The following paragraph is quoted from Tweedy Browne Value Fund's 1994 Annual Report:
"...Most investments in Tweedy, Browne portfolios have one or more of these investment characteristics: low price in relation to book value, low price to earnings ratio, low price to cash fl…ow, above average dividend yield, low price to sales ratio as compared to other companies in the same industry, low corporate leverage, low share price, purchases of the company's own stock by the company's o‚fficers and directors, company share repurchases, a stock price which has declined signifi„cantly from its previous high price and/or small market capitalization..."
Tweedy Browne Screen
I have done a "Tweedy Browne Screen" based on the following criteria using closing stock prices as at Nov. 6, 2012.
- Price to Earnings less than 10
- Price to Tangible Book less than 1
- Dividend Yield greater than 2%
- Gross Debt/Equity less than 50%
- Net Debt/Equity less than 30%
- Net Insider buying in the past 6 months
The following stocks passed the test:
Meta Financial Group Inc. (CASH, Financial)
Meta Financial Group Inc., (Meta Financial) is a unitary savings and loan holding company whose primary subsidiary is MetaBank (the Bank). The Bank provides a range of financial services. The principal business of the Bank has consisted of attracting retail deposits from the general public and investing those funds primarily in one- to four-family residential mortgage loans, commercial and multi-family real estate, agricultural operations and real estate, construction, and consumer and commercial business loans primarily in the Bank’s market areas. The Company also has a wholly owned subsidiary, First Midwest Financial Capital Trust. The Bank has four market areas and the MPS division: Northwest Iowa (NWI), Brookings, Central Iowa (CI), and Sioux Empire (SE). The Company’s primary commercial banking market area includes the Iowa counties of Buena Vista, Dallas and Polk, and the South Dakota counties of Brookings, Lincoln, Minnehaha and Moody.
- Price to Earnings = 4.4
- Price to Tangible Book = 0.89
- Dividend Yield = 2.2%
- Gross Debt/Equity = 35.6%
- Net Debt/Equity = Net Cash
Jeffersonville Bancorp (JFBC, Financial)
Jeffersonville Bancorp is a bank holding company for The First National Bank of Jeffersonville (the Bank). The company through its subsidiary The First National Bank of Jeffersonville provides traditional banking related services, which constitute the company’s only business segment. Its services consists of attracting deposits from the areas served by its banking offices and using those deposits to originate a range of commercial, consumer and real estate loans. The company’s primary sources of liquidity are its deposit base; Federal Home Loan Bank (FHLB) borrowings; repayments and maturities on loans; short-term assets, such as federal funds and short-term interest bearing deposits in banks, and maturities and sales of securities available for sale. The Bank owns FNBJ Holding Corporation.
- Price to Earnings = 9.9
- Price to Tangible Book = 0.86
- Dividend Yield = 5.1%
- Gross Debt/Equity = No debt
- Net Debt/Equity = Net Cash
United Fire Group Inc. (UFCS, Financial)
United Fire Group Inc., formerly United Fire & Casualty Company, is engaged in the business of writing property and casualty insurance and life insurance and selling annuities. The company operates in two segments: property and casualty insurance, and life insurance. The company’s property and casualty insurance segment consists of commercial lines insurance, including surety bonds, personal lines insurance and assumed insurance. Its life insurance segment consists of deferred and immediate annuities, universal life insurance products and traditional life insurance products. Its life insurance segment consists solely of the operations of United Life Insurance company.
- Price to Earnings = 9.4
- Price to Tangible Book = 0.84
- Dividend Yield 2.7%
- Gross Debt/Equity = 6.1%
- Net Debt/Equity = Net Cash
Crexus Investment Corp (CXS, Financial)
CreXus Investment Corp. is a real estate investment trust (REIT). The company is a commercial real estate company that acquires, manages, and finances, directly or through its subsidiaries, commercial mortgage loans and other commercial real estate debt, commercial real property, commercial mortgage-backed securities (CMBS), other commercial real estate-related assets and Agency residential mortgage-backed securities. The company also engages in long-term sale-leaseback and build-to-suit transactions with companies in the U.S. The company is managed by Fixed Income Discount Advisory Company (FIDAC). FIDAC is a wholly owned subsidiary of Annaly Capital Management Inc. (Annaly)
- Price to Earnings = 9.4
- Price to Tangible Book = 0.94
- Dividend Yield = 10.1%
- Gross Debt/Equity = 2.1%
- Net Debt/Equity = Net Cash
In Closing
I will appreciate suggestions from readers on how to improve the Tweedy Browne screen. Also a screen is the first step in narrowing down the list of potential candidates and a precursor to in-depth research and due-diligence.
