GuruFocus User Manual: All-in-One Guru Screener and Backtesting

Transcription

1 GuruFocus User Manual: All-in-One Guru Screener and Backtesting 2018 version 1

2 Contents One. Two. Three. Four. All-in-One Guru Screener: Basic Features 1. Introduction and Access a. Introduction to the All-in-One Guru Screener b. Accessing the Screener c. Screener Layout 2. Selecting Filters to Screen for Companies 3. The Predefined Screeners 4. Custom Filters in the All-in-One Screener 5. Saving Custom Screeners 6. The Screener Results Tabs 7. Screener FAQs Backtesting in the All-in-One Screener 1. Introduction to Backtesting 2. Backtesting Parameters 3. Backtesting Results 4. Backtesting FAQs Advanced Features in All-in-One Screener 1. Peter Lynch Charts 2. Customized Screener Results Views 3. The Valuation Heat Map New Features added to the Screener 1. Screening from Historical Data 2. Screening from a user portfolio 3. Various new filters 4. Screening using technical indicators 5. New Features FAQs 2

3 Section One: All-in-One Guru Screener Basic Features 1. Introduction and Overview As a value investing research platform, GuruFocus tracks the best stock ideas from various sources, including Peter Lynch, Ben Graham and Warren Buffett. These three legendary investors, unofficially known as the Power 3 of Value Investing, generate value strategies that have outperformed stock market benchmarks for decades. This user manual focuses on the granddaddy of them all, the All-in-one Guru Screener, which allows you to screen for companies using more than 200 predefined filters and customized filters. Introduction to the Screener As the name suggests, the All-in-One Guru Screener allows you to screen for companies from an eclectic variety of filters, ranging from profitability filters, valuation filters and guru filters. The Screener contains over 200 filters as of the writing of this user manual; however, the Customized Filters feature, which we will discuss later in this manual, boosts the number of filters to essentially infinity. Figure 1.1 shows a screen shot of the Screener upon access. At first glance, swarms of drop-down menus inundate the screen. However, we have organized the filters to facilitate the use of the Screener. Accessing the Screener Figure 1.1 GuruFocus offers several ways to access the All-in-one Guru Screener, likely due to its popularity among users. You can access the Screener by simply clicking the All-in-One Guru Screener underneath the Screeners tab. The Screener is the first item under the Value Screeners heading as Figure 1.2 illustrates. 3

4 Figure 1.2 Although discussing every possible way to access the All-in-One Guru Screener is beyond the scope of this user manual, we can still highlight other key ways to access the Screener. For example, let us consider the Search bar at the top of the Web page, below the blue GuruFocus ribbon. Note the purple arrow pointing to the word Search in Figure You can click here to drop a menu with two items: Search and Compare. Suppose we choose compare and type in some stock tickers as illustrated in Figure Clicking the go button takes us to the All-in-One Guru Screener with the four stock symbols listed in the Compare bar reappearing in the Stocks filter, located in the top-left corner of the Fundamental tab. Figure

5 Figure Screener layout The All-in-one Guru Screener consists of three parts: the header, the filter box and the results area. Figure shows the former two while Figure shows the third item. Figure Figure The header section contains two drop-down menus and the Global Stock Market ribbon. The dropdown menu on the left lists the predefined GuruFocus screens while the drop-down menu on the right lists your customized screens. Finally, the Global Stock Market ribbon allows you to screen for companies trading in global markets. Click on the check boxes to activate or deactivate the regions. Clicking on Show All Countries pulls down a color-coded list of all countries from the regions as Figure 1.5 illustrates. You can select the specific countries to screen right here. To save the Global Stock Market settings, click on the Set as Default button located on the farthest right of the Global Stock Market ribbon. Unless you change the settings, the Screener results area will only display the companies in the selected regions / stock exchanges. 5

6 Figure 1.5 The Filter box, which represents the core of the Screener, contains hundreds of financial filters organized in several tabs. The selected filters determine which company stocks populate the results area below the filter box. 6

7 2. Selecting filters to screen for companies As illustrated in Figure above, the All-in-one Screener contains over 200 filters organized into nine tabs: fundamental, valuation ratio, profitability, growth, valuation rank, price, dividends, gurus and insiders. Each tab screens for companies based on various value-investing categories. By default, the Screener displays the Fundamental tab. Brief overview of selecting filters Each of the drop-down menus allows you to screen for companies based on a specific financial metric. For each filter, the Screener implements the following layout: (Financial Metric) (Drop-Down Menu 1) To (Drop-Down Menu 2) To screen for companies whose revenue is at least a particular value, select the desired value from dropdown menu 1, the box between the financial metric name and the word to. Similarly, you can screen for companies whose revenue is less than a particular value by selecting the desired value from dropdown menu 2, the box to the right of to. As you activate filters, red numbers next to each of the tab headings track the number of active filters underneath each tab as illustrated in Figure 1.6. Figure 1.6 7

