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Author: TheStamper Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5655  
Subject: Boring Stocks 3.0 FAQ Ver. 1.0 Date: 3/22/2002 2:20 PM
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Boring Stocks 3.0 FAQ Version 1.0

Welcome to the Boring Stocks Board, version 3.0.  In January of 2002, we began an effort 
to revive this dead (or extremely sleepy) board.  Prior to this effort there have been two 
Fools that have been widely considered to be the portfolio managers.  Their names and 
beginning philosophies are linked below:

By Greg Markus (MF Boring)
http://www.fool.com/BoringPort/1996/BoringPort960122.htm

By Dale Wettlaufer (TMF Ralegh) – currently posting as 'FDWBaltimore'
http://www.fool.com/boringport/1999/boringport990709.htm

A Guide For Boredom Seekers

We believe that Tech Stock investors are usually thrill seeks.  By contrast, participants 
on our board are Boredom Seekers.

Most investing boards here at TMF have a subject, or topic that is easily understood 
simply in reading their names.  When most Fools choose to enter boards like; “Shorting Stocks”, 
or the “Communion of Bears”, they would likely have an understanding of the general subject matter 
to be discussed on that board.  However, “Boring Stocks” is open to interpretation.  

In this latest version of Boring Stocks, we have created a definition of the type of stocks 
we are interested in.  This definition is intended to help all interested Fools in 
learning the characteristics of companies that we consider Boring:

1 - A Boring Company Has Minimal Analyst Coverage.
2 - A Boring Company Earns a Majority Of Its Revenues In A Middle Growth Industry.
3 - A Boring Company Earns Revenues In A Small Number Of Industries.
4 - A Boring Company Has A History Of Positive Earnings
5 – A Boring Company Has Low Average Monthly Trading Volume.
6 – A Boring Company Pays A Dividend.



The Z FactorZ”; the universal symbol used to depict a sleeping cartoon character.  This 
letter is the symbol for our initial scoring system.

Along with our definition, we have created a scoring system.  Each portion of our definition 
has a range.  Each range has a score.  If you consider a particular company Boring, you can 
apply our scoring system to that company.  The score the company receives is called its 
“Z Factor”.  The higher the Z Factor, the more Bored you should be by the company.

Pick a company and give it a try!

Minimal Analyst Coverage – Number of Analysts
(A) 1-3  (3 points)
(B) 4-6  (2 points)
(C) 7-9  (1 point)
(D) More than 9  (0 points)

Revenues In A Middle Growth Industry – Industry Growth Percentage
(A) 7% - 8% (3 points)
(B) 9% - 10%, 5% - 6% (2 points)
(C)11% - 12% 3% - 4% (1 point)
(D)More than 12%, or Less than 4 (0 points)

Revenues In A Small Number Of Industries
(A) 1-2 (2 points)
(B) 3-4  (1 points)
(C) More than 4 (0 points)

History Of Positive Earnings (number of consecutive years)
(A) 6 or more (3 points)
(B) 4-5  (2 points)
(C) 2-3 (1 points)
(D) Less than 2 (0 points)

A Boring Company Has Low Average Monthly Trading Volume
(A) 0% - 3%  (3 points)
(B) 4% - 7%  (2 points)
(C) 8% - 11%  (1 point)
(D) 12 or more  (0 points)

A Boring Company Pays A Dividend
(A) Yes  (1 points)
(B) No   (0 points)



Where Do I Get The Information I Need To Calculate A Z Score?

Here are some rather mundane posts, in which a Fool has calculated a Z-Factor, and kindly 
provides links to the source(s) of the information:

Post #4825, By LakeEffect, on Sysco Foods (SYY):
http://boards.fool.com/Message.asp?mid=16694476

Post #4784, By Stamp, on AAON, Inc (AAON):
http://boards.fool.com/Message.asp?mid=16672502



What Companies Have You Assigned Z Factors To?

