Forum Archive Index - October 2000

[Brian Gale <brigale@i4free.co.nz>]

Last week I posted two surveys showing companies whose share-price had 
gained during the 9 mths of this year (a) TOP40 Index &  (b) SCI Index. 
against the falling trends of both Indexes.
These postings will be in the archives of course.

However for your exercise I repeat the main 'Winners' lists which I suggest 
should be the starting point for your exercise - to be measured against 
your criteria,

TOP40
  Out of a total of  49  Top 40 securities some 20 have shown an increase, 
or at least didn't fall during the 9 mths to date  Ten show a Cap gain of 
10% or better. The Top40 Index itself  fell nearly 10%.

MON , BCH , WHS,  INL, ANZ, UNL, WPTCA,

TTPGC, TLT, GPG, SKY, LNN, NCH, TRH, AMP, AIRVB, KIPVB,

FAP  &   FFS,FEG

SCI Index
Companies showing a 10% gain,or better, for the 9 months of this year 
....SCI Index fell 8.5%

RNS,  GDC,  NAPOC,  TAS, FRU,

WHHPA,  DBG.  CED, CMO, AFF

REI,  MCH,  WKL,  WRI

NTH, UIL, SPN, CAV. DBN, NZR

These range from gains of over 100% down to 11% in the order shown.

BG

At 07:18 07-10-00 +0000, you wrote:
>Thus far we have:
>
>SKC, RBD, AIA, BCH, WHS, NZR, TRH,
>
>Once we have the list - Step 1 (more submissions please!) why don't we 
>find the top 5 by consensus discussing the below - Step 2?
>
>(Thanks for the URL Brian (Brakenridge), what was your winners list Brian 
>(Gale)?)
>
>No share will match the crieria perfectly but I like the outline by Philip 
>Robinson:
>
>Quote
>
>1. Does the business have an identifiable consumer monopoly?
>It will be either a brand-name product or a key service that people or
>businesses are dependent on. A great product is where you start, but a great
>product doesn't necessarily mean a great company
>
>2. Are the earnings of the company strong and showing an upward trend
>Five or more years of earnings information is required. One looks for an
>annual per share earnings that are strong and show an upward trend.
>
>3. Is the company conservatively financed
>Star companies usually carry long-term debt of less than one times current
>net earnings. Sometimes an excellent company with a consumer monopoly will
>add a large amount of debt to finance buying another business, one has to
>judge whether the acquisition is also a consumer monopoly or not.
>
>4. Does the business CONSISTENTLY earn a high rate of return on shareholders
>' equity?
>A return on SH equity of 15% at least and preferably more. High rates of
>return on equity are indicative of an excellent business.
>
>5. Does the business get to retain its earnings?
>One wants to invest in businesses that can retain their earnings and haven't
>committed themselves to paying out a high percentage of their profits as
>dividends. This way the shareholders can benefit from the full effects of
>compounding, which is the secret to getting really rich.
>
>6. How much does the business have to spend on maintaining current
>operations?
>Making is money is one thing, retaining it is another, and not having to
>spend it on maintaining current operations is still another. The capital
>requirements of a business may be so demanding that a company ends up having
>little or no money left to increase the fortunes of its shareholders.
>
>7. Is the company free to reinvest retained earnings in new business
>opportunities, expansion of operations, or share repurchase? How good a job
>does the management do at this?
>Share repurchases increase per share earnings and expansion of operations
>will hopefully utilise the retained earnings to give an above average rate
>of return.
>
>8. Is the company free to adjust prices to inflation?
>
>9. Will the value added by retained earnings increase the market value of
>the company?
>
>10.  The company should not be in the commodity business!
>
>End Quote
>
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