8 Click the Reset button (the leftmost button in Figure 1.7 below) to erase all active filters from the Screener. Then confirm the screener reset by clicking OK on the dialog box that appears. New Feature: GuruFocus added two features to the Screener: hiding the filters and resetting filters for a specific tab. Figure 1.7 shows the Reset / Tutorial / Filter row of buttons. Figure 1.7 Click on the Filter button to close the Filter box and only show the gray ribbon. This will allow you to see the screener results area without having to scroll down. The bottom-right corner of each tab contains a button titled Reset current tab. As the name implies, clicking this button will remove all filters for the active tab only. Fundamental tab Figure displays about 65 fundamental filters into five columns. From left to right, the columns contain the following financial filters: Column 1 contains the most fundamental filters, including revenue, market cap, enterprise value (EV), earnings per share, financial strength rank, profitability rank and predictability rank. Column 2 contains filters on financial strength, including FZM scores, current and Sloan ratios, interest coverage and other debt ratios. Column 3 contains filters on profit returns, including return on assets, return on equity, return on capital and Greenblatt return on capital. Column 4 contains filters on return on tangible assets / equity, days inventory, days sales outstanding, days payable, cash conversion cycle and number of good signs / severe warning signs. Column 5 contains filters on ownership, share buyback rate, total payout ratio / yield, initial public offering (IPO) date, in S&P 500 and exclude / include over-the-counter stocks. Valuation ratio tab As Figure illustrates, the Valuation Ratio tab allows you to screen for stocks with low valuation ratios, including the price-earnings ratio, the price-to-sales ratio and the price-to-book ratio. This tab also contains filters for the Greenblatt earnings yield, the Yacktman forward rate of return and the margin of safety based on the discounted earnings model. 8

9 Figure Profitability tab The Profitability tab contains filters on profit margins, including the gross margin, operating margin, net margin, pretax margin and free cash flow margin. Surprisingly, the Quick Ratio filter is also underneath this tab as illustrated in Figure Growth tab Figure As the name suggests, the Growth tab lists filters for several growth rates, including the revenue growth rate, the EBITDA growth rate, the EPS growth rate, the book growth rate, the debt to revenue growth rate and the asset growth rate. The tab also filters for the latest quarter EBIT year-over-year growth and the estimated future EPS growth rate as Figure illustrates. 9

10 Figure Valuation rank tab While this tab only has six filters, the Valuation Rank tab allows you to screen for companies that have high or low valuation ratios relative to the industry. We currently support valuation ranks for P/E, P/S and P/B as of the writing of this user manual. The valuation rank tab filters are summarized in Figure Price tab Figure As Figure illustrates, the Price tab consists of three parts: price and shares outstanding, price changes and historical price comparisons. 10

11 Figure The first two rows list basic filters pertaining to price and shares outstanding while the next three rows list filters pertaining to price changes. The final four rows list filters pertaining to price comparisons based on historical prices and valuations. Dividend tab As the name suggests, the Dividend tab contains all filters dealing with dividends, including the dividend yield, the payout ratio and the minimum years of dividend increase. These filters are summarized in Figure Gurus tab Figure As the name suggests, the Gurus tab allows you to screen for companies based on guru ownership and guru trades. Figure displays a screen shot of the Gurus filter box. Figure On the left, you will see a list of gurus and a check box next to each guru. To view the company stocks owned by a particular guru, click the check box next to the desired guru. While you cannot search for the guru name, you can click on one of the letters to list all gurus whose first name begins with the selected letter. 11

12 Click on one of the buttons west of the guru list to select all hedge fund gurus, mutual fund gurus, global gurus or premium gurus. The final button deselects all gurus. You can also select a list of gurus from the Choose My Gurus drop-down menu, which is interconnected with your Personalized Lists of Gurus. You can screen for guru buys / sells over a specific time frame, current guru ownership, etc. by selecting the desired values for the drop-down menus on the right. Insiders tab The Insiders tab allows you to screen for insider cluster buys, CEO buys and CFO buys (and correspondingly, sells) during a specific time period. For cluster buys and sells, you can screen based on number of insiders. For CEO trades, CFO trades and all insider trades, you can either screen based on number of shares (left drop-down menu) or total transaction cost (right drop-down menu). The filters are summarized in Figure Customized tab Figure As we will explore later in this user manual, the Customized tab allows you to screen for companies based on a user-defined filter formula. This tab effectively increases the number of possible filters from about 200 to infinity. 12

