Here at The Acquirer’s Multiple we provide three deep value stock screens, The Large Cap 1000, The All Investable, and The Small and Micro Cap.
From today, we’re offering free access to our Large Cap 1000 Screener on an unlimited basis. If you were an existing subscriber to The Large Cap 1000 Screener and your subscription expired, your subscription has now been re-instated to ‘free unlimited’.
To subscribe to The Large Cap 1000 Screener on an unlimited basis, simply click here and select ‘Large Cap 1000 Screener – free – unlimited’. That’s it!
Some of you may be asking, What’s the Catch? The answer is, there is no catch!
For those of you that aren’t familiar with how we pick stocks for the three screens here at The Acquirer’s Multiple, here’s a quick explanation:
We use a valuation ratio called, The Acquirer’s Multiple® to find attractive takeover candidates.
This ratio examines several financial statement items that other multiples like the price-to-earnings ratio do not, including debt, preferred stock, and minority interests; and interest, tax, depreciation, amortization.
The Acquirer’s Multiple® is calculated as follows:
Enterprise Value / Operating Earnings*
It’s based on the investment strategy described in the book Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations.
The Acquirer’s Multiple® differs from The Magic Formula® Earnings Yield because The Acquirer’s Multiple® uses operating earnings in place of EBIT. Operating earnings is constructed from the top of the income statement down, where EBIT is constructed from the bottom up.
Calculating operating earnings from the top down standardizes the metric, making a comparison across companies, industries and sectors possible, and, by excluding special items–earnings that a company does not expect to recur in future years–ensures that these earnings are related only to operations.
Similarly, The Acquirer’s Multiple® differs from the ordinary enterprise multiple because it uses operating earnings in place of EBITDA, which is also constructed from the bottom up.
All metrics use trailing twelve month or most recent quarter data.
* The screener uses the CRSP/Compustat merged database “OIADP” line item defined as “Operating Income After Depreciation.”
Using The Acquirer’s Multiple®, we pick the top 30 stocks from the Large Cap, Small Cap, and All Investable universes. The three universes are defined as:
- The Large Cap 1000 universe contains the largest stocks by market capitalization. It is comparable to the Russell 1000, but it excludes utilities and financials. As at January 1, 2015, it contained 1,046 stocks, the smallest of which had a market cap of $2,940 million
- The All Investable universe contains the largest half of stocks by market capitalization. It is comparable to the Russell 3000 however, it excludes utilities and financials and includes stocks that are too small for the Russell 3000. It includes some of the stocks in the Large Cap universe. As at January 1, 2015, it contained 2,954 stocks with a median market cap of $1.43 billion, the smallest of which had a market cap of $131 million
- The Small and Micro Cap universe contains the smallest half of stocks by market capitalization. It excludes utilities and financials, and stocks traded over-the-counter. As at January 1, 2015, it contained 846 stocks with a median market cap of $46 million, the largest of which had a market cap of $131 million, and the smallest of which had a market cap of $0.9 million
The larger companies found in the Large Cap 1000 Screener have historically generated lower volatility, and lower returns than the other two screens. The smaller companies found in the Small and Micro Cap Screener have historically generated higher absolute returns, but had much greater portfolio volatility. The broadest screener – The All Investable Screener –gives the best balance of return and volatility.
For more information on the returns generated by using The Acquirer’s Multiple®, click here.
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Don’t forget to check out our FREE Large Cap 1000 – Stock Screener, here at The Acquirer’s Multiple: