Housekeeping: Answering Readers’ Questions
Upon completion of finishing Part 3 of our case study on Cisco and Philips–Chapter 7 in Competition Demystified, I will try to answer several questions from readers.
- What is the definition of inflation?
- How to calculate ROIC?
- How to develop a competitive advantage?
Thanks for your patience.
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.