13 3. The Predefined Screeners Since its 2004 inception, GuruFocus generated about 20 predefined screeners, which can be accessed from the drop-down menu next to GuruFocus Screens from the header. While a deep discussion on all predefined screeners is beyond the scope of this user manual, we can still highlight some of the key screeners. Ben Graham s Lost Formula in 1976 Intelligent investor Ben Graham had more investing strategies than his famous Net-Net Working Capital strategy. The Father of Value Investing also worked on a nearly finished magic formula in 1976, as discussed in the following tutorial article. Some criteria include a trailing 12-month price-earnings ratio less than 10 and an equity-to-asset ratio of at least 0.5. GuruFocus also limits the companies in noncyclical industries and requires a market cap of at least $1 billion. Screening for high dividend stocks Income investors can screen for high dividend stocks by activating filters underneath the Dividends tab as shown in Figure 7.6 above. Such companies have a trailing dividend-yield of at least 3%, a three-year dividend growth rate of at least 10% and a dividend payout ratio less than 0.6. GuruFocus also provides two predefined screeners on dividend stocks: the dividend income portfolio and the dividend growth portfolio. The T Rowe Price Equity Income Fund (Trades, Portfolio) primarily invests in companies with high dividend yields. Peter Lynch Screeners Legendary investor Peter Lynch made his way on the GuruFocus Predefined Screeners, which include the Growth with lower valuation screener, the Lynch-Buffett Screener, the S&L Low-Book Screener and the Stalwart Screener. Most of these screeners utilize his earnings line, i.e., the screeners require a P/E (ttm) less than 14. Predictable Companies Screeners Several of the predefined screeners utilize the predictability rank filter, including the High Quality screeners, the Profitable Predictable Margin Expanders screener and the Good Companies screener. The companies that make these screeners have consistent per-share revenue growth and EBITDA growth during the past 10 years. Several of the Most Popular Value Screeners, including the Undervalued Predictable Screener, the Buffett-Munger Screener and the Historical Low P/S or P/B Screeners require a GuruFocus Predictability Rank of at least four stars. The following tutorial article discusses how to implement the most popular screeners, which also include the Ben Graham Net-Net, Walter Schloss Cheap Stock and Peter Lynch Growth screeners. Value Trap Screeners 13

14 So far, the above screeners list potential buy targets. However, we also have screeners that list potential value traps, including the James Montier Short Screen and the Margin Declining Screen. Such companies appear to have value, but the declining margins suggest that these companies have higher bankruptcy potential and low value potential. GMO fund manager James Montier researched the dark side of value investing by looking at companies with high price-to-sales ratios relative to the industry, a low Piotroski F-score and doubledigit asset growth. While the Montier Short Screen does not directly look for margin decliners, companies on the Montier screen have high potential for declining margins in the short-term due to poor business operations. 14

15 4. Custom filters in the All-in-One Guru Screener While the Screener has about 200 predefined filters, the Customized Filters feature effectively increases the number of possible filters to infinity. You can create a user-defined filter by typing in the formula for the filter using the following steps: 1. First, click on the Customized tab, which should be the rightmost tab from Figure Note that this tab contains the word new, which blinks like a flashlight. 2. Scroll down until you see a blue Create New Filter button. When you click on this button, you should see a screen like the one in Figure 1.8. Figure The Edit Filter Formula pop-up screen contains two parts: a formula box and a Valid Parameters box. As you type in your filter formula, you can select the desired term from the drop-down menu. You can also click on the desired term from the Valid Parameters. a. Note: Each parameter requires single quotation marks around the term. b. The site will notify you if your formula input is invalid. Please check that you spelled the terms correctly. 4. You can name the filter by typing the name in the small box at the top of the screen. Once you finish typing the filter formula, click on the blue Save button to add the filter to your custom filter list. 15

16 5. For each custom filter listed, you can select the min / max value or activate it by clicking the Activated check box. The red number next to the Customized tab lists the number of active Custom filters. 6. Each custom filter has its own row. To edit a custom filter, click on the pencil icon located in the desired filter s row. To delete a custom filter, click on the X icon located in the desired row. The former pops-up Figure 3 with the existing formula in the big box while the latter popsup a dialog box confirming the filter delete. The following tutorial article illustrates how to create a sample Strong Stocks 2017 screener. 16

17 5. Saving custom screeners Once you finish selecting your desired screener filters, you can save the screen by typing the screen name in the box next to Save Current Screen. As illustrated in Figure 1.9, Save Current Screen occupies the white strip between the filter box and the Screener Results tabs. Figure 1.9 To access your saved screens, click on the drop-down menu next to User Defined Screens in the header section (See Figure 1.4.1). Click on the desired screen to display that screen s active filters and the company stocks matching the criteria. The Manage Screens button next to the User Defined Screens drop-down menu pops up a window like the one shown in Figure Figure

