(GuruFocus, May 1, 2009) Based on the research that GuruFocus completed in 2008, we developed a stock screener called "Buffett-Munger Screener" to identify companies in high quality business but at undervalued prices. Specifically, we used the following criteria:
At the beginning of 2009, we structured a model portfolio consisted of 25 top stock based on this criteria. We list the 25 stocks and made it available to the Premium Members. The list can be found here. Four months have passed, how has the strategy held up? It is time for a review.
According to the performance data, $100 dollars evenly invested in the 25 stocks in the Buffett-Munger Screener portfolio at the beginning of the year would become $104.73, an increase of 4.73% . Same amount invested in S&P500 index would become $96.67, an decrease of 3.37%. The Screener beat the index by a large margin of 8.1%.
12 of the 25 stocks increased in price during the first four months of the year, and of course that leaves the rest 13 of the stocks lost value. The difference of the gained amount was more than enough to offset the declined amount. The two of the top performers of the model portfolio are: Whole Foods Market Inc (WFMI, Financial) and World Acceptance Corp (WRLD, Financial).
Whole Foods Market Inc. (WFMI)
Whole Foods Market is the largest purveyor of natural foods in the world. They own and operate the country's largest chain of natural food supermarkets. Whole Foods Market Inc. has a market cap of $2.91 billion; its shares were traded at around $20.73 with a P/E ratio of 23 and P/S ratio of 0.3. Whole Foods Market Inc. had an annual average earning growth of 14.7% over the past 10 years. GuruFocus rated Whole Foods Marketthe business predictability rank of 5-star.
WFMI more than doubled with a119.60% gain since the beginning of the year.
World Acceptance Corporation (WRLD)
World Acceptance Corporation is engaged in the small-loan consumer finance business offering short-term small loans medium-term larger loans related credit insurance and ancillary products and services to individuals. World Acceptance Corp. has a market cap of $479.6 million; its shares were traded at around $29.68 with a P/E ratio of 8.8 and P/S ratio of 1.4. World Acceptance Corp. had an annual average earning growth of 20.3% over the past 10 years. GuruFocus rated World Acceptance Corp. the business predictability rank of 5-star.
WRLD has increased 50.20% since the beginning of the year
Who else are on the list
As value investors, we look for stocks that have gone down rather than gone up. So WFMI and WRLD may not necessarily be the stocks you want to invest in. On the list that was generated on January 1, 2009, there is one insurance company lost 37% year-to-date and one pharmaceutical company followed with a 32% decline. Who are these companies? Do they still show up if one runs the Buffett-Munger Screener today? To find out, register or upgrade to Premium Member. 7-day free trial is available.
1.Companies that have high Predictability Rank, that is, companies that can consistently grow its revenue and earnings.
2. Companies that have competitive advantages. It can maintain or even expand its profit margin while growing its business
3. Companies that incur little debt while growing business
4. Companies that are fair valued or under-valued. We use PEPG as indicator. PEPG is the P/E ratio divided by the average growth rate of EBITDA over the past 5 years.
At the beginning of 2009, we structured a model portfolio consisted of 25 top stock based on this criteria. We list the 25 stocks and made it available to the Premium Members. The list can be found here. Four months have passed, how has the strategy held up? It is time for a review.
According to the performance data, $100 dollars evenly invested in the 25 stocks in the Buffett-Munger Screener portfolio at the beginning of the year would become $104.73, an increase of 4.73% . Same amount invested in S&P500 index would become $96.67, an decrease of 3.37%. The Screener beat the index by a large margin of 8.1%.
| Performance | December 31, 2008 (Inception) | Last (April 30, 2009) | Last Change (April 30, 2009) | % Change Since Inception | % Change Since Last Rebalance | |
|---|---|---|---|---|---|---|
| Portfolio | 100 | 104.73 | +0.48 | +0.46% | +4.73% | +4.73% |
| S&P500 | 903.25 | 872.81 | -0.83 | -0.1% | -3.37% | -3.37% |
12 of the 25 stocks increased in price during the first four months of the year, and of course that leaves the rest 13 of the stocks lost value. The difference of the gained amount was more than enough to offset the declined amount. The two of the top performers of the model portfolio are: Whole Foods Market Inc (WFMI, Financial) and World Acceptance Corp (WRLD, Financial).
| Symbol | Company | # of Shares | Bought on | Share Cost | Current Price | Change | Value ($) |
|---|---|---|---|---|---|---|---|
| WFMI | Whole Foods Market Inc. | 424 | 1/1/2009 | $9.44 | 20.73 | 119.60% | 8,790 |
| WRLD | World Acceptance Corp. | 202 | 1/1/2009 | $19.76 | 29.68 | 50.20% | 5,995 |
Whole Foods Market Inc. (WFMI)
Whole Foods Market is the largest purveyor of natural foods in the world. They own and operate the country's largest chain of natural food supermarkets. Whole Foods Market Inc. has a market cap of $2.91 billion; its shares were traded at around $20.73 with a P/E ratio of 23 and P/S ratio of 0.3. Whole Foods Market Inc. had an annual average earning growth of 14.7% over the past 10 years. GuruFocus rated Whole Foods Marketthe business predictability rank of 5-star.
WFMI more than doubled with a119.60% gain since the beginning of the year.
World Acceptance Corporation (WRLD)
World Acceptance Corporation is engaged in the small-loan consumer finance business offering short-term small loans medium-term larger loans related credit insurance and ancillary products and services to individuals. World Acceptance Corp. has a market cap of $479.6 million; its shares were traded at around $29.68 with a P/E ratio of 8.8 and P/S ratio of 1.4. World Acceptance Corp. had an annual average earning growth of 20.3% over the past 10 years. GuruFocus rated World Acceptance Corp. the business predictability rank of 5-star.
WRLD has increased 50.20% since the beginning of the year
Who else are on the list
As value investors, we look for stocks that have gone down rather than gone up. So WFMI and WRLD may not necessarily be the stocks you want to invest in. On the list that was generated on January 1, 2009, there is one insurance company lost 37% year-to-date and one pharmaceutical company followed with a 32% decline. Who are these companies? Do they still show up if one runs the Buffett-Munger Screener today? To find out, register or upgrade to Premium Member. 7-day free trial is available.
