Monday, April 07, 2014

Hoping for the next (flash) crash by Warren Buffett

Source: http://www.berkshirehathaway.com/letters/1987.html 

During 1987 the stock market was an area of much excitement but little net movement: The Dow advanced 2.3% for the year. You are aware, of course, of the roller coaster ride that produced this minor change. Mr. Market was on a manic rampage until October and then experienced a sudden, massive seizure. 

 We have "professional" investors, those who manage many billions, to thank for most of this turmoil. Instead of focusing on what businesses will do in the years ahead, many prestigious money managers now focus on what they expect other money managers to do in the days ahead. For them, stocks are merely tokens in a game, like the thimble and flatiron in Monopoly. 

 An extreme example of what their attitude leads to is "portfolio insurance," a money-management strategy that many leading investment advisors embraced in 1986-1987. This strategy - which is simply an exotically-labeled version of the small speculator's stop-loss order dictates that ever increasing portions of a stock portfolio, or their index-future equivalents, be sold as prices decline. The strategy says nothing else matters: A downtick of a given magnitude automatically produces a huge sell order. According to the Brady Report, $60 billion to $90 billion of equities were poised on this hair trigger in mid- October of 1987. 

 If you've thought that investment advisors were hired to invest, you may be bewildered by this technique. After buying a farm, would a rational owner next order his real estate agent to start selling off pieces of it whenever a neighboring property was sold at a lower price? Or would you sell your house to whatever bidder was available at 9:31 on some morning merely because at 9:30 a similar house sold for less than it would have brought on the previous day? Moves like that, however, are what portfolio insurance tells a pension fund or university to make when it owns a portion of enterprises such as Ford or General Electric. The less these companies are being valued at, says this approach, the more vigorously they should be sold. 

As a "logical" corollary, the approach commands the institutions to repurchase these companies - I'm not making this up - once their prices have rebounded significantly. Considering that huge sums are controlled by managers following such Alice-in-Wonderland practices, is it any surprise that markets sometimes behave in aberrational fashion?

 Many commentators, however, have drawn an incorrect conclusion upon observing recent events: They are fond of saying that the small investor has no chance in a market now dominated by the erratic behavior of the big boys. This conclusion is dead wrong: Such markets are ideal for any investor - small or large - so long as he sticks to his investment knitting. 

Volatility caused by money managers who speculate irrationally with huge sums will offer the true investor more chances to make intelligent investment moves. He can be hurt by such volatility only if he is forced, by either financial or psychological pressures, to sell at untoward times. 

 At Berkshire, we have found little to do in stocks during the past few years. During the break in October, a few stocks fell to prices that interested us, but we were unable to make meaningful purchases before they rebounded. At yearend 1987 we had no major common stock investments (that is, over $50 million)other than those we consider permanent or arbitrage holdings. However, Mr. Market will offer us opportunities - you can be sure of that - and, when he does, we will be willing and able to participate.






Comments, questions or E-mails welcome: ajbrenninkmeijer (a) gmail.com

Friday, March 14, 2014

A new gizmo I co-invented now being built.






Comments, questions or E-mails welcome: ajbrenninkmeijer (a) gmail.com

Friday, March 07, 2014

Fugro Graham Number Valuation

Based on annual results released today March 7, 2014 and (Mr.) Market price today of €39.  


SECTOR: [PASS]  Fugro is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Fugro's sales of €2,478 million, based on 2013 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Fugro's current ratio €1,111m/€697m of 1.6 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL]  For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for Fugro is €822 million, while the net current assets are €414 million. Fugro fails this test.

LONG-TERM EPS GROWTH: [PASS]   Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. Fugro's EPS growth was 334% over the past 10 years, Fugro passes this test.

Earnings Yield: [PASS] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. Fugro's E/P of 9% (using the average of last 3 years earnings) passes this test.

Graham Number value: [PASS] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Fugro has a Graham number of (22,5 x €4,2 EPS x €26 Book Value) = €50 and passes this test.


Figure from last year, March 8th 2013, buy recommendation. A sell at $46 a few months later = 15% return. 


Comments, questions or E-mails welcome: ajbrenninkmeijer (a) gmail.com

Monday, December 16, 2013

Warren Buffett's company Berkshire Hathway shares relatively cheap now

BRK.A Chart
BRK.A data by YCharts

Buffett / Berkshire Hathaway will buy the shares from you if they are less than 1,2x book value. The book value in September 2013 was $127000 x 1,2 = $152 000 .

Now January 2014 the book value should have increased to about $134 000. The price that Buffett will pay is now $134 000 x 1,2 = $160 000 and going up by 12% or more per year. So in January 2015 the price Buffett will buy at, should be $180 000. Giving you a return of at least $10/$170 = 6% in 2014 and 12% in the years after that.

You can buy B shares today for 1/1500 of the price of an A share. http://www.iex.nl/Aandeel-Koers/330118703/Berkshire-Hathaway-B.aspx

Comments, questions or E-mails welcome: ajbrenninkmeijer (a) gmail.com

Thursday, December 12, 2013

Always building

The City Museum, St Louis, MO might just be the coolest place on earth. Never heard of it before, here's a clip about the mad genius behind it Bob Cassilly.


Comments, questions or E-mails welcome: ajbrenninkmeijer (a) gmail.com

Monday, December 02, 2013

Row around the clock 24 Guinness World Record !