18 As illustrated in Figure 1.10, the Manage Screens pop-up window contains four columns: screen name, private, alert and delete. You can click on the Private check box to prevent a screener from appearing on our User Defined Screens list. To receive alerts when new stocks appear on the top 50 screen results (or when stocks disappear from the list), click on the Alert check box for the desired screener. Finally, click on the red X to delete a screen. Click to confirm the screener delete when the dialog box appears. 18

19 6. The Screener Results area As you select filters, the Screener results area populates the companies that meet all of the selected criteria. Figure 1.11 shows a sample Screener Results screen shot. Figure 1.11 The pink arrow in Figure 1.11 lists the total records in the Screener results. By default, the Screener results area first displays the Active Filters tab. As the name suggests, this tab only lists financial information for the filters selected in the filter box. You can click on the other tabs in the gray ribbon at the header of Figure 1.11 to view financial information for a predefined set of filters. The first nine tabs correspond to tabs in the filter box, while the four tabs to the right of Active Filters offer advanced features within the Screener. For each of the first nine tabs, the Screener results area lists the companies that match all of the selected criteria and the following financial information (including the company ticker symbol): Fundamental tab: the company name, exchange, market cap ($ millions), price, yield, number of shares (millions), float shares, return on equity, return on assets and the industry. By default, the Screener lists the companies in ABC order by ticker symbol. Assume this is the case unless stated otherwise. Valuation tab: the price, price-book ratio, price-earnings ratio, price-sales ratio, DCF valuations (FCF based followed by earnings based), Projected FCF. The Screener lists the companies by increasing P/E ratios by default. Profitability tab: the company name, price, gross margin, operating margin, pretax margin and net margin. Growth tab: the price, and the 1-year, 5-year and 10-year growth rates for revenue, EBITDA, EPS, Book, Debt to Revenue and Asset. Price: the price, market cap, stock beta, trade volume, short ratio and other information about price changes / price changes relative to the Standard & Poor s 500 index price. 19

20 Dividend: the company name, price, trailing dividend yield, five-year yield on cost, payout ratio and five-year dividend growth rate. Guru Buy / Sell: the guru name, transaction date, action, price average, price change since action, current price, transaction comments and resultant shares. By default, the guru trades are listed from newest to oldest. Insider: the company name, the insider s position / name, the transaction date, transaction details and the current share price. By default, the insider trades are listed from newest to oldest. Guru Consensus: the company name, number of shares outstanding, market cap ($ millions), number of guru owners and information about the company s top guru holder. By default, the Screener lists the company stocks by decreasing number of guru owners and excludes companies with zero guru owners. Premium members have the option to customize the Screener Results area by clicking on the Customized tab between the Peter Lynch Charts and Valuation Map tabs. Note that this tab is different from the Customized tab in the filter box above. We will discuss this further in the Advanced Features section later in the user manual. 20

21 7. All-in-One Screener FAQs Do I need a Premium membership to use the All-in-One Guru Screener? o To have full access of the All-in-One Guru Screener, you do need a Premium membership. o Note the blurred lines as you attempt to use the Screener. Clicking on one of these blurred lines will either direct you to the membership upgrade screen or the Home screen. If you see the former page, we encourage you to go ahead and sign up for a free seven-day trial of Premium membership. Can I screen for technical indicators, like the relative strength index or the simple moving average? o You can now screen for technical indicators like the 14-day relative strength index and the 50-day simple moving average. (We support SMA s for 20 days, 50 days and 200 days.) Please refer to Section 4.4 for more details on technical indicator screening. What can I do if I cannot find a particular screener filter? o Please select the Customized tab in the filter box and click on the Create New Filter button. o Then follow the steps illustrated in Section 4, Creating Custom Filters in the All-in-One Screener. What does the From Home Exchange filter do? o The From Home Exchange filter limits the companies to those trading from their home exchange, e.g., it will only show Apple (AAPL) if you select the USA region. o This filter allows you to remove duplicate companies from the Screener results area. Is there a way I can show companies that do not meet all of the selected criteria in the Screener, in addition to the companies listed? o Yes. If you look closely at the Screener Results area, you should see the words Compare the results with these stocks, and a white box. o You can type the ticker symbols you want to compare into the white box. o For example, let us consider the Strong Stocks 2017 Screener that we discuss in the tutorial article. We can compare these results to other companies, like AAPL, IBM and WMT. Figure 1.12 shows a screen shot of the output: o o Figure