"...Most investments in Tweedy, Browne portfolios have one or more of these investment characteristics: low price in relation to book value, low price to earnings ratio, low price to cash fl…ow, above average dividend yield, low price to sales ratio as compared to other companies in the same industry, low corporate leverage, low share price, purchases of the company's own stock by the company's o‚fficers and directors, company share repurchases, a stock price which has declined signifi„cantly from its previous high price and/or small market capitalization..."
Tweedy Browne Screen
I have done a "Tweedy Browne Screen" based on the following criteria using closing stock prices as at Nov. 6, 2012.
- Price to Earnings less than 10
- Price to Tangible Book less than 1
- Dividend Yield greater than 2%
- Gross Debt/Equity less than 50%
- Net Debt/Equity less than 30%
- Net Insider buying in the past 6 months
The following stocks passed the test:
Meta Financial Group Inc. (CASH, Financial)
Meta Financial Group Inc., (Meta Financial) is a unitary savings and loan holding company whose primary subsidiary is MetaBank (the Bank). The Bank provides a range of financial services. The principal business of the Bank has consisted of attracting retail deposits from the general public and investing those funds primarily in one- to four-family residential mortgage loans, commercial and multi-family real estate, agricultural operations and real estate, construction, and consumer and commercial business loans primarily in the Bank’s market areas. The Company also has a wholly owned subsidiary, First Midwest Financial Capital Trust. The Bank has four market areas and the MPS division: Northwest Iowa (NWI), Brookings, Central Iowa (CI), and Sioux Empire (SE). The Company’s primary commercial banking market area includes the Iowa counties of Buena Vista, Dallas and Polk, and the South Dakota counties of Brookings, Lincoln, Minnehaha and Moody.
- Price to Earnings = 4.4
- Price to Tangible Book = 0.89
- Dividend Yield = 2.2%
- Gross Debt/Equity = 35.6%
- Net Debt/Equity = Net Cash
Jeffersonville Bancorp (JFBC, Financial)
Jeffersonville Bancorp is a bank holding company for The First National Bank of Jeffersonville (the Bank). The company through its subsidiary The First National Bank of Jeffersonville provides traditional banking related services, which constitute the company’s only business segment. Its services consists of attracting deposits from the areas served by its banking offices and using those deposits to originate a range of commercial, consumer and real estate loans. The company’s primary sources of liquidity are its deposit base; Federal Home Loan Bank (FHLB) borrowings; repayments and maturities on loans; short-term assets, such as federal funds and short-term interest bearing deposits in banks, and maturities and sales of securities available for sale. The Bank owns FNBJ Holding Corporation.
- Price to Earnings = 9.9
- Price to Tangible Book = 0.86
- Dividend Yield = 5.1%
- Gross Debt/Equity = No debt
- Net Debt/Equity = Net Cash
United Fire Group Inc. (UFCS, Financial)
United Fire Group Inc., formerly United Fire & Casualty Company, is engaged in the business of writing property and casualty insurance and life insurance and selling annuities. The company operates in two segments: property and casualty insurance, and life insurance. The company’s property and casualty insurance segment consists of commercial lines insurance, including surety bonds, personal lines insurance and assumed insurance. Its life insurance segment consists of deferred and immediate annuities, universal life insurance products and traditional life insurance products. Its life insurance segment consists solely of the operations of United Life Insurance company.
- Price to Earnings = 9.4
- Price to Tangible Book = 0.84
- Dividend Yield 2.7%
- Gross Debt/Equity = 6.1%
- Net Debt/Equity = Net Cash
Crexus Investment Corp (CXS, Financial)
CreXus Investment Corp. is a real estate investment trust (REIT). The company is a commercial real estate company that acquires, manages, and finances, directly or through its subsidiaries, commercial mortgage loans and other commercial real estate debt, commercial real property, commercial mortgage-backed securities (CMBS), other commercial real estate-related assets and Agency residential mortgage-backed securities. The company also engages in long-term sale-leaseback and build-to-suit transactions with companies in the U.S. The company is managed by Fixed Income Discount Advisory Company (FIDAC). FIDAC is a wholly owned subsidiary of Annaly Capital Management Inc. (Annaly)
- Price to Earnings = 9.4
- Price to Tangible Book = 0.94
- Dividend Yield = 10.1%
- Gross Debt/Equity = 2.1%
- Net Debt/Equity = Net Cash
In Closing
I will appreciate suggestions from readers on how to improve the Tweedy Browne screen. Also a screen is the first step in narrowing down the list of potential candidates and a precursor to in-depth research and due-diligence.
