My Greatest Invention - The Ultimate Scorecard
With the launch of the Value/Growth seminar and the up-coming
database website, I believe many of you will want to hear me discuss about the new changes in my scorecard – Currently my greatest invention – “The
Ultimate Scorecard”.
Seriously it is hard and harder to come up with new name for my
scorecards, hopefully this will be my final enhancement.
Prior to elaborate further on the scorecard, it will be good to note that, in view of my up-coming database website, I will not be distributing
any of my old or new scorecards anymore to members or non-members.
Lets' get back to the main topic...
What has changed in the Super Scorecard to have to rename it
the Ultimate Scorecard?
1. Removal of Items in the Super Scorecard
Firstly, all the subjective questioning at the start of the
scorecard has been removed. This will be eventually be up to individual
understanding of the counter.
For example, I used to remove China companies
from my analysis. But I include them now. However it is still up to me at that
point whether I want to buy a China company even if it passes the Ultimate
Scorecard.
Secondly, I have also removed the Stable Stock Analysis. It is
simply not accurate enough. Thus, the existing Super Scorecard users do take note.
2. A Special Return on Equity Ratio
While working on the Ultimate Scorecard, I wanted a ratio that
tell me whether the management is doing well. Thus, I decided to fall back on the use of Return on Equity. However, being the contrarian, I believe comparing
just this ratio is not enough. I believe I must be different to outshine,
outlast, and outwit others.
Thus, I decided on combining 2 ratios to give the Ultimate
Scorecard an advantage over others.
The final ratio is Price to Book to Return on Equity. I believe
this encompasses the concept of value investing as well as good management.
At the end of the day, I expect this ratio to pick out undervalued
counters with good management. Thus, buying this counter will be like, “BUY 1
GET 1 FREE”, getting 2 catalysts to push the share price higher.
3. Minor Changes Across the Super Scorecard
Other than the above, there are also many minor changes, such as which
number to pick and which figure to obtain.
Thus, if you calculate and find that your ratio differs from mine
in the Ultimate Scorecard, it is most probably because we picked the different
figures to calculate.
What is the results from the vigorous testing?
Since I had enough data from Simple Investor SG, I managed to do a
more thorough testing compare to what I did previously.
Do note that I randomly pick 40 counters with at least 5 years
financial data and test them on how they will fare after announcing their
2016 annual report results (mostly done over 2017 which was a bull year) from 4 months to 14 months. In addition, do note that REITs,
Business Trusts and IPO counters without at least 5 years data are not
included.
The accuracy of whether the Ultimate Scorecard will provide an
accurate judgement is only at 58%.
To investigate further, I focus only at the “buy” decision made by
the Ultimate Scorecard and, to my own surprise, the accuracy becomes
significantly high at 88%.
Counters which the Ultimate Scorecard returns with a “buy”
decision (Share price information taken from Yahoo Finance):
|
Company
|
Date
|
Price
|
Capital
Gain
|
% Gain
|
|
AP Oil
|
24/2/2017
|
0.260
|
0.010
|
3.85%
|
|
5/8/2017
|
0.270
|
|||
|
Captii
Ltd
|
22/2/2017
|
0.500
|
0.120
|
24.00%
|
|
22/6/2017
|
0.620
|
|||
|
Ellipsiz
Ltd
|
3/8/2016
|
0.360
|
0.255
|
70.83%
|
|
22/6/2017
|
0.615
|
|||
|
Fisher
Tech Ltd
|
1/6/2016
|
1.500
|
1.150
|
76.67%
|
|
24/6/2017
|
2.650
|
|||
|
Global
Testing Corporation Ltd
|
21/2/2017
|
1.150
|
0.220
|
19.13%
|
|
24/6/2017
|
1.370
|
|||
|
Hongkong
Land Holdings Limited
|
3/3/2017
|
6.740
|
1.060
|
15.73%
|
|
5/8/2017
|
7.800
|
|||
|
Japan
Foods Holding Ltd
|
31/5/2016
|
0.370
|
0.100
|
27.03%
|
|
27/5/2017
|
0.470
|
|||
|
Keong
Hong Holdings Ltd
|
1/12/2016
|
0.440
|
0.020
|
4.55%
|
|
24/6/2017
|
0.460
|
|||
|
KSH
Holdings Limited
|
1/6/2016
|
0.510
|
0.430
|
84.31%
|
|
27/5/2017
|
0.940
|
|||
|
Lee
Metal Group Ltd
|
22/2/2017
|
0.280
|
0.025
|
8.93%
|
|
24/6/2017
|
0.305
|
|||
|
Micro-Mechanics
(Holdings) Ltd
|
30/8/2016
|
0.800
|
0.420
|
52.50%
|
|
22/6/2017
|
1.220
|
|||
|
PNE
Industries Ltd
|
1/12/2016
|
0.770
|
0.310
|
40.26%
|
|
24/6/2017
|
1.080
|
|||
|
Tiong
Seng Holdings Ltd
|
25/2/2017
|
0.240
|
0.045
|
18.75%
|
|
24/6/2017
|
0.285
|
|||
|
Valuetronics
Holdings Ltd
|
1/6/2016
|
0.330
|
0.465
|
140.91%
|
|
2/7/2017
|
0.795
|
However, since the first test was done based on 2017 prices, which
was a bull year, I decided to run another test on 15 counters on how they will
fare announcing their 2015 annual report results (mostly done over 2016 which
was a slightly-bear, stagnant year).
The accuracy of whether the Ultimate Scorecard will provide an
accurate judgement falls to 43%.
But if I only focus on the “buy” decision made by the Ultimate
Scorecard, the accuracy is still a respectable 75%.
Therefore, I came up with these observations:
- The Ultimate Scorecard is not very accurate when assessing a counter. This is especially true if it makes a “FAIL” decision, as the counter may still increase in its price within the next few months.
- The Ultimate Scorecard is more accurate in providing a “VALUE, BUY or DIVIDEND” result.
- The Ultimate Scorecard will give up more “FAIL” decision in a bear year as compare to a bull year.
- For any purchase of the counter due to the Ultimate Scorecard providing a “VALUE, BUY or DIVIDEND” decision, it should be held for at least 4 months.
In Short
But this does not mitigate the risk of a catastrophic event. But that will be for another discussion on diversification.
After all the explanation above, if you are interested to know
more about the Ultimate Scorecard, please sign up for my latest seminar with Simple Investor SG at this
LINK and you will get to see the launch of the up-coming database website too.
After the launch of the website, I believe I will be testing and
maybe adding other features to the scorecard, such as possible selling price. The
possibility is infinite! Bookmark this blog and continue to follow me!
Other than this seminar, I also have another market insight panel discussion with InvestingNote coming up! Do support me at this event too!
Please like our Facebook page (T.U.B Investing) and follow me on InvestingNote for the latest updates!
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