Here is a list of the companies; the Z Factor score; and the original post number:

Company	      Symbol	Z Factor  Date	          Fool	        Post #
Timberland	TBL	6	02/05/2002	LakeEffect	4728
Fidelity Nation FNF	8	02/06/2002	LakeEffect	4814
Northwest Natur NWN	5	02/06/2002	LakeEffect	4814
AAON, Inc.	AAON	9	02/08/2002	Stamp	        4784
United Rentals	URI	5	02/08/2002	schruchill16	4791
Target	        TGT	8	02/10/2002	Stamp	        4815
Costco	        COST	7	02/11/2002	Stamp	        4815
Sysco	        SYY	7	02/11/2002	LakeEffect	4825
Supervalue	SVU	6	02/11/2002	LakeEffect	4824
McCormick & Co	MKC	7.5	02/16/2002	yofluke	        4880
Mettler-Toledo 	MTD	8	02/16/2002	yofluke	        4881
Family Dollar	FDO	8	02/16/2002	jackcrow	4888
Industrias Bach IBA	13	02/19/2002	Peanalyst	4901
Patterson Denta PDCO	8	02/20/2002	Stamp	        4907
Smuckers	SLM	11	03/16/2002	yofluke	        4980




So What?

The Z Factor assigned to a company is not intended as a “buy”, “sell”, or “don't buy” signal.  
We believe buying stocks is much more complicated than a scoring gimmick (no offense 
Tom & Dave).  The scoring method is intended to provide framework for future discussion 
on a company.  

Following extensive research, we are just as likely to purchase a company with a Z Factor 
of 1, as we are a company with a Z Factor of 10.  Indeed, a company with a Z Factor of 10 
may receive more interest at first, but that does not mean companies with lower scores are 
eliminated from consideration.



How it Works

Our board has a mythical IRA account, online, with American Express.  Our opening balance is 
$100,000.  As a result, no tax considerations, or transaction charges are considered in our 
portfolio's performance.  (If you have a problem with this, then you may volunteer to be the 
bookkeeper for the portfolio, and you can track all that stuff!).

Our funds come from the death of our rich uncle, Dean.  He was an accountant for a funeral 
home his entire life.  However, his estate turned a fortune on selling his secret stamp 
collection.  A part of that estate was gifted to us.  We have vowed to only purchase Boring 
Stocks as a tribute to him and his rather dull existence!

A reasoned, business-like approach is required in the analysis of our stocks.  There are an 
endless amount of things to consider when purchasing a stock.  However, our board has provided a 
list of measures that we intend to consider in evaluating a stock after its Z Factor has been determined:

Low Valuation 
Positive Cash Flow 
Returns on Capital / Better than Cost of Capital
Increasing Earning Growth
Dividend Rates
Low Market Cap

There may be other things to consider as well.  This list is intended to inform posters of the 
things that our members feel are important considerations when deciding to buy a stock.

We are not professionals (except for Dale).  We very much consider our board to be a work in 
progress.  We are learning just like you.  As our Board's community evolves, we anticipate 
that we will need to make changes to our philosophies and definitions.  Respectful, well reasoned 
debate is oil on the gears of change.  If you don't like, or agree with something, let us know.  
But remember, this is an investment group.  We are always interested in 'what works 
for you'.  However, certain practices or methods that work well for individuals, but may be 
difficult for the group to adapt.  In the end we hope we are sharing ideas; laughing; and 
learning with each of the boards successes and failures.

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Author: RoryBBellows One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5008 of 5655
Subject: Re: Boring Stocks 3.0 FAQ Ver. 1.0 Date: 3/22/2002 9:08 PM
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I don't get the revenue growth part. How is 7-8% middle growth?
Maybe in earnings but for revenues that sounds like a lot to me.

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Author: tenegmonhag Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5009 of 5655
Subject: Re: Boring Stocks 3.0 FAQ Ver. 1.0 Date: 3/22/2002 10:22 PM
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Excellent effort Stamper. Great job.

I have only two things, both very minor...

You wrote We believe that Tech Stock investors are usually thrill seeks.

I think it would sound better if 1) you replaced the word "usually" with the word "often", and

2) change "seeks" to "seekers".