It's official:



Facebook: www.facebook.com/RowAroundTheClock24hrWorldRecordRowing


The record we want to beat: http://www.guinnessworldrecords.com/world-records/1/rowing-(team-men)-distance-in-24-hours


What: Rowing (team - men) - distance in 24 hours : 263 km

 The greatest distance rowed in 24 hours (upstream and downstream) is was 263 km (163.42 miles) by Matthias Auer, Christian Klandt and Olaf Behrend (all Germany) at DRUM Rowing Club, Berlin, Germany on 2-3 August 2003.

The attempt: record was broken.
When: Friday June 14th 2013, 10:30 AM until Saturday June 15th 2013, 10:30 AM

Where: Royal Amsterdam Rowing and Sailing Club De Hoop

Weesperzijde 1046a
1091 EH Amsterdam
 

There will be drinks and food available for fans Friday evening in the living room (kleine societeit) and Saturday morning! Call: Ansgar John: 06-295 47 689 or Oscar 06-14810663 to get in if the door is closed.

Circuit: The Skiffhead course between Amsterdam and Oudekerk on the Amstel river. To break the record the team needs to row the course back and forth (15km) 18 times.



Who: Ansgar John Brenninkmeijer, Oscar Dinkelaar, Gert-Jan Keizer, Jacques Klok, Jeroen van Renese, Hans-Jan Rijbering. All rowing for De Hoop.

Royal Dutch Rowing Federation official judge: Nico van Horn, Kamprechter A

Boat: Single scull: "Schapenwal"



Planned rowing times and distance:
Bijz. Roeier van tot Oude WR #km prognose - lineair Shift Prognose target
Vrijdag Start: Ansgar John 10:30 11:45 13,6 14,8 1 14,80
Oscar 11:45 13:00 27,2 29,6 1 14,80
Hans-Jan 13:00 14:15 40,9 44,4 1 14,80
Jeroen 14:15 15:30 54,6 59,2 1 14,80
Jacques 15:30 16:45 68,2 74,0 1 14,80
Gert-Jan 16:45 18:00 81,9 88,8 1 14,80
Ansgar John 18:00 19:15 95,6 103,6 2 14,80
Oscar 19:15 20:30 109,3 118,4 2 14,80
Hans-Jan 20:30 21:45 123,0 133,2 2 14,80
22:00 Z. onder Jeroen 21:45 23:00 136,6 148,0 2 14,80
Schemer 22:49-0:08 Jacques 23:00 0:15 150,2 162,8 2 14,80
Zaterdag Gert-Jan 0:15 1:30 163,8 177,6 2 14,80
Ansgar John 1:30 2:45 177,4 192,4 3 14,80
Oscar 2:45 4:00 191,0 207,2 3 14,80
Schemer 3:30 Hans-Jan 4:00 5:15 204,6 222,0 3 14,80
5.16 Z. op Jeroen 5:15 6:30 218,2 236,8 3 14,80
Jacques 6:30 7:45 231,9 251,6 3 14,80
Record Gert-Jan 7:45 9:00 245,6 266,4 3 14,80
20 minutes sprints 9:00 9:15 248,5 269,4 4 3,00
9:15 9:30 251,4 272,4 4 3,00
9:30 9:45 254,3 275,4 4 3,00
9:45 10:00 257,2 278,4 4 3,00
10:00 10:15 260,1 281,4 4 3,00
Finish 10:15 10:30 263,0 284,4 5 3,00
door snelste roeier

Champagne breakfast at the Hoop at 10:30 on Saturday if we are succesful.

Guinness Book of World Record Rules:

DEFINITION OF RECORD #44642
This record is for the greatest distance rowed within 24 hours.

This is to be attempted by a team of up to six people.

GUIDELINES FOR ‘ROWING – GREATEST DISTANCE ON FLAT WATER IN 24

HOURS’
 

1. The team may be made up of no less than two and no more than six people. It
is up to the team to decide the rowing combinations i.e. all six may row at once
or be split into relay shifts.

2. The same boat must be used for the entire event.

3. The record attempt must take place on a pre-measured circuit on a body of
water. 

4. If the record attempt takes place on a river, at least 50% of the paddling should
be against the flow of the river (thus, for example, if 100 km are covered during
the course of the event, at least 50 km must be upstream). It is recommended
that the boat is paddled back and forth along a length of river no more than 5
km in length.

5. Distances are calculated by multiplying the number of laps by the circuit length.

6. The circuit must be professionally measured and the method and person

responsible for this must be made clear in the claim.

7. Paddling must resume at the same place it ended after breaks.


Guinness World Record: Most in 24 hours template


 


§ The event must take place in a public place or in a venue open to public
inspection.

§ The event is continuous. The clock does not stop. 24 hours means a complete
24-hour cycle including rest breaks. For example, if the event starts at 12 noon
on Monday, it must finish at 12 noon on Tuesday.

§ The participant may take as many breaks as he/she wishes, but the clock must
not stop at any time for any reason. The point where the journey breaks must
be marked and the participant must restart from that point.

§ A loud start and finish signal recognized by all participants must be used.
§ Experienced timekeepers (e.g. from a local athletics club) must time the
attempt with stopwatches accurate to 0.01 seconds.


Comments, questions or E-mails welcome: ajbrenninkmeijer (a) gmail.com

Friday, November 22, 2013

Eenvoud en vuur

In de afgelopen maanden heeft paus Franciscus opmerkelijke uitspraken gedaan over Kerk en samenleving. Wat was zijn punt?

