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Your New Years Portfolio Review

All over social media friends, family and colleagues are posting their resolutions for 2014. Some concentrate on living a healthier lifestyle, spending more time with those they care about or stating an ambitious goal they would like to pursue.

The early part of any year, for myself, is dominated by personal finances and my portfolios. I generally get some extra free time to myself where I review my own portfolios, update my tracking spreadsheets and complete some review consulting with clients.

Today I was running through one of my spreadsheets and wondered how much information the average investor tracks…

Over 40% of the emails I receive from readers involve techniques for picking stocks, knowing when to buy or sell and general rules for success. Tracking financial information, while not very exciting, has always been a part of my success so I can’t imagine that it wouldn’t be successful for others.

In numerous posts on this blog (especially my ebook and Stock Analysis Guide – Taking Stock in IGM) I go through the types of information I track, pay attention to, and use to make decisions on investments.

Far too often I believe investors ignore important financial metrics because they feel that the information is too complicated. How do you sift through financial reports (without training) and how do you know what to look for?

A good starting point is this…

Take 3 annual reports from any company; say the reports for 2013, 2011 and 2009. Create an excel spreadsheet the tracks this basic information:

-Return on Shareholder’s Equity (ROE)
-Book Value per Share (BVPS)
-Year End Price of the stock
-Earnings per Share (EPS)
*(if it pays a dividend)

Seems simple enough?

Try collecting the above information for 2013, 2012, 2011, 2010, 2009 & 2008 using the annual reports. If you’re lucky the company may already have consolidated the information into a 5 year or 10 year review. You will want to have at least 5 years of data to examine which is the minimum I advise to look at.

From that information you can easily determine the annual…

-Payout Ratio*
-Price to Earnings (P/E)
-Price to Book Value (P/B)
*(if it pays a dividend)

What you can then do is take the average(s) over that period of time and examine the company’s current financial situation (how has it changed) versus the historical average. Remember this isn’t the only criteria for investing, but will give you a quick check on the company you’re looking at.


I just recently updated my spreadsheet on Saputo (SAP); a Canadian dairy product company.

I track information on Saputo (one of my longest held investments) since around 1996.

Historically the company has the follow stats in my spreadsheet:
ROE: 20.5%
Yield: 1.33%
Payout Ratio: 26.04%
P/E: 20.3
P/B: 3.62
Book Value Growth: 13.16%
Dividend Growth: 20.64%

If I do the above exercise and collect just 5 years of data I get the following…

ROE: 20.9%
Yield: 1.66%
Payout Ratio: 32.26%
P/E: 20.1
P/B: 4.00
Book Value Growth: 5.40%
Dividend Growth: 12.79%

In assessing the changes over the past 12 months, 24 months, 5 years and 18 years there are changes that should be noted.

Book value growth (a big deal to me as a value investor) has changed substantially, but an investor has to be open to knowing the company has been quite active recently in acquisitions. ROE (another important metric for me) has remained stable, but the growth of the dividend has slowed versus the historical trend of ~20%.

I am happy overall with this investment when I consider all factors involved with Saputo and its operations. This quick checkup, along with updating my fundamental analysis of the company, can be done a few times per year and helps me to quickly review items I may be missing that are very easily and effective to track.

I do this for each investment I hold (roughly 30) on at least a quarterly basis and have a stock calendar so I know when to expect annual reports so I can update my data.

I would suggest giving it a try and if you have any difficulties…let me know!

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