Need Help, With Analysis System

**MyTh** Sun Apr 08, 2007 1:16 pm

Need Help, With Analysis System
Hi all, I find that it is fairly easy to find prospects using the MFI site, various value blogs, various screens, and by looking at the 52 week low lists. My problem centers around the due diligence side of the equation.

I would like to design a qualitative and quantitative evaluation system that can be completed for each security I wish to analysis. It would include the usual value calculations but I would like to expand on the usual value investing questions to make them more direct.

I would like for you all to review it and make basic suggestions. I want to use it to start reviewing 2 - 5 securities a week. It was designed using questions from about 6 - 8 value investing books and is refined each time I come across something interesting. These are sort of the very basic investing questions but, please add some of the things you always check / look for / calculate when valuing a company.

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Security Analysis

Moat
What is the firms competitive advantage and is it durable?
How does this firm fit into its industry and where will it be in 10 years time?

Meaning
Do I understand how the firm makes money?
Do I understand what factors drive the stock?
Do I understand what factors drive the business?

Management
Does management own the stock? Do they behave like manages or owners?

Margin of Safety
Thoughts on the financial statements, audit report, and industry analysis?
Does the price make sense, does it have a reasonable margin of safety?

Reflexivity Considerations
What influences does the stock place have on the fundamentals?
What is the prevailing Bias on the stock or industry (negative, positive, reasonable, sustainable)?

Summary, Catalyst, Decision
Executive Summary, Potential Catalyst, Time Frame, & Decision (With Exit Info)

**Mosguy** Mon Apr 09, 2007 7:03 pm

Hey Myth

That is a pretty good list. I would suggest that you make sure there is

no aggresive accounting in place as well. Margin of safety is vital but

will you use a some DCF model or some other appraisal method to find

an estimate value of the stock?

Something to look into.

Good Investing.

**MyTh** Mon Apr 09, 2007 8:10 pm

Im still working on alot of the fundamentals and have a few good spreadsheets (mostly from fatptich) which calculate value using DCF.

I have made 30% on a stock or 2 and am up quite a bit this year but, just realized the difference between the PE and Forward PE. Some of my bargains are not as good because of deteriorating fundamentals.

I plan to add some language in there which mentions figuring out how the business is valued for take over purposes (sum of parts, DCF, ect) and to try to value the business in that manor with regard to the MoS.

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I look at financial statements all day for work and have found some of the funny ways companies improve there outlook or BS (old recieveables, obsolete inventory) but, am still trying to nail down some of the more complex tricks.

Thanks for the insights and guys keep em coming.