Door kapelaan Jim Schilder voor NicolaasNieuws Advent 2013 

Paus Franciscus is populair in Nederland, zo bleek onlangs uit een onderzoek. De Nederlandse bevolking gaf hem het rapportcijfer 7. Van de katholieke Nederlanders had 90 procent vertrouwen in hem, en 80 procent was zelfs trots op hem. Twee derde van de katholieken dacht dat paus Franciscus de rooms-katholieke Kerk zal veranderen. Ook protestanten gaven aan de paus te waarderen: op alle vijf de bevraagde eigenschappen (sympathiek, vernieuwend, verrassend, charismatisch en krachtig) werd Franciscus positief tot zeer positief beoordeeld.

Na jaren van kritiek en desinteresse van de buitenwereld jegens het Vaticaan is nu sprake van grote, en vaak positieve belangstelling. Voor een deel zit dat in de vorm, in hóe hij handelt - recht toe recht aan, zonder omhaal van woorden - en voor een deel in wat hij zegt en doet. Al vanaf zijn eerste optreden maakte de paus indruk door de menigte op het St. Pieterplein te begroeten met een eenvoudig "Goedenavond" en met het verzoek voor hem te bidden. Later zagen we hem de voeten wassen van jonge gevangenen. Hij uitte zich in scherpe taal over diverse vormen van onrecht. In een vliegtuig ging hij onvoorbereid in gesprek met de wereldpers, en trok de aandacht met een opmerking over homoseksuelen: "Wie ben ik om te oordelen?" Het zat ook in de keuze van zijn naam: Franciscus, de heilige die het opnam voor armen en kwetsbaren, en die in een visioen van Jezus te horen kreeg: "Herstel mijn kerk."


In interviews zei Fransiscus dat de Kerk zich soms heeft "laten inkapselen in details en kleine voorschriften". Ook zei hij: "We kunnen niet zomaar hameren op de problemen rond abortus, het homohuwelijk en het gebruik van anticonceptie. Ik heb nooit heel veel over die zaken gepraat en dat is me vaak kwalijk genomen. Maar als men erover spreekt, dan moet dat binnen een bepaalde context. Wat betreft de standpunten van de Kerk - men kent ze trouwens, ik ben immers een zoon van de kerk - is het niet nodig daar continu over te praten."

De paus vergeleek de Kerk met een veldhospitaal na een slag. "Het heeft geen zin om aan een zwaargewonde te vragen hoe hoog zijn cholesterolgehalte is en hoe het zit met zijn suikergehalte. Men moet eerst zijn wonden helen, pas nadien kan men over de rest praten. Wonden helen, wonden verzorgen..." Met een missie. Een missionaire verkondiging, meent de paus, "concentreert zich op het noodzakelijke, wat overigens ook datgene is waarvoor men het meest warmloopt en wat het meest aantrekt, namelijk dat wat het hart doet branden, zoals bij de leerlingen van Emmaüs". Dan volgt een belangrijke opmerking: "Anders dreigt ook het morele bouwwerk van de Kerk als een kaartenhuis in te storten en riskeert men de frisheid en de aangename geur van het Evangelie te verliezen. De evangelische boodschap moet met meer eenvoud, diepte en vuur worden voorgeschoteld. Uit deze boodschap vloeien de morele consequenties voort."

De paus erkent hier dat de Kerk een groot probleem heeft. Hij erkent de kloof die is ontstaan tussen Kerk en samenleving. Hij meent dat het volstrekt verkeerd zou zijn om je terug te trekken in een bastion van het grote gelijk, want het Evangelie is bedoeld om verkondigd te worden, juist in de buitenwereld. Ga in het gesprek, zei Fransiscus, en doe dat zonder te willen bekeren; toon de schoonheid van de boodschap. En tegen een paar miljoen jongeren in Rio de Janeiro zei hij de afgelopen zomer:"Ga, wees niet bang, en dien." 

Comments, questions or E-mails welcome: ajbrenninkmeijer (a) gmail.com

Thursday, November 21, 2013

Cargo Cult: The people aren't stupid, the group is uneducated.

The most widely known period of cargo cult activity occurred among the Melanesian islanders in the years during and after World War II. A small population of indigenous peoples observed, often right in front of their dwellings, the largest war ever fought by technologically advanced nations. First, the Japanese arrived with a great deal of supplies and later the Allied forces did likewise.

The vast amounts of military equipment and supplies that both sides airdropped (or airlifted to airstrips) to troops on these islands meant drastic changes to the lifestyle of the islanders, many of whom had never seen outsiders before. Manufactured clothing, medicine, canned food, tents, weapons and other goods arrived in vast quantities for the soldiers, who often shared some of it with the islanders who were their guides and hosts. This was true of the Japanese Army as well, at least initially before relations deteriorated in most regions.

With the end of the war, the military abandoned the airbases and stopped dropping cargo. In response, charismatic individuals developed cults among remote Melanesian populations that promised to bestow on their followers deliveries of food, arms, Jeeps, etc. The cult leaders explained that the cargo would be gifts from their own ancestors, or other sources, as had occurred with the outsider armies. In attempts to get cargo to fall by parachute or land in planes or ships again, islanders imitated the same practices they had seen the soldiers, sailors, and airmen use. Cult behaviors usually involved mimicking the day to day activities and dress styles of US soldiers, such as performing parade ground drills with wooden or salvaged rifles. The islanders made headphones from coconuts and wore them while sitting in fabricated control towers. They waved the landing signals while standing on the runways. They lit signal fires and torches to light up runways and lighthouses.

