What about Using Screens? Question from Readers

Screeners

A reader asks what type of screeners do I use to find ideas.  I do not use any other than reading.

I have used 10-K Wizard (bought by Morningstar) to do word searches and alert me to form-10 filings (Spin-off report), so I am aware of special situations.  I also have Google alert me to any news of corporate liquidations, spin-offs, restructuring, emergence from bankruptcy, etc.  That is one tool for searching for special situations or corporate restructuring.

Mostly I have 150 to 200 stable franchise-like companies that I have followed for many years, I follow capital allocation type companies like Markel, Loews, Enstar that have good investors at the helm so you buy when the price is at or below net asset value so you get management for free. Like being invested in private equity without the fees.

Reading is the main way. The problem is not enough time to handle all the ideas, so the key is to quickly focus on the best opportunity–the biggest discount to future cash flows.

Capital IQ is too expensive and Yahoo is unreliable. I can have access to a Bloomberg terminal but rarely use it. Just let me read my 10-Ks.

I will do a post on search at another time. Perhaps then there will be ideas to help in finding opportunities.

 Thanks for the question.

10 responses to “What about Using Screens? Question from Readers

  1. I would love to know what makes your list of 150-200 franchise-like companies. I have trouble coming up with 15-20 that I feel are stable.

    • OK,we will get to that in a post.

    • Well, if you get a few more interested on this blog, I can post five a day with 25 year charts and a value line plus the indications of
      competitive advantage and then you can determine for yourself or contest the designation as a franchise. For example, I classify Vulcan Materials (VMC) as a franchise though its recent financial results are poor. Why?
      Their assets are singular. They own rock quarries near major cities, thus their unit costs are lower to transport than
      competitors. Franchises also can be extremely stable with little to no growth.

      But people will need to start working
      on the book Competitive advantage plus those case studies. I am a week away from posting. Thanks for keeping me honest.

  2. Under capital allocators, you don’t include LUK or even BRK?

  3. Hi John, Google alert is a great tool. Can you please tell me the keywords (apart from spinoff, corporate liquidation) used in Google alert.

    • Dear Mayur:

      We want to approach this from principles and not technique because search words go out of style and you might be much better at technical search than me.
      There are two ways that I approach this: If I find a company through reading that will do a corporate restructuring, I will read their 8-K and look for certain words like Corporate dissolution, going-private, etc. and see if those words bring up the company in Google. The problem is if you get back too many subjecst. If you put in spin-off, you will receive many emails with movie spinoffs not corporate spins.

      I also use the type of SEC form like and 8-K with a term like corporate dissolution or split.

      There are probably a few readers that are technically gifted in Internet search.

      • What i have done in my Google Alert is “spin off” “economic times” so i would get only those alerts which are published in Economic Times news paper and not beyond a paper.

  4. the most simple and best screen is the 52 week low list.

    • Good point Sandesh. Klarman also mentions deletions from an index and small divisions spun off from larger corporations–often people sell for reasons unrelated to the economics of the business. You always want to seek an edge–uneconomic selling or buying to take advantage. Thanks for your contribution.

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