The Screen Of Screens Bounces Back To Triple Figure Returns

7th Jun '17 by Ben Hobson

6 comments 9245 reads

This time two years ago, one of the most popular ‘quality’ investment strategies tracked by Stockopedia was sitting on a three year return of just over 100%. After a strong run, the Screen of Screens drifted with the market in late 2015 and early 2016, but it’s recovered well since last summer. In that time it’s bounced back to the top of the 5-year ‘quality’ leaderboard, with a return of 113% - and it is doing even better in Europe.

To make it onto the Screen of Screens, a company has to be passing the rules of at least four of Stockopedia’s 60 long-only investing models. Those guru-inspired strategies are categorised as being either bargain, value, growth, quality, momentum or income. To make it onto the SoS, the precise style isn’t important - just the number of strategies passed. So, for example, one of the leaders in the list at the moment is the housebuilder Persimmon, which passes the rules of 12 strategies in the value, growth, quality and income categories.

A signpost to solid companies

The idea behind the SoS is that companies making it onto several different strategies should be a pointer to those with good fundamentals across a range of investing criteria.

Like all the investment strategies, the Screen of Screens portfolio is refreshed every quarter. That ensures it’s always holding stocks that are closely aligned with the strategy rules. Trading fees aren’t counted against the performance returns, but neither are the gains of dividend income.

Over the past year - when markets have been pushing higher - the SoS strategy has returned 24.0% in the UK, and a really eye-catching 65.3% across Europe.

So what does a typical SoS stock look like? One observation since the launch of the StockRanks (Stockopedia’s calculation of each share’s quality, value and momentum) is that these companies do tend to score well against those investment ‘factors’.

Back in April 2015, Ed wrote that the average StockRank in the screen was 87 out of a possible 100. Right now, the median across the 54 UK qualifiers is slightly higher at 91. In Europe, the average StockRank for the 200 companies passing the screen rules is 92.

But while the average rankings are impressive, they do mask quite a wide spectrum…

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coniston

7th Jun '17

Thanks Ben, very interesting,is it possible to direct me to the uk portfolio of SOS.

Johnny2509

4th line down, in the first paragraph of the article. Just click on the blue text link and you'll be directed to the SOS.

AlanJenkins2

Any chance of making the stock characterisations searchable ?

Lovely thank you Johnny.

Micky3

From the SOS place the chosen companies in order of Value (Stockopedia Rank) and buy the ones over 95. The returns are even better.

Redrichmond

8th Jun '17

One of the Key metrics on that value screen is the P/S (look it up on stocko help you if you don't know what it is)

Basically the lower the cheaper. From reading mountains of books and gurus anything below 1.0 is cheap.

Obviously loads of other metrics then to compare. Looking at (Free Cash Flow) FCF, then FCF 1 year ago then FCF 2 years ago , ideally you should see increase in cash each year to allow them to grow and not large negative numbers .

I check the market cap over 50 million and the spread bps (not more than 300bps - that's 3% you lose when you buy , like a commission)..It doesn't work in all cases but its a great easy way to identify cheap companies who are growing cash flow (I don't do non UK companies, like Russia, Israel etc,,)

I always filter by P/S the lowest first then work from there. so like 0.078 and not like 24.2 or anything too high..

I then check the graph and that its steady as a rock over time.... Do this example on the SOS screen and look at Morgan Sindall.... MGNS Cheap at 0.22 P/S ..FCF 2 years ago = -2.40, FCF 1 year ago = 3.10 FCF = 172.9... So growing a lot... Market CAP is 558 million so that's fine too.

Using a technique by Mark minavera in one of his books... I then check the 52 week low versus the 52 week high.. Mark states that %52 week low must be over a 100 and %52 week high must be roughly between -10% and 0...MGNS again in this area.......

I spend hrs and hrs looking at this stuff and I have made a mint..alas its in my pension . Up 30% since xmas

The Screen of Screens bounces back to triple figure returns

A signpost to solid companies

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Ben Hobson

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