In a form of sympathetic magic, many built life-size replicas of aeroplanes out of straw and cut new military-style landing strips out of the jungle, hoping to attract more airplanes. The cult members thought that the foreigners had some special connection to the deities and ancestors of the natives, who were the only beings powerful enough to produce such riches.

Cargo cults are typically created by individual leaders, or big men in the Melanesian culture, and it is not at all clear if these leaders were sincere, or were simply running scams on gullible populations. The leaders typically held cult rituals well away from established towns and colonial authorities, thus making reliable information about these practices very difficult to acquire.

Comments, questions or E-mails welcome: ajbrenninkmeijer (a) gmail.com

Monday, September 30, 2013

Germany 263 km in 2003, Holland 295,2 in June 2013, Hungary 313km in September 2013

Our Guinness Record has been beaten ! http://www.digisport.hu/video/16318 Congratulations to Varga Joszef and his team.


Comments, questions or E-mails welcome: ajbrenninkmeijer (a) gmail.com

Tuesday, September 17, 2013

Value Investing: Margin of Safety (beta)

Stupid behavior leads to results, that are worse than the index (S&P 500 Total Return).

March 2009 when the stock market had crashed individual investors were selling: http://www.youtube.com/watch?v=oHbYitWqmho#t=2m

  Dilbert:


Buffett:
"Be fearful when others are greedy, and be greedy when others are fearful."
In 1984 Warren Buffett gave a speech and wrote a paper called: The Superinvestors of Graham-and-Doddsville.  (Click here voor Dutch Superinvesteerders).

Here are the results of these Superinvestors since 1992 as well as Bestinver, who use the same principals and a Benjamin "Graham" screen started in 2003. At the very bottom are typical results of a mixed portfolio with an average return of about 6% per year.

Theory: Mr. Market price <-> Graham Value



SUPERINVESTORS look for values with a significant Margin of Safety relative to stock prices.


HAVE NO FEAR!
Your stock's estimated VALUE is: 
in thousandths of a cent per share at this very second.

Below is a comparision between the Mr. Market price of several Dutch stocks compared to their Graham value (calculated using the Graham Number formula). As well as the Validea.com Benjamin Graham screen criteria with financial numbers from www.iex.nl.

(This doesn't work for financial stocks (as you can see with SNS Reaal in 2007).  For companies making heavy losses (such as Ahold around 2002 the Graham value becomes 0.)


SECTOR: [PASS] AHOLD is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. AHOLD's sales of $32,841 million, based on 2012 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. AHOLD's current ratio €4,804m/€4,171m of 1,2 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for AHOLD is €4,014 million, while the net current assets are €633 million. AHOLD fails this test.

LONG-TERM EPS GROWTH: [PASS] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. AHOLD's EPS growth over that period passes the EPS growth test.

Earnings Yield: [PASS] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. AHOLD's E/P of 7% (using the current Earnings) passes this test.

Graham Number value: [FAIL] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. AHOLD has a Graham number of (22,5 x €0,9 EPS x €5,8 Book Value) = €10,8

SECTOR: [PASS] AF is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS]  The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. AF's sales of €24,820 million, based on trailing 12 month sales, pass this test.

CURRENT RATIO: [FAIL]  The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. AF's current ratio of €7,377m/€9,949m of 0.7 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for AF is €9,292 million, while the net current assets are €-2,572 million. AF fails this test.

LONG-TERM EPS GROWTH: [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. EPS for AF were negative within the last 5 years and therefore the company fails this criterion.

P/E RATIO: [FAIL] The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. AFLYY's P/E ratio is not available, the company has no earnings, hence it fails this test.

PRICE/BOOK RATIO: [FAIL] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. AF is French and an airline, little wonder that it fails this test.




SECTOR: [PASS] AKZO is neither a technology nor financial Company, and therefore this methodology is applicable. 


SALES: [PASS]  The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. AKZO's sales of €15,390 million, based on 2012 sales, pass this test.

CURRENT RATIO: [FAIL]  The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. AKZO's current ratio €7,007m/€5,059m of 1.4 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for AKZO is €3,388 million, while the net current assets are €1,948 million. AKZO fails this test.

LONG-TERM EPS GROWTH: [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. EPS for AKZO were negative within the last 5 years (2008 and 2012) and therefore the company fails this criterion.

Earnings Yield: [FAIL]  The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. AKZO's negative E/P (using the current Earnings) fails this test.

Graham Number value: [FAIL] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. AKZO has a Graham number of (22,5 x €1,6 EPS x €30,78 Book Value) = €34,4 and fails this test.
2012 results, 6 Feb. 2013 Market price
SECTOR: [PASS] Aperam is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Aperam's sales of €3,900 million, based on 2012 sales, pass this test.

CURRENT RATIO: [FAIL]  The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Aperam's current ratio €716m/€569m of 1.2 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for Aperam is €575 million, while the net current assets are €147 million. Aperam fails this test.

LONG-TERM EPS GROWTH: [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. EPS for Aperam were negative three times within the last 5 years and therefore the company fails this criterion.


Earnings Yield: [FAIL]  The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. APERAM's negative E/P of -9% (using the current Earnings) fails this test.

Graham Number value: [FAIL] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Aperam has a Graham number of (22,5 x €0 EPS x €30 Book Value) = €0

2012 results, 7 Feb 2013 price
SECTOR: [PASS] Arcelor Mittal MT is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS]  The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. MT's sales of €62,417 million, based on 2012 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. MT's current ratio €25,121m/€30,958m of 0.8 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL]  For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for MT is €11,041 million, while the net current assets are $-5,837 million. MT fails this test.