22 o The yellow bars in Figure 1.12 indicate that these company stocks do not meet all of the above criteria and are not included in the total records count. For example, the three stocks we compared do not have a GuruFocus Predictability Rank of four stars or higher, one of the key filters for the Strong Stocks 2017 Screener. Can I download the screener records to Excel? o Only Premium members can download screener records to Excel. To download the Screener records to Excel, click on the XLS Download link. o Additionally, Premium members can download just the top 1000 records from the Screener. o If you want to download up to 5000 records, you must upgrade to Premium Plus. How can I exclude industries from the Screener? o If you click on the button next to Industry under the Fundamental tab, you will see a drop-down menu listing all of the industries, as illustrated in Figure o o Figure 1.13 o Consider the pink oval in Figure If you select the Exclude option, you can select the industries / sectors you want to exclude from the Screener. o You can also select or unselect all industries by clicking the Select/Unselect All link. o Similarly, you can also exclude certain companies by tying the stocks to exclude in the white box after Stocks and click on the Exclude checkbox between the white box and the Go button. Can I screen for warning signs? o Yes. On the Fundamental tab, you will see two filters, Good Signs and Warning Signs. These two filters are located immediately above Financial Statement Type as Figure 1.14 illustrates. o o Figure 1.14 o Note: The Warning Signs filter applies to the Severe Warning Signs. To screen for Medium Warning Signs, please go to Customized Filters and type in Number of Median Warning Signs in the formula box. You can also add a criterion, e.g. 22

23 o Number of Median Warning Signs < 5 o NOTE: Although you can screen for warning signs and good signs, you cannot backtest on these parameters as of the writing of this user manual. Please try backtesting these through custom filters. Why do you show user generated screeners on the home page and on the initial Screener page? o As good minds think alike, the GuruFocus community can share value investing ideas among themselves. If you have good stock ideas, we can benefit from them if you are willing to share them with us. o If you do not want to share your stock ideas, you can set your user defined screener to Private by clicking the Private check box next to the Save button in the white Save Current Screen strip. o You can also change the privacy settings for your screeners through Manage Screens. Please refer to Figure 1.10 (Pages 17 and 18 of the user manual) for information on managing your custom screens. What happened to the filters for Price Change? You used to have them, but they are gone. o We actually display the Total Return instead of the Price Change. The Total Return filters show the split and dividend adjusted price changes for the following time periods: one week, one month, three months, six months and 12 months. o You will still find the total return filters underneath the Price tab. o Note: we might just use total return as we get these values from our data vendor. o You might be interested in a six-month price index. Please consult Section 4.4 for more details on screening using technical indicators, which includes the relative strength index and simple moving average. Section One ends here. 23

24 Section Two: Backtesting in All-in-One Guru Screener 1. Introduction to Backtesting Once you create a user-defined investing strategy from the All-in-One Screener, you may want to backtest the strategy and determine the strategy s outperformance relative to the Standard & Poor s 500 index exchange-traded fund. You can now backtest your user-defined strategies through GuruFocus. During June 2016, GuruFocus launched the backtesting feature in the Screener, free of survival bias caused by the historical mergers, acquisitions, spin-offs and delisting as discussed in the new feature announcement. This section of the user manual will detail the backtesting feature and how to analyze the results. Backtesting Preliminaries Before you can run backtesting, you must first choose the Screener filters that match your investing strategy. Section one of this user manual details how to screen for companies. Once you finish selecting the desired filter criteria, click on the Backtesting tab among the tabs located in the Screener Results area. This tab is located immediately to the right of the Active Filters tab, as Figure 1.11 illustrates. Once you click on the Backtesting tab, you should see a screen like the one shown in Figure 2.1. Figure 2.1 Note the large white space in Figure 2.1. Once you run backtesting, the white space will display two charts that we will discuss further. 24

25 2. Backtesting Parameters As illustrated in Figure 2.2, the backtesting feature requires several parameters, including the initial screen date, the rebalance frequency, the maximum number of stocks in the test portfolio and the financial metric used to rank the company stocks. Screen Date Figure 2.2 The Screen Date parameter sets the initial date of the backtesting. In the drop-down menu next to Screen Date, select the desired first month of the backtesting period. Rebalance Frequency The Rebalance Frequency parameter determines how often Backtesting should rebalance your test portfolio, i.e., close out the current holdings and allocate the proceeds equally to the top-ranked company stocks at the time of rebalance. You can rebalance your portfolio every three months, six months or 12 months. You can also choose to buy and hold, i.e., not rebalance the test portfolio at all. Rank by The Rank by parameter controls which financial metric should Backtesting rank your company stocks by. You can choose the desired parameter from the active filters selected, and then you can rank the company stocks in ascending order (ASC) or descending order (DESC) based on the selected financial metric. Number of Stocks The # of Stocks parameter determines the maximum number of stocks in the test portfolio. You can choose to have five, 10, 20, 30, 40 or 50 stocks in your portfolio. Backtesting determines which company stocks to list in the results tab based on the Rank by and # of Stocks parameters. Initial Investment Amount Although the Initial Investment Amount does not directly affect backtesting, you can set your initial investment amount for your test portfolio. By default, the initial investment amount is $1 million. 25

