocks and the ability to buy them with a significant margin of safety. It uses valuation ratios including price-to-earnings and price-to-book but also looks for a history of earnings growth and dividend payouts. Ben Graham once said: "The determining trait of the enterprising investor is his willingness to devote time and care to the selection of securities that are both sound and more attractive than the average." Enterprising Investor is a less strict approach than Ben Graham's defensive strategies, which often focus on large, well financed and profitable companies. Instead, it looks for unpopular companies, special situations and 'bargain' issues. more »

Value Investing
6 Month Return: -21.5%
Quality Income Screen

Quality Income is a dividend strategy focused on firms with strong fundamentals and high yields, based on research by Societe Generale. It looks for quality income stocks using checklists for identifying strong financial health, low bankruptcy risk and high, but not excessive, yields. Specifically, firms must be capitalised at more than £800 million, have a Piotroski F-Score of more than 7 out of 9 and a strong Altman Z-Score. Yields are capped at 15% to avoid potential dividend traps.The SocGen team explains: "As a real asset class, we think Quality Income is an attractive alternative to anyone buying credit thinking that’s the only way to generate a high yield." SocGen found that quality income stocks produced standout total returns that averaged 11.6% per year since between 1990 and 2012, more than doubling the return of the global equity markets but with significantly reduced volatility. more »

Income Investing
6 Month Return: -22.1%
John Neff Value Screen

John Neff Value is a value investing strategy based on the rules of successful US fund manager John Neff. It combines demanding value criteria with elements of growth, quality and dividend income. Although he didn't like the term, Neff was a contrarian investor buying good companies with moderate growth and high dividends while out of favour, and selling them once they rose to fair value. One of the tools used by Neff is the Total Return Ratio, which is calculated using the price-to-earnings growth factor (PEG), but adjusted for dividend yield - PEGY. John Neff wrote: "If you buy stocks when they are out of favor and unloved, and sell them into strength when other investors recognize their merits, you'll often go home with handsome gains." During his tenure as manager of Vanguard's Windsor Fund between 1964 and 1995, Neff's average annual total return was 13.7%. more »

Value Investing
6 Month Return: -23.4%
Earnings Downgrade Momentum Screen

Earnings Forecast Downgrades is a short selling and red flag strategy identified in a research paper by academics Philipp McKnight and Steven Todd, called Analyst Forecasts and the Cross Section of European Stock Returns. It looks for stocks experiencing earnings forecast downgrades by analysts as a potential trigger of negative momentum. They found that the positive returns from an earnings upgrade portfolio were large and persistent, whereas the sell portfolio generated a near zero return because bad news was quickly 'priced-in'. While the strategy on its own may be difficult to profit from, it still highlights stocks that should perhaps be avoided, or warrant careful additional research. McKnight and Todd wrote: "We find differences in the return continuation patterns of stocks with upward versus downward revisions, namely, bad news travels quickly, but good news travels slowly." more »

Short Selling
6 Month Return: -23.7%
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