LONG-TERM EPS GROWTH: [FAIL]  Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. MT's EPS have declined over the past 10 years, and it made a loss in 2012. MT fails this test.

Earnings Yield: [FAIL] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. MT's E/P of -14% (using the current Loss) fails this test.

Graham Number value: [PASS]  The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. MT has a Graham number of (22,5 x €0,7 EPS x €26 Book Value) = €21





SECTOR: [FAIL] ASML is in the Technology sector, which is one sector that this methodology avoids. Technology and financial stocks were considered too risky to invest in when this methodology was published. At that time they were not the driving force of the market as they are today. Although this methodology would avoid ASML, we will provide the rest of the analysis, as we feel times have changed.

SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. ASML's sales of €4,732 million, based on 2012 sales, pass this test.

CURRENT RATIO: [PASS] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. ASML's current ratio €6,366m/2,086m of 3.1 passes the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [PASS] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for ASML is €1,290 million, while the net current assets are €4,280 million. ASML passes this test.

LONG-TERM EPS GROWTH: [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. EPS for ASML were slightly negative within the last 5 years (2009) and therefore the company fails this criterion.


Earnings Yield: [FAIL] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. ASML's E/P of 5% (using the last 3 years earnings) fails this test.

Graham Number value: [FAIL] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. ASML has a Graham number of (22,5 x €3,3 EPS x €10,71 Book Value) = €28,5





SECTOR: [PASS] Boskalis is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS]  The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million.  Boskalis' sales of €2,809 million, based on 2011 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Boskalis' current ratio €1,707/€2,021 of 0.8 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for Boskalis is €867 million, while the net current assets are €-314 million. Boskalis fails this test.

LONG-TERM EPS GROWTH: [PASS]   Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. Boskalis' EPS growth was 236% over the past 10 years, Boskalis passes this test.

P/E RATIO: [PASS] The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. MT's P/E of 14,3 (using current PE) passes this test.

PRICE/BOOK RATIO: [FAIL] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Boskalis has a book value of €17 and fails this test.


SECTOR: [PASS] Corio is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS]  The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million.  Corio's sales of €475 million, based on 2012 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Corio current ratio €225/€358 of 0.6 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for Corio is €3,125 million, while the net current assets are $-133 million. Corio fails this test.

LONG-TERM EPS GROWTH: [FAIL]  Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. Corio's earnings were negative during the past 5 years (2008, 2009) and therefore fails this test.

Earnings Yield: [FAIL] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. Corio's E/P of 0% (using the last years earnings) fails this test.

Graham Number value: [PASS] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Corio has a Graham number of (22,5 x €1,6 EPS x €43,13 Book Value) = €40 and passes this test.
April 2013 Joh. A Benckiser offers €12,50 voor all stock. Seems like a lot of money.

SECTOR: [PASS]  DE is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. DE's sales of €2,795 million, based on 2012 sales, pass this test.

CURRENT RATIO: [PASS] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. DE's current ratio €1,065m/€1,035m of 3.0 passes the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [PASS] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for DE is €138 million, while the net current assets are €2,248 million. DE passes this test.

LONG-TERM EPS GROWTH: [?] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. EPS figures for DE over 10 years are not available .

Earnings Yield: [FAIL] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. DE's E/P of 2% (using the last years earnings) fails this test.

Graham Number value: [FAIL] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. DE has a Graham number of (22,5 x €0,4 EPS x €5,3 Book Value) = €6,9 and fails this test.


SECTOR: [PASS] DSM is neither a technology nor financial Company, and therefore this methodology is applicable. 


SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. DSM's sales of €9,214 million, based on 2012 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. DSM's current ratio €5,181m/€3,078m of 1.7 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for DSM is €2,640 million, while the net current assets are $2,103 million. DSM fails this test.

LONG-TERM EPS GROWTH: [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. DSM's EPS growth of -50% fails this test.

Earnings Yield: [FAIL] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. DSM's E/P of 4% (using the last years earnings) fails this test.

Graham Number value: [PASS] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. DSM has a Graham number of (22,5 x €2,9 EPS x €34,82 Book Value) = €47,8 and passes this test.


SECTOR: [PASS]  Fugro is neither a technology nor financial Company, and therefore this methodology is applicable. 


SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Fugro's sales of €2,180 million, based on 2012 sales, pass this test.

CURRENT RATIO: [PASS] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Fugro's current ratio €2,421m/€916m of 2.6 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [PASS]  For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for Fugro is €1,275 million, while the net current assets are €1505 million. Fugro passes this test.

LONG-TERM EPS GROWTH: [PASS]   Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. Fugro's EPS growth was 252% over the past 10 years, Fugro passes this test.

Earnings Yield: [PASS] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. Fugro's E/P of 9% (using the average of last 3 years earnings) passes this test.

Graham Number value: [PASS] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Fugro has a Graham number of (22,5 x €3,7 EPS x €24,4 Book Value) = €45,4 and passes this test.

SECTOR: [PASS] HEINEKEN is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. HEINEKEN's sales of €19,893 million, based on 2012 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. HEINEKEN's current ratio €5537m/€7800m of 0.7 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for HEINEKEN is €15,000 million, while the net current assets are €-2,263 million. HEINEKEN fails this test.

LONG-TERM EPS GROWTH: [PASS] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. HEINEKEN's EPS growth over that period of 93% passes the EPS growth test.

