The Online Ben Graham - Barrons.com
What value investor doesn't like Benjamin Graham? He's famous worldwide, with his strategies and tactics imitated by some of investing's best-known names.
Investment Maxim (www.investmentmaxim.com) is the latest service to offer individuals an opportunity to view the market as he would.
Based in India, Investment Maxim has a more international flare than similar valuation services—GuruFocus (www.gurufocus.com), YCharts (www.ycharts.com) and Validea (www.validea.com)—because, unlike those sites, much of its data come from foreign exchanges.
THE VISITOR CHOOSES FROM among five strategies from Graham, 10 from other gurus, four of Investment Maxim's own design, and two very general technical screens. A rather unusual "Score Board" feature will cross-reference a particular strategy's o output against other experts' approaches to see just how steeped in Grahamism they are.
Free registration provides access to preconfigured screeners that serve up a dozen or more prospects, based on the investing styles of Warren Buffett, David Dreman of Dreman Value Management and former Fidelity Investments manager Peter Lynch, with a few parameters that define the strategy. For example, output for Peter Lynch's growth at a reasonable price, or GARP, strategy includes the average earnings-per-share growth rate, debt-to-equity ratio and PEG (price/earnings to growth) ratio.
A $175-a-year subscription permits unfettered access to all strategies, screeners, the portfolio manager and data from five international-exchange indexes—the S&P 500, Toronto's S&P/TSX, the U.K.'s FTSE 100 and India's Nifty50 and CNX100.
However, the only U.S. stocks covered here are the 500 in the S&P, which accounts for about three-fourths of American stock-market capitalization.
In contrast, Validea includes data on 6,500 U.S. tickers for its $270 annual subscription price, while GuruFocus maintains a database of 8,700 stocks, including some in the pink sheets, for $289 a year. YCharts delivers 10 years of stock history on more than 5,000 issues for $384 a year.
Long story short, Investment Maxim has an international tilt, applying valuation analysis to overseas markets that have been garnering increased interest from U.S. investors lately.
The first Graham strategy, Net Current Asset Bargains, is something of a model for the other four. Its awkward name aside, NCA is a simple concept that could be summed up as "Never pay retail."
Specifically, it counsels paying less for a stock than the value of its net current assets alone. Graham determined these by focusing on the sum of cash, short-term investments, three-fourths of accounts receivable, and half of inventory less total liabilities.
An Investment Maxim screen uses this approach in identifying the top 20 prospects from each of five international indexes. However, the site is a little underpowered when it comes to tracking these picks. Its portfolio manager has room for little more than the most basic metrics, and is definitely not a place from which to manage sizable and varied holdings, versus Personal Capital's (www.personalcapital.com) portfolio manager.
Investment Maxim's company dashboard offers a drill-down function that serves up key metrics for a stock, but there's no way to add them to the portfolio manager.
SUBSCRIBERS ARE LIMITED TO only five portfolios of 10 tickers each—a reasonable number for most folks, but a low ceiling for advanced investors who keep multiple watch lists. If you want to see a really good online portfolio manager, check out Wikinvest (www.wikinvest.com).
Although the Investment Maxim Website is a bit spare, that quality can be a plus for investors who know what they want to do and are looking for offshore data. It's also not a bad place for new investors to get the short course on valuation analysis.
E-mail: mike@mikhogan.com
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