Welcome to Cheapskate Investing!
Cheapskate Investing borrows from the wisdom of value investing giants and uses a systematic quantitative screening approach to filter the global stock markets for cheap deep-value cigar-butts and wide-moat compounders. Based on the initial list of stock ideas filtered, Cheapskate Investing applies customized investment checklists to ask the right questions of the investments in question.
Walter Schloss, arguably the most ardent follower of Benjamin Graham’s cigar-butt value investing strategy, delivered annualized investment returns of ~16% for the 46 year period from 1956 to 2002, compared with ~10% for the S&P during the same period.
James Montier’s 2008 study found that holding a global basket of net-nets from 1985-2007 would have generated a return of over 35% p.a. versus an equally weighted universe return of 17% p.a. On a regional level, net-nets outperformed the market by 18%, 15%, and 6% in the USA, Japan and Europe, respectively.
Tweedy, Browne’s global research has found among different investment approaches, low P/B, Low P/E, high dividend yields, insider buying, falling knives and small-cap stocks, have outperformed the market over time.
Barclays Europe Research showed that a combined low P/B and high ROE screen outperforms the high P/B, low ROE screen by 32.3% annualised and the market by 13.6%; while combining low P/Book, High Return on Equity and High Dividend Yields in a Financials Value screen outperformed the Stoxx TMI Financials by 19.5% annualized.
Warren Buffett grew the book value of Berkshire Hathaway from $19 per share in 1965 to a $114,214 per share in 2012, equivalent to a 19.7% annualized rate of return. In comparison, the S&P 500 index, with dividends included, compounded returns at 9.4%.
Warren Buffett quoted from Fortune‘s 1988 Investor’s Guide issue in Berkshire Hathaway’s 1987 Shareholder Letter, a study that indicated that among the 500 largest industrial companies and 500 largest service companies, only 25 of the 1,000 companies achieved 10-year average ROE of over 20% from 1977 through 1986, with a minimum ROE of 15% in each of the years. During the decade, 24 of the 25 outperformed the S&P 500.
Joel Greenblatt, Managing Principal and Co-Chief Investment Officer of Gotham Asset Management, claims in his 2006 book ‘The Little Book That Beats The Market’, that back testing the Magic Formula returned 30.8% per annum from 1988 to 2004, compared with a market average and S&P500 return of 12.3% and 12.4% respectively. (Note: Cheapskate Investing’s quantitative and systematic approach towards seeking cheap wide-moat compounders was inspired by the underlying concept of the Magic Formula’s ‘quality bought cheap.’)
In contrast to deep-value cigar-butts (typically screening and 52 week lows), the process of finding and selecting wide-moat compounders is much more diverse, with various practitioners adopting different approaches.
Cheapskate Investing’s strategy for seeking wide-moat compounders is a three-step process. First, we narrow our investment universe for compounders by ‘searching for past excellence’ (refer to Wedgewood Partners) via screening for long term, consistent financials. Second, we rank the candidates by EV/EBITDA, to look for wonderful companies at fair prices. Third, we finally get to the qualitative side of things and assess the potential for future excellence by evaluating the presence (or absence) of economic moats (and reinvestment potential/growth runway) leveraging on Pat Dorsey’s theoretical framework.
Read more about Cheapskate Investing’s Investment Philosophy here:
Also refer to our Case Studies
Free Stock Ideas and Value Investing Wisdom
Subscribe to the free open-access Cheapskate Investing Blog by entering your email address in the right sidebar and clicking on the ‘Subscribe’ button
If you want more…
If you will like to get further assistance on investment idea generation for global stocks such as deep-value cigar-butts and wide-moat compounders, please consider Cheapskate Investing Paid Membership!
At $29 a month, you will benefit from
- At least one (1) new investment idea profiles updated monthly
- Deep-value cigar-butts and Wide-moat compounders raw stock screens updated monthly
- A peek into Cheapskate Investing’s Current Stock Portfolio
- Piggyback under-followed and undiscovered fund managers
- Avoid Value Traps referring to the Members-Only Red-Flag Stocks List
- Q&A – Ask Mark of Cheapskate Investing questions on any value investing topics or stocks, and get answers
This FAQ will get you started using Cheapskate Investing, and serves as a good reference for potential questions.
Q: What is Cheapskate Investing and what is the difference between paid content and free content?
A: Cheapskate Investing is a investment website devoted to the application of various proven value investing strategies to global stocks across several countries and stock exchanges around the world.
We provide a limited number of stock ideas and snippets of our paid content via our open free access blog.
BUT our exclusive content found in Members Area and/or blog posts tagged as ‘Members’, open to only Paid Members, provide the following:
- Raw Quantitative Screens/Lists of specific stock names screened Monthly based on proven value investing strategies;
- One (1) New Monthly Investment Idea Profile; and
- Other undiscovered gems flying off the radar from
- Piggybacking under-followed and undiscovered fund managers
- Sell-side Analyst Reports focusing on unjustified consensus SELL rating reports and NON-RATED reports, industry/sector research reports and thematic investing strategy reports
- Value Investing Blogs/Forums
Cheapskate Investing Paid Membership is an extension of the analysis and writing done at Cheapskate Investing Blog, where I highlight global investment opportunities (deep value cigar-butts & wide-moat compounders) and discus general value investing principles.