Earnings Yield: [FAIL] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. HEINEKEN's E/P of 5% (using the average over 3 years) fails this test.

Graham Number value: [FAIL] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. HEINEKEN has a Graham number of (22,5 x €3 EPS x €20,30 Book Value) = €37,5 and fails this test.

ING 2012 numbers

SECTOR: [FAIL] ING is in the Financial sector, which is one sector that this methodology avoids. Technology and financial stocks were considered too risky to invest in when this methodology was published. Although times have changed since then with respect to the risk of financial stocks, several of Graham's criteria, like the Current Ratio and Debt to Current Assets, do not apply to financial companies. As a result, the company will not be able to pass this methodology, although we will include the remainder of the analysis for informational purposes.

SALES: [PASS]  The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. ING's sales of €37,840 million, based on trailing 12 month sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. ING is a financial stock so the current ratio analysis cannot be applied and this criterion cannot be evaluated.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] Long term debt must not exceed net current assets. Companies that meet this criterion display one of the attributes of a financially secure organization. ING is a financial stock so this variable is not applicable and this criterion cannot be evaluated.

LONG-TERM EPS GROWTH: [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. EPS for ING were negative within the last 5 years (2008, 2009) and therefore the company fails this criterion.

Earnings Yield: [PASS]  The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. ING's E/P of 16% (using the current Earnings) passes this test.

Graham Number value: [PASS]  The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. ING has a Graham number of (22,5 x €1,1 EPS x €14,47 Book Value) = €19,2
 



SECTOR: [PASS]  KPN is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS]  The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. KPN's sales of €13,163 million, based on 2011 sales, passes this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. KPN's current ratio €5,085/€5,609m of 0.9 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for KPN is $13,010 million, while the net current assets are $-524 million. KPN fails this test.

LONG-TERM EPS GROWTH: [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. EPS for KPN have decreased since 2003 and therefore the company fails this criterion.


Earnings Yield: [PASS]  The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. KPN's E/P of 19% (using the current Earnings) passes this test.

Graham Number value: [PASS]  The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. KPN has a Graham number of (22,5 x €0,9 EPS x €2 Book Value) = €6,2



SECTOR: [PASS] Philips is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS]  The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Philips' sales of €24,800 million, based on 2012 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Philips' current ratio €12,528m/€9,955 of 1.3 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL]  For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for Philips is €7,950 million, while the net current assets are €2,573 million. Philips fails this test.

LONG-TERM EPS GROWTH: [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. EPS for Philips were negative within the last 5 years (2008, 2011) and therefore the company fails this criterion. 

P/E RATIO: [FAIL]  The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. Philips' P/E of 89,4 (using the current PE) fails this test.

PRICE/BOOK RATIO: [FAIL]  The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Phlilps has a book value of €12,18 and fails this test.



SECTOR: [PASS]  PNL is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS]  The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. PNL's sales of €4,350 million, based on 2011 sales, pass this test.

CURRENT RATIO: [PASS] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. PNL's current ratio €2,528m/€1,204m of 2.1 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for PNL is €1,607 million, while the net current assets are €-1,204 million. PNL fails this test.

LONG-TERM EPS GROWTH: [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. EPS for PNL have declined over the last 10 years and therefore the company fails this criterion.

P/E RATIO: [PASS]  The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. PNL's P/E of 4,2 (using the current PE) passes this test.

PRICE/BOOK RATIO: [PASS] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. PNL has a book value of €1 and passes this test.




SECTOR: [PASS]  Randstad is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Randstad's sales of €17,087 million, based on 2012 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Randstad's current ratio €3,114m/€3,948m of 0.8 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for Randstad is €59 million, while the net current assets are €-834 million. Randstad fails this test.

LONG-TERM EPS GROWTH: [PASS]   Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. Randstad's EPS growth was 186% over the past 10 years, Randstad passes this test.

Earnings Yield: [FAIL] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. Randstad's E/P of 3% (using the last 3 years Earnings) fails this test.

Graham Number value: [FAIL] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Randstad has a Graham number of (22,5 x €0,8 EPS x €17 Book Value) = €18



SECTOR: [PASS] REN is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. REN's sales of €6,902 million, based on 2011 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. REN's current ratio €3,111m/€5,262m of 0.6 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for REN is €5,754 million, while the net current assets are €-2,151 million. REN fails this test.

LONG-TERM EPS GROWTH: [PASS] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. REN's EPS growth over that period of 324% passes the EPS growth test.

P/E RATIO: [FAIL] The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. REN's P/E of 16.7 (using the last 3 year's PE) fails this test.

PRICE/BOOK RATIO: [FAIL] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. REN has a book value of €2,3 per share and fails this test.
 

Shell includes 2012 results 31/1/2012


SECTOR: [PASS]  RDS.A is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. RDS.A's sales of €346,244 million, based on 2012 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. RDS.A's current ratio €85,038m/€69,491m of 1.2 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for RDS.A is €25,271 million, while the net
current assets are €15,547 million. RDS.A fails this test.

LONG-TERM EPS GROWTH: [PASS] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. RDS.A's EPS growth over that period of 124% passes the EPS growth test.

P/E RATIO [PASS]  The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. RDS.A's P/E of 8.30 (using the 3 year PE) passes this test.

PRICE/BOOK RATIO: [PASS] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. RDS.A has a book value of €22,31 per share and passes this test.

Margin of SafetyA €41 Graham value for sale at a €25,84 Mr. Market price => You can buy €1 euro of value for 63 cents.  