26 3. Backtesting Results Once you finishing setting the backtesting parameters, click on the blue Backtesting button to run the backtesting. You will see two charts once the backtesting finishes. Figure 2.3 shows a sample backtesting output. Figure 2.3 Chart 1 graphs the model portfolio s performance relative to three exchange-traded funds: the Standard & Poor s 500 index, the Dow Jones industrial average and the Nasdaq. Chart 2, the one below Chart 1, graphs the portfolio value during the backtesting period. The final value of the portfolio value depends on the initial investment amount entered. If you scroll down, you should see two sections: Performance and Annual Performance. The former lists the portfolio gains over a certain time period while the latter lists the portfolio gains for each year during the backtesting period. Figure 2.4 shows a sample Performance table while Figure 2.5 shows a sample Annual Performance table. Figure

27 Figure 2.5 To see the stocks in the model portfolio, click on the Results tab, the lower of the two tabs west of the Charts. By default, Backtesting lists the initial companies in the model portfolio as Figure 2.6 illustrates. You can view the companies in the model portfolio during a particular rebalancing period by clicking the respective tab. Figure

28 4. Backtesting FAQs Do I need Premium membership to run backtesting? o Yes. (This is the likely reason why Backtesting is highlighted in orange.) o Furthermore, Premium members can only backtest up to three years. As of the writing of this user manual, Premium members can use any initial screen date after o You must upgrade to Premium Plus membership to backtest beyond three years. Premium Plus members can backtest all the way to , the first month we have backtesting data. When I run backtesting, I noticed that gurus and insider filters become deactivated. Why does this occur? o As mentioned in the June 2016 new feature announcement, we only have the first release of the Backtesting manual. o Filters on gurus and insiders are still not supported as of the writing of this user manual. o However, we do support custom filters in Backtesting. Can I backtest companies in Europe or U.K.? o We only support backtesting for U.S. companies as of the writing of this user manual. Sorry about that. o Why? Since we want backtesting to be free of survival bias, we include all historical mergers, acquisitions, spin-offs and delisting in the backtest. In order to show backtesting results for global companies, we will need high quality fundamental data for delisted companies in global markets. I see an asterisk between the drop-down menus for rank by parameter and order by. What does the asterisk mean? o The asterisk reminds you that you need to choose an active financial filter for the backtesting. You will see the following warning message similar to the one in Figure 2.7 if you leave the Rank By parameter blank: o Figure 2.7 Can I download the backtesting results to Excel? o Yes, if you are a Premium or a Premium Plus member. (Which you should be or otherwise you won t be able to access Backtesting at all!) o You can click the blue Download all tables to Excel button to download all backtesting results into one Excel file. This button should be directly to the right of the Backtesting button. o You can also download a specific period s backtesting results by following these steps: First, click on the Results tab and select the desired backtesting period. Click on the XLS Download to Excel item to download the results. Section Two ends here. 28

29 Section Three: Advanced Features in All-in-One Guru Screener 1. Peter Lynch Charts in All-in-One Screener As the name suggests, you can click on the Peter Lynch Charts tab to view the Peter Lynch chart for all companies listed in the records. You can view the companies three at a time. For each Peter Lynch chart, you can graph the historical price and earnings line for the year to date, the past 12 months, the past three years, the past five years, the past 10 years or all historical years. You can also save the charts or embed them in your articles. 2. Customized views in All-in-One Screener In Section One above, we discussed the tabs to the left of the Backtesting tab and the financial metrics discussed on each tab. As a GuruFocus Premium member, you can customize the Screener Results area by first clicking on the Customized tab located two tabs to the right of Backtesting, and then clicking the Customize View icon as illustrated in Figure 3.1. Figure 3.1 By default, the Customized view lists the symbol, company, price, predictability rank, market cap and price-earnings ratio for the companies meeting all selected criteria. The Customized View feature allows you to select which financial metrics you want to view in the Screener Results area. Figure 3.2 shows a portion of the Customized view financial metric selection box. 29

30 Figure 3.2 The Custom View Financial Metric Selection Box lists over 500 financial metrics into nine categories: fundamental, valuation ratio, profitability, growth, price, dividends, income statement, balance sheet and cash flow statement. The first six categories correspond to the filter tabs discussed in Section One while the latter three list financial information from the accounting statements. Once you finish selecting all of the desired filters (you may need to scroll up and down the page), scroll down to the bottom where you should see a blue Save View button. Click on the Save View button to save the custom view. You can also download the custom view to Excel by clicking on the CSV or Excel button underneath the Customize View icon. Note: If you are not a Premium member, you may see blurred lines underneath the Symbol and Company headers. Clicking on the blurred lines will take you to our membership upgrade page, where you can sign up for a free seven-day trial of GuruFocus. 30

