Returns to The Acquirer’s Multiple® Screeners and The Best Value Stocks

Tobias CarlisleStock Screener1 Comment

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One Comment on “Returns to The Acquirer’s Multiple® Screeners and The Best Value Stocks”

  1. Hi Tobias

    I have a few question about the acquirers multiple and strategy.

    1. So when screening for cheap companies on operating income/EV then wont we face the risk of buying a stock with a cyclically high operating income? and not a fall in the stock price? Should I prefer companies with a quarterly high operating income or should I go for stocks with a low EV, beacuse of a falling stock price?`I would think the risk in buying a company with a recent high operating income and no fall in the stock price will revert to the mean. On the oppsite side a company with the same operating income, but a falling stockprice(and falling EV) will revert upwards to a more normal stock price.

    Would it maybe better be better to smooth out the Acquirer’s Multiple over a 5-or 10y average like we can do with the graham 10 P/E?
    In that way we can adjust it for cyclically high operating earnings.

    2. Do you do any qualitative screening on the stocks in the list? Like screening out stocks with a low F-score, Z-score and M-score?

    3. Does this strategy works equally well on international stocks? (non US)

    4. If I buy 20 stocks and rebalance every year or more freqently it will be much trancaction cost and taxes in my country. If I buy 20 stocks that you reccomend for proper diversification, can I hold the stocks for 2-3 years before selling? Or will the perfomance be negatively affected by such a “long” holding period?

    5. I guess in generall I should stay away from any chinese companies with this strategy? I see many of them are cheap on the acquirers multiple, but I would suspect many of them are value traps or freuds.

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