SECTOR: [PASS]  SBM is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. SBM's sales of €2,836 million, based on 2012 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. SBM's current ratio €2,208m/€1,934m of 1.1 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for SBM is €1,414 million, while the net current assets are €274 million. SBM fails this test.

LONG-TERM EPS GROWTH: [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. SBM's EPS were negative in 2011 and 2012 therefore SBM fails this test.

Earnings Yield: [FAIL] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. SBM's E/P of 0% (using the current Earnings) fails this test.

Graham Number value:  [FAIL]  The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. SBM has a Graham number of (22,5 x €0,5 EPS x 6,32 Book Value) = €8,6


TNT problem: No numbers before 2011. 

SECTOR: [PASS]  TNT is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. TNT's sales of €7,316 million, based on 2012 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. TNT's current ratio €1,902m/€1,329m of 1.4 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [PASS] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for TNT is €225 million, while the net current assets are €573 million. TNT passes this test.

LONG-TERM EPS GROWTH: [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. TNT's EPS were negative in 2011 and 2012 therefore TNT fails this test.

P/E RATIO: [FAIL] The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. TNT's P/E can't be calculated (using last 3 year's PE), therefore TNT fails this test.

PRICE/BOOK RATIO: [FAIL] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. TNT has a Graham number of (22,5 x €0,1 EPS x €5 Book Value) = €2,8 and fails this test.


SECTOR: [PASS]  UN is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS]  The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. UN's sales of €51,324 million, based on 2012 sales, pass this test.

CURRENT RATIO: [FAIL]  The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. UN's current ratio €12,147m/€15,815m of 0.8 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL]  For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for UN is €14,635 million, while the net current assets are €-3,668 million. UN fails this test.

LONG-TERM EPS GROWTH: [PASS]  Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. UN's EPS growth over that period of 139% passes the EPS growth test.

P/E RATIO: [FAIL]  The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. UN's P/E of 20 (using last 3 year's PE) fails this test.

PRICE/BOOK RATIO: [FAIL]  The Price/Book ratio must also be reasonable.  That is the Graham number value must be greater than the market price. UN has a book value of €5,20 per share, and fails this test.



SECTOR: [PASS]  WKL is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS]  The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. WKL's sales of €3,354 million, based on 2011 sales, pass this test.

CURRENT RATIO: [FAIL]  The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. WKL's current ratio €1,586m/€2,47m of 0.6 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL]  For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for WKL is €2,591 million, while the net current assets are €-871 million. UN fails this test.

LONG-TERM EPS GROWTH: [FAIL]  Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. WKL's EPS have declined over the past 5 years, WKL fails the EPS growth test.

P/E RATIO: [FAIL]  The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. WKL's P/E of 21 (using last 3 year's PE) fails this test.

PRICE/BOOK RATIO: [FAIL]  The Price/Book ratio must also be reasonable.  That is the Graham number value must be greater than the market price. UN has a book value of €5,20 per share, and fails this test.



SECTOR: [PASS] Aalberts is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS]  The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Aalberts' sales of €2,025 million, based on 2012 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Aalberts' current ratio €663m/€605m of 1.1 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for Aalberts is €362 million, while the net current assets are €58 million. Aalberts fails this test.

LONG-TERM EPS GROWTH: [PASS] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. Aalberts' EPS growth over that period of 175% passes the EPS growth test.


Earnings Yield: [FAIL] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. Aalberts's E/P of 6% (using the average of last 3 years) fails this test.

Graham Number value:  [FAIL]  The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Aalberts has a Graham number of (22,5 x €1,3 EPS x €8,9 Book Value) = €16,8




Advanced Metallurgical Group
SECTOR: [PASS] AMG is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS]  The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. AMG's sales of €995 million, based on 2011 sales, pass this test.

CURRENT RATIO: [PASS]  The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. AMG's current ratio €440m/€217m of 2.0 passes the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [PASS] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for AMG is €169 million, while the net current assets are €223 million. AMG passes this test.

LONG-TERM EPS GROWTH: [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. AMG's EPS were negative in 2009, AMG fails this test.

P/E RATIO: [FAIL]  The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. AMG's P/E of 52 (using the current PE) fails this test.

PRICE/BOOK RATIO: [FAIL]   The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. AMG has a book value of €5,77, but fails this test.


Arcadis




ASMI
BAM



SECTOR: [FAIL] Binck  is in the Financial sector, which is one sector that this methodology avoids. Technology and financial stocks are considered too risky to invest in. Several of Graham's criteria, like the Current Ratio and Debt to Current Assets, do not apply to financial companies. As a result, the company will not be able to pass this methodology, although we will include the remainder of the analysis for informational purposes.

SALES: [FAIL] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Binck's sales of €160 million, based on 2012 sales, fails this test.

LONG-TERM EPS GROWTH: [PASS] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. Binck's EPS growth over that period of 210% passes the EPS growth test.

Earnings Yield: [FAIL] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. Binck's E/P of 4% (using the current Earnings) fails this test.

Graham Number value: [PASS]  The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Binck has a Graham number of (22,5 x €0,4 EPS x 6,11 Book Value) = €7,7

Brunel old


BRUNEL new




CSM


Delta Lloyd:  Financial, doesn't work in Graham value. Not enough years figures either. Losses in past 5 years: fail.


Heijmans



Chart February 1st 2013
Imtech 2012 numbers were expected February 5th, now they are delayed. 