Q: What is Cheapskate Investing Paid Membership?
A: It is FOR investors currently currently invested in or looking to invest in global stocks in the near future,
WHO NEED to generate and/or validate global stock ideas in an efficient and effective manner.
Cheapskate Investing Paid Membership IS AN easy-to-use convenient service for global stock idea generation and validation
THAT PROVIDES lists of specific stock names screened based on investing strategies across key global stock markets (the United States (U.S.), The United Kingdom (U.K.), Hong Kong, Malaysia, Japan, Australia) MONTHLY AND One (1) New Monthly Investment Idea Profile AND other stocks ideas from sell-side research reports & value investing blogs/forums on an ad-hoc basis
UNLIKE other U.S-focused premium investment services, Cheapskate Investing Paid Membership focuses exclusively on selecting global stocks using a systematic quantitative approach, complemented by qualitative approaches via sell-side analyst reports and value investing blogs/forums.
Q: What is Cheapskate Investing’s investing style?
Which quantitative screens/investing strategies currently are used?
A: We currently employ two (2) broad value investing strategies (Cigar-butts and Wide-Moat Compounders) and five (5) different quantitative screens.
Benjamin Graham Deep-Value Cigar-Butts
- Low P/NTA Stocks / Stocks trading below Tangible Book;
- Net-nets / Stocks trading below Net Current Asset Value (NCAV);
- Net Cash Stocks / Negative Enterprise Value Stocks
which are profitable, dividend-paying and have strong balance sheets
Warren Buffet Wide-Moat Compounders
- 10-Year track record of Consistent, High Profitability;
- 10-Year track record of Consistent Free Cash Flow Generation;
which are trading at low EV/EBITDA ratios
Read more about Cheapskate Investing’s Investment Philosophy and Case Studies below:
Q: Which markets are covered?
- United States: NYSE AMEX (AMEX), NASDAQ (NASDAQ), New York Stock Exchange (NYSE)
- Excludes OTC (pink sheets) stocks, due to issues with liquidity and access to financial information (‘go dark’)
- Hong Kong: Hong Kong Stock Exchange (SEHK)
- Malaysia: Bursa Malaysia Stock Exchange
- Japan: Tokyo Stock Exchange (TSE)
- Australia: Australia Stock Exchange (ASX)
- UK: London Stock Exchange (LSE SETS)
Note: The above list reflect the stock markets for which I conduct my screening. I don’t necessarily own or do analysis on companies in all of these stock exchanges. Based on my experience, I have found the most number of wide-moat compounders listed in the U.S., while Hong Kong, Malaysia (these two countries make up the bulk of my stock portfolio) have been fertile ground for my cigar-butt investments.
Q: How much does the paid premium member subscription cost? What methods of payment do you accept?
A: You will be charged US$29 upfront and every month thereafter for the Cheapskate Investing Paid Membership. You can either pay with your Paypal balance or with credit cards through Paypal.
Q: Why is the payment in US$ dollars?
A: This is to standardize the payment for subscribers from different countries.
Q: How do I sign up or subscribe to my Cheapskate Investing Paid Membership?
A: Subscriptions are currently processed automatically.
Click on the ‘Membership Account’ on the navigation bar below the header and execute payment as necessary.
Q: Is there any trial period? Are samples of stock ideas available?
A: There isn’t any trial period. But you are free to cancel your membership anytime and you will be refunded your last monthly payment.
No samples are available. If you wish to have a understanding of Cheapskate Investing’s value investing philosophy and stock analysis, please navigate to the blog. Cheapskate Investing Paid Membership is a premium version of the Cheapskate Investing (Open Access) Blog. Members have priority access to the author and the top stock ideas are reserved solely for members.
Q: What should I do if I have problems paying with Paypal?
A: Feel free to email the Administrator.
Provide details of the issues you are facing, and I will do my best to solve them or accommodate other methods of payment.
Q: I completed the payment via Paypal, but can’t access Paid Content.
A: Our Paid Content is accessed in the Members Area and Blog Posts tagged as ‘Members’.
Q: How do I cancel my Paid Membership?
A: You can cancel your membership by at anytime through your Paypal Account, by:
(1) Go to ‘Membership Account\Membership Cancel’ on our website when you login; or
(2) Go to ‘Profile\My Money\My pre-approved payments’ on your PayPal Profile page.
If you cancel your membership during the month, you will be refunded your last monthly payment.
Q: How do I get refunded?
A: Any member who is unsatisfied will receive a refund. If you cancel because Cheapskate Investing no longer meets your expectations, your last monthly payment will be refunded.
Q: What if I have further questions?