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Negative Enterprise Value Screen 10 Qualifying in UK

Some companies trade so cheaply that their cash balance is worth more than the company's enterprise value (i.e. the sum of the market cap and total long term debts).  This is known as a negative enterprise value (EV) and searching for such companies is a common bargain stock strategy. While, in theory, a negative EV may seem to be an easy arbitrage opportunity, whereby one could buy all of the debt and equity in a firm and use its cash balance to cover costs and keep the difference, there are a number of reasons to be cautious: Firstly, the enterprise value may not have captured all of the debt outstanding in the firm (e.g. the present value of lease commitments) and secondly the cash balance is from the balance sheet (rather than stated at the today's date used for the market cap). Given how quickly firms burn through cash, what you see on the balance sheet may not reflect what the firm has as of today as a cash balance so be careful! You can read more here. To learn more about this strategy please click here »

Negative Enterprise Value

by Jae Jun

Back-tested by Jae Jun on Old School Value for the US market, this strategy exhibited significant outperformance over a 10 year period, albeit with significant volaility.

 

This screen is based on a UK dataset. It uses the following criteria:

  • EV £m < 0
  • Mkt Cap £m > 15
  • Sector not in F inancials,

Results are sorted by:

  • EV £m in descending order


And limited to the first 200 Results


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Negative Enterprise Value Screen Graphical History in

Returns

Timeframe Screen Returns FTSE 100 Outperformance
1 week -2.83% -0.10% -2.7%
1 month -10.20% 0.86% -11.1%
3 months 1.35% -3.46% 4.8%
6 months 1.77% 0.54% 1.2%
1 year 12.63% 3.79% 8.8%
2 years 33.67% 16.50% 17.2%
Since inception 58.23% 22.7% 35.5%
Annualised 21.67%

Risk

Maximum Drawdown-15.09%
Average No. of Holdings11
Diversification LevelModerate

 Chart based on an equal weighted portfolio of max 25 stocks rebalanced quarterly. Qualifying shares below updated daily. Past performance not indicative of future returns.


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10 Qualifying in

Ticker Name Mkt Cap £m EV £m RS 1y Sector
Subscriber Subscriber Consumer Cyclicals  
Subscriber Subscriber Energy  
Subscriber Subscriber Energy  
Subscriber Subscriber Energy  
Subscriber Subscriber Energy  
Subscriber Subscriber Industrials  
Subscriber Subscriber Industrials  
Subscriber Subscriber Consumer Defensives  
Subscriber Subscriber Industrials  
Subscriber Subscriber Basic Materials  

Can't see the share you expect? View this screen as a checklist to find out why.

You should consider the results of any screening process, including this one, as candidates for further research, not as a buy list. Screening helps to narrow a search based on pre-defined criteria. It is not a substitute for independent research reflecting your individual criteria for investing/trading. Please note that the screening criteria used represents Stockopedia's interpretation of the author's investment approach and are not determined or endorsed by the original strategist.