Geoff Gannon om Value Traps

Geoff Gannon är inte helt okänd i bloggosfären och omnämns av en och annan då och då. Själv har jag också läst en hel del av hans alster.

Som alltid dock får man ändock vara lite kritiskt. Jag har ingen aning om hur han egentligen presterar när det kommer till investeringar. Han skriver bra om dem ja, men bara för att man kan sätta ord på saker och ting på ett bra sätt betyder inte nödvändigtvis att man har rätt i sak.

Hur som helst. Jag tycker ändå det kan vara intressant vad Gannon omnämnt vad det gäller s.k. value traps. En hel del har han ju tagit från värdeinvesteringens fader Benjamin Graham.

"Even though Graham was a value investor who bought a lot of cheap stocks - he didn’t think the big risk for investors way paying too much for a good company. He thought the big risk was buying a bad company during a stock market boom."

Mycket riktigt är det under tider då börsen är optimistisk som man löper störst risk att köpa de sämsta bolagen. Det är ju inte allt för sällan de som ser billigast ut. Mycket av det andra har ju stuckit iväg allt för mycket i pris.

Hur undviker man då de dåliga bolagen? Hur undviker man s.k. value traps?

"Let’s start with the things you can put into numbers. Ben Graham was big on using averages. He never wanted to know just what a stock’s earnings were for the last year or two. He wanted to know what the stock’s average earnings were for 5 years or 7 years.

And he wanted to see the past year’s numbers - not just the average - so he could see how those numbers fell around the average. Graham’s textbook Security Analysis talks about this topic. He compares two different stocks and shows that in one case the average earnings look a lot like each year’s earnings. In the other case he shows that the average is an average in name only. Yes, it’s the mean number. But there’s no pattern to the way numbers fall around it. They don’t all land close to the average. Instead they’re spread far apart. Some years the earnings are positive. Other years they’re negative. That’s not the kind of average Graham was looking for. He wanted a representative average. Something that gave you a real idea of a stock’s normal earnings."

Man måste med andra ord med hyfsad säkerhet kunna försöka avgöra vad som är normal intjäningsförmåga för bolaget i fråga. Medel räcker inte alltid, om det svänger för mycket. Ska man köpa något så måste man kunna göra en bedömning av "värdet". Utan det så finns inte förutsättningar till en investering. Allt är då enbart spekulation. Gannon föreslår också att man kan med fördel göra detsamma med det fria kassaflödet. På Grahams tid var det mer svåruppnåelig information. Idag redovisas det öppnare. I många fall är det bättre att utgå från det fria kassaflödet istället för att "se igenom" resultaträkningen.

"That’s why I like to use 10 year free cash flow numbers. Now, obviously, you’re not going to get many stocks where the 10-year average free cash flow divided by the current stock price is more than 10 percent. That’s not going to happen, because that would be an absurdly low price. Also, most businesses are growing, so their 3-year average free cash flow is higher than their 10-year average free cash flow. That means the free cash flow yield, when you use 10 years of data is going to be lower. Fine. But I still like to look at the last 10 years. I want 10 straight years of free cash flow. And I want the average to be high compared to the price I’m paying. I also want the yield to be as much as triple A corporate bonds.

Let me say that again: I want the 10-year average free cash flow divided by the current stock price to be more than the yield on triple A corporate bonds. Right now, triple A corporate bonds yield 5.34%. So the stock price has to be less than 20 times the stock’s 10-year average free cash flow or I’m not interested."

Han inför dock tre brasklapper angående vilka som inte passar sig för att utvärdera på detta sätt.

"Retailers have a hard time making the cut. Most growing retailers don’t throw off free cash flow every year. And those that do are slowing down and getting old. Sometimes they’re losing sales to new competitors.

It’s hard to find retailers with this approach. You can’t find financial companies with it either. Cash flow data for financial companies is not as important as cash flow data for other businesses. It doesn’t mean the same thing. If you want to know how to value a financial company, listen to the two episodes I did about banks and insurance companies.

And finally, it’s hard to value utilities on 10-year free cash flow. Utilities tend to be inconsistent free cash flow generators because of their capital spending."

Gannon nämner också i förbigåendet att när det blir svårare att hitta köpvärda aktier så är det också lättare att tumma på sina regler och släppa igenom vissa egentligen halvbra ideer som godkända. Försök att inte göra detta. Att använda en någorlunda mekanisk utvärderingsstrategi kan då hjälpa en att hålla standarden. Använd exempelvis F-score.

"You can use something called the F-Score. The F-Score was created by an accounting professor at the University of Chicago. He wanted to use a simple checklist to separate troubled companies from companies that were going to pull through."

Dock ska man komma ihåg att Piotroski själv (upphovsmannen till F-score) nämnt att om man använder F-score i ett försök att få bättre avkastning så passar F-score bäst till mindre och medium stora bolag som inte har så god täckning från analytikerkåren. Här kan det oftare ske fundamentala förbättringar i bolagen före det prisas in ordentligt. M.a.o. Grahams Mr Market är mer effektiv i större bolag.

Gannon nämner också Z-score som en mekanisk strategi för att se om bolaget har en stor statistisk risk för konkurs inom de närmsta två åren.

"The Z-score was created the opposite way from the F-score. And it’s not meant to pick good stocks. It’s just meant to warn you about a possible bankruptcy."

Undik helt enkelt bolag som inte klarar av Z-score.

Något annat tänkvärt som Gannon nämner är:

"One of my favorite ways to avoid value traps is a thought exercise. When you research any stock, promise yourself you won’t sell it for at least 5 years. Then, whenever you figure what kind of returns you can get in that stock, limit yourself to only looking at possible 5 and 10 year annual returns.

This is a great way to avoid value traps. Bad businesses can only give you good returns over 5 or 10 years if you buy them super cheap. Most bad businesses won’t give you good returns unless you manage to flip them in 1, 2, or maybe 3 years. Good businesses can work out well if you own them for the long haul. Making yourself act like selling isn’t an option for at least 5 years is a good way of keeping yourself far away from any value traps."

M.a.o. om du tänker att du ska sälja av aktierna du köper nu inom en snar framtid för att på så sätt generera vinst, så ta det som en varningsignal.

Slutligen:

"It’s hard to be honest with yourself. But you have to. Separating the business from the stock price is a good first step. Is this a good business? Or just a good stock? Sometimes bad businesses make good stocks. But they have to be cheap enough and safe enough. Be careful. Bad businesses are often dangerous stocks. Even at low prices.

Look at the stock for what it is. Don’t try to go against the crowd. Instead, try to look at the stock like there’s no crowd at all. Too many value investors think being contrary means being right.

No. The market is right most of the time. It’s not hard being right. What’s hard is being right when the market is wrong. You don’t want to be so humble that you trust the market. But you don’t want to be so proud that you automatically think the opposite.

You need an independent mind. You need to be rational. And you need to be honest with yourself.

One more thing. Don’t look for catalysts. Looking for events that will drive up a stock’s price is a dangerous game. It makes you overconfident. You think you know something other people don’t. You think you know a stock will get bought out. Or you know natural gas prices have nowhere to go but up. Investors loves catalysts, because they don’t just tell you how much money you’ll make, they tell you when you’ll make it and why you’ll make it.

Value is its own catalyst. Cheap stocks go up because they’re cheap. You don’t need another reason. Looking for one is dangerous. More investors fall into value traps looking for catalysts than doing anything else."

Tankar, kommentarer eller funderingar kring detta?