31 3. The Valuation Heat Map in All-in-One Screener As the name suggests, the Valuation Map allows you to visualize the relative valuations of companies within a specific industry. Figure 3.3 shows a sample Valuation Heat Map. Valuation Heat Map Layout Figure 3.3 The Valuation Heat Map can graph the relative value of one financial metric at a time. You can select this valuation metric among the drop-down menus located below the Total Records counter at the top-left corner of the Screener Results area. The available financial metrics are grouped into six dropdown menus: valuation ratio, price, fundamental, profitability, growth and dividends. The selected financial metric is highlighted in yellow, e.g., the Map in Figure 3.3 color codes the regions based on the companies trailing 12 month price-earnings ratio (P/E (ttm)). Like a floor plan, the Valuation Heat Map arranges the Screener results based on industry and sector. Each of the companies occupies one region on the Map, and the Map color codes the regions based on the relative value of the selected financial metric. Note the Relative Value Bar in the bottom-left corner of Figure 3.3. Based on this color-coded bar, you can find the range of the financial metric for each company listed on the valuation map. For example, in 31

32 Figure 3.3 above, dark green indicates that the company s P/E (ttm) is between 10.0 and Likewise, black indicates that the company s P/E (ttm) is between 16.0 and 31.3, i.e., near the median P/E (ttm). How is the Valuation Heat Map useful? With the Valuation Heat Map, you can narrow your stock picks to the companies that have higher value potential than other companies in the Screener Results. Suppose you generated a screen based on an investing strategy, but the Screener results show about 20 to 30 companies. To narrow the search results, you could add additional filters as illustrated in Section One. Alternatively, you can find good investing opportunities from the 30 stocks in the results area using Valuation Maps. 32

33 Section Four: New Features added to the Screener in June / July Screening for companies using historical data You will notice we have added the option to screen using historical data between the Customized tab and the Reset button as Figure 4.1 illustrates. Figure 4.1 Click on the check box between Use historical data and the corresponding drop-down menu to activate the historical data screening feature. The Screener will then list the companies that met your screening criteria for the month specified. You can change the backtesting month by selecting it from the drop-down menu provided as illustrated in Figure 4.2. Figure

34 2. Screening from user portfolios In addition to screening from historical data, you can also screen from a user portfolio. (Notice how this feature connects the My Portfolios feature to our All-in-one Screener, a winning combination.) Figure 4.3 illustrates the location of this filter. Figure 4.3 You can select the universe of stocks for the screener by selecting the desired user portfolio from the drop-down menu. Figure 4.4 shows a sample screenshot illustrating this. Figure 4.4 Notice that the Screener automatically populates the Stocks filter with the ticker symbols for the stocks included in the selected portfolio. You can change the universe of stocks to screen by selecting the desired portfolio from the Load from Portfolio drop-down menu. Remark: For both features, the Screener works the same way as outlined in Sections One and Two of this user manual. Please consult the My Portfolios user manual for details on creating user portfolios. 34

35 3. Miscellaneous new filters in the Screener Figure 4.5 shows the lower-left corner of the Fundamental filters box, which contains three newly-added filters: Next Earnings Date, Most Recent Financial Update and Optionable Stock. Figure 4.5 Next Earnings Date: This filter allows you to screen for stocks whose next earnings report will be released in a given time period. You can select from a period of one month to 12 months in one-month intervals. Most Recent Financial Update: This filter allows you to screen for stocks that reported a financial update during a given time period. You can select from a period from one week up to 12 months. Optionable Stock: The word optionable (it is not really a word per se) means that the stock offers call options and put options. Select Yes to view only the stocks that offer options or No to view only the stocks that do not offer options. We also added a Probability of Financial Distress (PFD) filter in the leftmost column underneath the Fundamental tab as Figure 4.6 illustrates. Figure

