INVESTING STRATEGIES - Buffett-style Value Criteria and Filter.

Buffett-style Value Criteria and Filter.

1.Earnings yield should be at least twice the AAA bond yield (which is about 5.9%)

2.PE should be less than 40% of the share's highest PER over the previous five
years.

3.Dividend yield should be at least two thirds of the AAA bond yield.

4.Stock price should be no more than two thirds of company's tangible book value
per share..
5.Company should be selling in the market for no more than two thirds of its net
current assets.

To this, add Margin of Safety criteria:

1.Company should owe no more than it is worth: total debt should not exceed book
value.

2.Current assets should be at least twice current liabilities - in other words, the
current ratio should exceed 2.

3.Total debt should be less than twice net current assets

4.Earnings growth should be at least 7% a year compound over the past decade.

5.As an indication of stability of earnings, there should have been no more than two
annual earnings declines of 5% or more during the past decade.

Demanding a share price no more than two-thirds tangible assets is asking too much of
today's market. The basic search, therefore, used the following sieves:

1.PE less than 8.5. This is the implied multiple from the demand that the earnings
yield should be more than twice 5.9%. The inverse of an 11.8% earnings yield is a
price-earnings multiple of 8.5.

2.A dividend yield of at least 4% - two thirds of the 5.9% AAA bond yield.

3.A Price to Tangible Assets Ratio of less than 0.8 - price less than four-fifths
tangible assets.

4.Gross Gearing of less than 100% - the company does not owe more than it is
worth.

5.Current Ratio of at least two - in other words current assets are at least twice
current liabilities.