QLTI – a Graham value play experiment
Value investing
I purchased some shares of QLTI today in what is basically my first attempt at putting Benjamin Graham’s value investing approach for “enterprising investors” at work. Given the drop in stock prices the last few months, various screens showing stocks trading at 2/3 net current asset value (or NCAV) have suddenly shown dramatic increases in listings versus in “normal” times.
I found QLTI through a 2/3 NCAV screen at Fat Pitch Financials’ Contributors Corner, of which I’m a subscriber. Note that again, there are many different Graham stock screens available, each of which may show a different set of stocks based on definitions and criteria. I narrowed down the list from FPF’s screen against another one based on value, momentum, earnings quality, and predictibility and came up with a much smaller subset of candidates. Of the 8 remaining, I looked at specific financial ratios for each one and QLTI was the one that really stuck out as an anomaly. Keep in mind that Graham emphasizes having sufficient diversification among even stocks trading a 2/3 NCAV, so at least in theory, my just buying this stock should be just the first step among many others to follow.
Read the rest of this entry »