T

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Author: TheStamper Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5014 of 5655
Subject: Re: Boring Stocks 3.0 FAQ Ver. 1.0 Date: 3/25/2002 10:00 AM
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T,

I think it would sound better if 1) you replaced the word "usually" with the word "often", and

2) change "seeks" to "seekers".


You are correct. I shall fix it ASAP.

Thank you for taking the time to;

A) Read the FAQ, and
B) Help us make it better.

Stamp



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Author: mangol Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5043 of 5655
Subject: Re: Boring Stocks 3.0 FAQ Ver. 1.0 Date: 4/2/2002 2:22 PM
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Help?

   Could someone please explain what 'Low Average Monthly Trading 
Volume' is and where you find that information?

A Boring Company Has Low Average Monthly Trading Volume
(A) 0% - 3%  (3 points)
(B) 4% - 7%  (2 points)
(C) 8% - 11%  (1 point)
(D) 12 or more  (0 points)

   I don't quite understand.

   Thank you for your time in advance!

      Regards-
              .\\angol


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Author: LakeEffect Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5044 of 5655
Subject: Re: Boring Stocks 3.0 FAQ Ver. 1.0 Date: 4/2/2002 4:24 PM
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Could someone please explain what 'Low Average Monthly Trading
Volume' is and where you find that information?


No problem. First, find the average daily volume (ADV). An convenient source for this is a quote here at TMF.

Next, find the number of shares outstanding (SO). A snapshot here at TMF provides this value.

Lastly, multiply the ADV times the number of trading days in a month (20 is a nice round number), then divide by the SO. The resulting percentage is the Average Monthly Trading Volume. Boring stocks have a low number.

Here's an example for SuperValu (NYSE:SVU):

Avg Daily Volume (ADV) = 709,500
Shares Outstanding (SO) = 132.44 Mil
Trading Days per Month = 20

AMTV = (ADV x 20) / SO = 709500 x 132440000 = 10.71%

http://quote.fool.com/detailed.asp?osymbols=nwn&symbols=svu
http://quote.fool.com/Snapshot/snapshot.asp?osymb=&osymbols=nwn&symbols=svu&GetBtn=Get+Snapshot&currticker=svu





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Author: LakeEffect Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5045 of 5655
Subject: Re: Boring Stocks 3.0 FAQ Ver. 1.0 Date: 4/2/2002 4:27 PM
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Correction,
The formula in the preceding post should read:

AMTV = (ADV x 20) / SO = (709500 x 20) / 132440000 = 10.71%

**not**

AMTV = (ADV x 20) / SO = 709500 x 132440000 = 10.71%

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Author: TMFDean1 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5638 of 5655
Subject: Re: Boring Stocks 3.0 FAQ Ver. 1.0 Date: 4/1/2007 1:56 AM
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Excellent concept.

Perhaps the boring board will consider adding dividends "growing at a boring rate".

When considering the usage of "seeks" vs "seekers", I found far more interesting visions arising from "seeks". Furthermore, it adds a rather boring uniqueness to the board.

Dean (not the one mentioned at the beginning of this thread)



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Author: TheStamper Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5639 of 5655
Subject: Re: Boring Stocks 3.0 FAQ Ver. 1.0 Date: 4/1/2007 10:48 PM
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Hi Dean !

When considering the usage of "seeks" vs "seekers", I found far more interesting visions arising from "seeks".

I had to go back and re-read the post. I didn't know what the heck you were going-on about! LOL. I assure you that was simply a typo (I make a lot of those), and, as a result, completely unintentional.

Thanks for taking the time to read & respond to the FAQ. I'm sorry I've let the board fall in to disrepair again, as I have added 2 children & greater responsibility in the office and & at home. I just haven't time to do my research, and then properly discuss it with others. I wish I did. I though we were on to something.

Stamp


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Author: EthylMercaptan Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5640 of 5655
Subject: Re: Boring Stocks 3.0 FAQ Ver. 1.0 Date: 4/2/2007 7:54 PM
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I though we were on to something.

I thought we were on to something.

Eye wish thay had an edit button somewere hear. ;-)

C2H5SH


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