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Buffettology-esque Sustainable Growth Screen 176 Qualifying

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.

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This is an independent study based upon the methods of...
Picture of Warren Buffett

Warren Buffett

The world's most famous living investor, chairman and CEO of Berkshire Hathaway

The New Buffettology

by Mary Buffett, David Clark

The original book, "Buffettology: The Previously Unexplained Techniques That Have Made Warren Buffett the World's Most Famous Investor", was published in 1997  - a more recent edition, "The New Buffetology" was released in 2002. We are not aware of any backtesting for this screen. 

This screen uses the following criteria:

  • EPS Gwth Streak > 4
  • ROE % 5y Avg > 15
  • ROCE % 5y Avg > 12
  • FCF > 0
  • Long Term Debt < 5 * Net Profit before Extraords
  • Price 5y CAGR % > 0
  • NAV PS 5y CAGR % > 0
  • Earnings Yield % Last Yr > 3
  • Exp. Return (Sust Gwth) > 15

Results are sorted by:

  • Exp. Return (Sust Gwth) in descending order


And limited to the first 200 Results


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Performance Tracking


Returns FTSE 100
1 week -6.1% -5.6% -3.9% 2.2% -4.7% -4.5% -3.7% -2.8%
1 month -10.7% -10.1% -8.0% -8.2% -3.7% -4.4% -4.7% -3.8%
3 months -9.3% -10.6% -5.6% -15.4% -3.8% -10.4% 1.4% -8.3%
6 months -8.1% -9.8% 7.9% -29.2% -0.1% -12.2% -0.6% -3.2%
1 year -11.2% -15.2% 4.2% -21.1% -9.4% -10.3% -1.2% -6.7%
2 years 1.3% -4.3% 11.4% -22.5% -2.1% -4.3% -12.0% 0.2%
Annualised 3.3% 0.7% 13.0% -7.5% 11.6% 11.2% 4.2%
 
Risks
Max Drawdown -25.1% -22.6% -17.6% -41.1% -14.8% -20.5% -21.8%
Avg Holdings 14.4 23 24.9 11.9 4.2 24.4 5
Diversification Moderate Good Good Moderate Low Good Low