36 The PFD is the probability that a company will go bankrupt within the next year based on a comprehensive model containing eight explanatory variables: net income over total market assets, total liabilities over total market assets, cash over market assets, excess return compared to the S&P 500, standard deviation of daily returns from the past three months, the relative size, market to book and the logarithmic share price. The logit probability of financial distress (LPFD) is a linear sum of the explanatory variables according to a 2010 Harvard Business School research article: LPFD = * NIMTAAVG * TLMTA 7.88 * EXRETAVG * SIGMA * RSIZE 2.27 * CASHMTA * MB 0.09 * PRICE 8.87 PFD = exp (LPFD) / (1 + exp (LPFD)) You can screen for the PFD between 0% and 100% in increments of 5% by selecting the drop-down menus for PFD. 4. Screening for technical indicators (August 2017 new feature) You have waited for this all year long and it is finally here. You can now screen using technical indicators like the Relative Strength Index (RSI), the Six-Month Price Index and the Simple Moving Average (SMA). These filters are located underneath the Price tab as Figure 4.6 illustrates. Figure 4.6: The filters highlighted in yellow represent the new technical indicator Screener filters You screen for these filters just like how you screen for filters like revenue per share or operating margin: click on the drop-down menus next to the desired filter to select the desired range. For example, you can screen for companies whose 14-day relative strength index is between 30 and 50 by setting the 14-Day RSI filter as (30) To (50). We will now briefly discuss these technical indicators: Relative strength index: o The relative strength index (RSI) determines if a stock is likely overbought or oversold. According to Investopedia, the RSI equals 100 minus the quotient of 100 and a (1+RS) term. The RS value equals the average gain of up periods divided by the 36

37 o average loss of down periods during the past 14 days (we only support a 14-day RSI as of the writing of this user manual). Traditionally, an RSI of 70 or above suggests that a stock is likely overbought while an RSI of 30 or below suggests that a stock is likely oversold. These values suggest that over time, the stock s RSI should revert to a mean of 50. The six-month price index: o The six-month price index compares the current share price (numerator) to the share price six months ago (denominator). The share prices are adjusted for stock splits and cash dividends. o Price indexes greater than 1 indicate that the company s share price increased during the recent six-month period while price indexes less than 1 indicate that the company s share price declined during the recent six-month period. The simple moving average o The simple moving average (SMA) computes the arithmetic average price of a security during a set time frame. We currently support SMA for the past 20 days, the past 50 days and the past 200 days. o You can screen for companies whose share price is between a% and b% above or below its SMA 20, SMA 50 or SMA 200, where a and b is any multiple of five less than or equal to 100. This includes screening for combinations of these SMA filters. 37

38 5. New Features FAQs Do I need a Premium membership to screen from historical data? o Yes. Screening from historical data has the same limitations as that of Backtesting (see Section Two): up to for Premium members and up to for Premium Plus members. o Notice that we explicitly indicate which months require Premium Plus with the (Premium+) tag next to those months. How can I screen from multiple months? o We unfortunately do not support this feature as of the writing of this user manual. o Here is a workaround: First, please screen for stocks using one month and download the screener results into a portfolio. You can then load that portfolio into the Screener and screen for stocks using the second month. Repeat the two steps above until you have your desired list of companies. Do you have data on the stock options themselves? o We unfortunately do not have options data as of the writing of this user manual. o You can only screen for stocks that offer options at this time. o Sorry, but you also cannot backtest on stocks that offer options either. How does the Most Recent Financial Update work? Will it tell me if the financial update is an 8-K, 10-Q or a 10-K? o Unfortunately, the Most Recent Financial Update only gives you the date of the last financial update. o You can click on the Filings item from a company s summary page to view the past 10- Qs and 10-Ks for a specific company. (You will be directed to that company s SEC Edgar search page.) Figure 4.6 illustrates the location of the Filings button. o o Figure 4.6 o Our new homepage has a section titled Latest Quotes, where you can access your most-recently viewed stock pages. The Alerts tab, as Figure 4.7 illustrates, will give you the alert type and details. o o Figure

39 Where can I find the next earnings date for a company? o You can find the next earnings date in the Financials section of a company s stock page as Figure 4.8 illustrates. Note that Est. indicates an estimated date. o o Figure 4.8 Can I backtest on some of these new filters? o We unfortunately do not support backtesting on the technical indicators even though the Screener suggests you can. o You cannot backtest on the next earnings date or most recent financial update as well (these filters will be grayed out when you click Backtesting. ) How can I screen for a different RSI or SMA, say an SMA 100 or a seven-day RSI? o We unfortunately only support screening for 14-day RSI and the following SMA s: SMA 20 SMA 50 SMA 200 o Note that the Price tab only offers filters for % above or % below the SMA s. You can screen for the SMA s themselves using Customized filters (please refer to Section 1.4). o Note that we only have simple moving averages. Sorry, but we do not support screening on exponential moving averages at this time. 39

40 All-in-One Screener Manual: Conclusions The All-in-One Guru Screener is one of the most popular features that GuruFocus provides to its Premium members. Although every detail of the Screener is beyond the scope of the user manual, this user manual detailed the Screener Basics, the Backtesting Feature and several other advanced features. If you are not a Premium member of GuruFocus, you will see a warning message similar to the one shown in Figure 5 throughout the Screener. Figure 5 Please click on the orange link to sign up for a free seven-day trial of our Premium Membership, which gives you full access to the All-in-one Guru Screener and much more. The link is also listed below: 40