I am a big fan of James Montier. He is a great great teacher of the value investing approach and philosophy. In his September 16th, 2008 newsletters he did something he rarely does: share one of his approaches to stock screening. The goal of the article was to explore the benefits of global value investing through the investment in “cheap stocks”. Based on Montier’s analysis, portfolio of those cheap stocks outperformed by a wide margin indexes both on country and global levels.
In order to identify some interesting investment ideas, I have decided to re-create this “Montier cheap stock” screen. Rather than using only one definition of cheapness, Montier suggests ranking stocks based on 5 metrics: P/E, P/B, P/CF, Price / Sales and Enterprise Value / EBIT. In order to eliminate a bias towards small cap stocks he also suggested a minimum market capitalization of $250M. Unfortunately I do not have access to data on global stocks so I limited my search to US-listed stocks.
All stocks with positive earnings, cash flow and operating income are ranked using the 5 metrics above. I then add the score/ranking on each metrics and selected the 30 stocks with the lowest total “score” to come to the following list of “Montier cheap stocks”:
Disclosure: I do not own any of the stocks mentioned here.
In order to identify some interesting investment ideas, I have decided to re-create this “Montier cheap stock” screen. Rather than using only one definition of cheapness, Montier suggests ranking stocks based on 5 metrics: P/E, P/B, P/CF, Price / Sales and Enterprise Value / EBIT. In order to eliminate a bias towards small cap stocks he also suggested a minimum market capitalization of $250M. Unfortunately I do not have access to data on global stocks so I limited my search to US-listed stocks.
All stocks with positive earnings, cash flow and operating income are ranked using the 5 metrics above. I then add the score/ranking on each metrics and selected the 30 stocks with the lowest total “score” to come to the following list of “Montier cheap stocks”:
| Company | Ticker | Industry | Market Cap | Share Price | z-score |
| ITT Corporation | ITT | 0218 - Misc. Capital Goods | 1,789 | 19.94 | 1.99 |
| Fiat S.p.A. | FIATY | 0412 - Auto & Truck Manufacturers | 6,607 | 5.32 | 1.42 |
| Career Education Corp. | CECO | 0969 - Schools | 531 | 7.14 | 3.32 |
| AXA | AXAHY | 0709 - Insurance (Life) | 34,661 | 14.86 | 0.32 |
| Trina Solar Limited | TSL | 1033 - Semiconductors | 596 | 7.96 | 2.55 |
| Deutsche Lufthansa AG | DLAKY | 1106 - Airline | 5,579 | 12.17 | 1.55 |
| JA Solar Holdings Co., Ltd. (A | JASO | 1033 - Semiconductors | 272 | 1.62 | 2.47 |
| CNO Financial Group, Inc. | CNO | 0709 - Insurance (Life) | 1,494 | 6.31 | 0.43 |
| Satyam Computer | SAYCY | 1036 - Software & Programming | 1,481 | 2.4 | 5.13 |
| Yingli Green Energy Hold. Co. | YGE | 1033 - Semiconductors | 710 | 4.45 | 1.51 |
| LUKOIL | LUKOY | 0606 - Oil & Gas - Integrated | 43,641 | 50.85 | 4.22 |
| Valero Energy Corporation | VLO | 0609 - Oil & Gas Operations | 11,687 | 21.15 | 3.84 |
| Tesoro Corporation | TSO | 0609 - Oil & Gas Operations | 3,022 | 21.79 | 4.18 |
| Mercer International Inc. | MERC | 0133 - Paper & Paper Products | 329 | 5.91 | 1.65 |
| Reinsurance Group of America | RGA | 0706 - Insurance (Accident & Health) | 3,661 | 51.38 | 0.69 |
| Hartford Financial Services | HIG | 0715 - Insurance (Property & Casualty) | 7,667 | 17.49 | 0.23 |
| Research In Motion Limited (US | RIMM | 1003 - Communications Equipment | 8,576 | 16.46 | 4.13 |
| KEMET Corporation | KEM | 1024 - Electronic Instruments & Controls | 351 | 7.7 | 2.87 |
| MetLife, Inc. | MET | 0709 - Insurance (Life) | 32,744 | 31.79 | 0.22 |
| Symetra Financial Corporation | SYA | 0709 - Insurance (Life) | 1,083 | 9.42 | 0.3 |
| Protective Life Corp. | PL | 0709 - Insurance (Life) | 2,018 | 22.41 | 0.24 |
| ZHONGPIN INC. | HOGS | 0515 - Food Processing | 350 | 9.44 | 3.15 |
| OMV AG | OMVKY | 0609 - Oil & Gas Operations | 10,393 | 32.77 | 1.91 |
| Community Health Systems | CYH | 0806 - Healthcare Facilities | 1,613 | 17.61 | 1.28 |
| Lincoln National Corporation | LNC | 0709 - Insurance (Life) | 5,925 | 20.04 | 0.23 |
| Cosan Limited | CZZ | 0609 - Oil & Gas Operations | 3,270 | 12.34 | 1.87 |
| M & F Worldwide Corp. | MFW | 0909 - Business Services | 482 | 24.99 | 0.95 |
| BE Semiconductor Industrs NV ( | BESIY | 1033 - Semiconductors | 271 | 6.51 | 4.23 |
| Boise Inc. | BZ | 0133 - Paper & Paper Products | 638 | 6.2 | 2.15 |
| Vishay Intertechnology | VSH | 1033 - Semiconductors | 1,434 | 9.43 | 2.81 |
Disclosure: I do not own any of the stocks mentioned here.