2011 Imtech Graham screen: FAILED in CURRENT RATIO and LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS. Which is the reason they are now in trouble with the banks after a major loss in Poland. 

Book value 2011 was €932m/87,5m shares is €10,6 per share. The loss in Poland is at least €100million. Too be safe, we'll make it 232m. Guesstimate book value per share = €700/€87,5 = €8,-

New lower EPS estimate for 2013 €1,30 (was €1,7 in 2011). €0,- for 2012.

Guesstimate of Graham value: Graham number of (22,5 x €1,3 EPS x 8 Book Value) = €15,2


Imtech guesstimate with 300 million Polish write off and 0.- profit in 2012 (February 4th, 2013)

Imtech 2012 numbers February 5th

Mediq: When price was at around €8,50 in 2012, Advent offered to buy Mediq, shareholders said the €13,25 offer was too low, it will be taken over in 2013 for €14.


Nieuwe Steen Investments

SECTOR: [PASS]  NSI  is neither a technology nor financial Company, and therefore this methodology is applicable.

SALES: [FAIL] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. NSI's sales of €160 million, based on 2012 sales, fails this test.

CURRENT RATIO: [FAIL]  The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. NSI's current ratio €99m/€316m of 0.3 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL]  For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for NSI is €1,042 million, while the net current assets are €-217 million. NSI fails this test.

LONG-TERM EPS GROWTH: [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. NSI made a loss in 2009 and 2012 and therefore fails this test.

Earnings Yield: [FAIL] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. NSI's E/P of 0% (using the current Earnings) fails this test.

Graham Number value: [PASS]  The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. NSI has a Graham number of (22,5 x €0,7 EPS x €9,78 Book Value) = €12,7



SECTOR: [PASS] Nutreco is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS]  The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Nutreco's sales of €5,229 million, based on 2012 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Nutreco's current ratio €1,701m/€1,315m of 1.3 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for Nutreco is €494 million, while the net current assets are €386 million. Nutreco fails this test.

LONG-TERM EPS GROWTH: [PASS] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. Nutreco's EPS growth since 2008 of 53% passes the EPS growth test.

Earnings Yield: [PASS] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. Nutreco's E/P of 7% (using the current Earnings) passes this test.

Graham Number value: [FAIL]  The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Nutreco has a Graham number of (22,5 x €4,9 EPS x €28,09 Book Value) = €57,3



SECTOR: [FAIL] SNS is in the Financial sector, which is one sector that this methodology avoids. Technology and financial stocks were considered too risky to invest in when this methodology was published. Several of Graham's criteria, like the Current Ratio and Debt to Current Assets, do not apply to financial companies. As a result, the company will not be able to pass this methodology.


SNS Reaal: The bank was nationalized (because of impending bankruptcy) February 1st 2013. Shareholders received €0,00.  

Ten Cate old

Chart above before 2012 results, chart below with 2012 results.
Ten Cate new
SECTOR: [PASS] Ten Cate is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS]  The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Ten Cate's sales of €1049 million, based on 2012 sales, pass this test.

CURRENT RATIO: [PASS]  The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Ten Cate's current ratio €413m/€179m of 2.3 passes the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for Ten Cate is €280 million, while the net current assets are €234 million. Ten Cate fails this test.

LONG-TERM EPS GROWTH:  [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. Ten Cate's EPS growth over that period of 23% passes the EPS growth test.

Earnings Yield:  [FAIL] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. Ten Cate's E/P of 5% (using the current Earnings) fails this test.

Graham Number value: [PASS]  The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Ten Cate has a Graham number of (22,5 x €1,7 EPS x 17,25 Book Value) = €26


SECTOR: [FAIL] TomTom is in the Technology sector, which is one sector that this methodology avoids. Technology and financial stocks were considered too risky to invest in when this methodology was published. 


SALES: [PASS]  The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. TomTom's sales of €1057 million, based on 2012 sales, pass this test.

CURRENT RATIO: [FAIL]  The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. TomTom's current ratio €477m/€442m of 1.1 fails the test.


LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL]  For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for TomTom is €362 million, while the net current assets are €35 million. TomTom fails this test.

LONG-TERM EPS GROWTH: [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. TomTom made losses in 2008 and 2011 and therefore fails this test.

Earnings Yield: [FAIL] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. TomTom's E/P of -9% (using the past 3 years Earnings) fails this test.

Graham Number value: [FAIL]  The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. TomTom has a Graham number of (22,5 x €0,1 EPS x €3,76 Book Value) = €3,1



Unit 4



SECTOR: [PASS] Accell is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS]  The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Acell's sales of €772 million, based on 2012 sales, pass this test.

CURRENT RATIO: [FAIL]  The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Accell's current ratio €408m/€305m of 1.3 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [PASS] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for Accell is €15,8 million, while the net current assets are €103 million. Accell passes this test.

LONG-TERM EPS GROWTH: [PASS] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. Accell's EPS growth over that period of 266% passes the EPS growth test.


Earnings Yield: [PASS]  The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. Accell's E/P of 8% (using the current Earnings) passes this test.

Graham Number value: [PASS]  The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Accell has a Graham number of (22,5 x €1,4 EPS x €10,4 Book Value) = €18,5


Margin of Safety: A €18,5 Graham value for sale at a €13,2 Mr. Market price. You can buy €1 euro of value for 70 cents.  


Arseus





Source of inputs: iex.nl 


Results:
Comments, questions or E-mails welcome: ajbrenninkmeijer (a) gmail.com