Home Value Investing Value Investing: Qualitative Versus Quantitative Aspects

Value Investing: Qualitative Versus Quantitative Aspects

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In general, over the years, I have had respect for John Buckingham, who writes The Prudent Speculator.  I caught this because we own the  same stock Ensco plc.  As he said:

For instance, Ensco PLC (ESV) is the world’s second largest offshore driller, operating in six continents with one of the newest jackup and deepwater fleets in the industry. The company has shown a relatively impressive ability to keep operating expenses in check and generate solid free cash flow, while the P/E is less than 10, the dividend payout is more than 5% and profits per share are expected to increase from $6.14 last year to $6.67 this year and $7.79 in 2015. In short, we find Ensco to be a high-yielding, value-priced, financially-strong growth stock, operating in an industry with high barriers to entry and favorable long-term demand characteristics!

Great minds think alike, and fools seldom differ.  You shouldn’t buy Ensco after reading this unless you have studied it out.  Just because I agree with a comrade does not mean you should take action.  We could both be wrong.

At the end of his piece he listed many summary statistics of his portfolio.  I want to compare his with mine:

Dividend yield: His: 2.3%, mine 2.2%

P/E: His 15.9x, mine 12.0x

P/B: His 1.65x, mine 1.48x

P/S His 0.86x, mine 0.68x

I don’t look for dividend yields, and many European stocks that I own pay dividends, just not regular dividends — the philosophy is different there.

One thing that is different for me versus Buckingham is that I have more foreign stocks in my portfolio.  I am willing to consider companies in countries that follow the rule of law.

I have done better, and you are free to ask me how.  My main idea is to search for the best ideas regardless of where they are domiciled, or what size they are.  I analyze stocks regardless of how they are categorized by most.

Full disclosure: long Ensco plc [ESV]

By David Merkel, CFA of alephblog

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David Merkel

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