C G V I

1
Rather than take notes all the information on
this method is found on www.sharesguru.com/forum
/index.php Free to register and then information
can be sighted by a click on the Reference
Section, then find click on New Investor
Guide. It is a great Shares information
source. To Download copy of this presentation
look for CGVI on http//www.lainie.com.au/s
haresguru/index.html Email this address to a
friend to help their Investing
2
cgvi040705 DISCLAIMER

• NOT Financial Advice Not A Financial Adviser
• Only an exercise in F/A Type Share Price
  Analysis
• I Accept No Responsibility for your use of
  Concept
• Only a training guide to help understand Basic
  Share Data and some ways you are able to use
  that data.
• 5. You should always seek the Applicable
  Professional Advice suitable to your situation
  Plans Needs.
• 6. Presentation is mainly for The New Investor
  in shares.

3
C G V I

• A COMPARATIVE GROWTH VALUE INDICATOR
• FOR SELECTING SHARES
• If you cant calculate a CGVI for a share then
  you are Speculating

A Jodi Robertson Scientific Business Slide
Presentation
4
A Method of Selecting Shares forPension
Endowment Family Trust

• Method is for The New Investor Based On
• FORBES Business Magazine June 1988
• Method Gives a single Comparison Value
• Allows calculation of a price at 3 Levels

5
Is There A Single Value Indicator To Give
Guidance

• Scanning 1500 shares is a large Task
• A Comparison Filter Value is required
• Is CGVI that numeric Filter indicator
• 14 Years Using the Method says YES !

6
By Presentation End You Will Understand how to

• Calculate a Comparison Value for Shares
• Understand How and When to use CGVI
• Compare two shares CGVI Values
• Find Shares worth further Consideration
• Resist buying shares where Price is too high
• Avoid Shares that may not Grow in Value
• Release Shares that may not Grow in Value

7
Now Have you ever. . . . . .

• Consulted an Expert USING their advice
• Bought shares that went down
• Bought shares that went nowhere
• Bought shares that went bust
• Bought shares that tripled in price
• Bought shares that went up five times
• Wondered if YOU could know more do better ?

8
Adding 3 Important Share Indicators gives a CGVI

• The Earnings Yield EPSc / Share Price
• ( Above is Inverse of the PE the Price Earnings
  Ratio )
• The Dividend Yield DPSc / Share Price
• The Re-Invest Rate (EPSc DPSc) / NTA
• CGVI Remember Bigger usually Better

9
THE CGVI FORMULA
EPSc DPSc
EPSc - DPSc CGVI ------------------
------------------ SHARE
PRICE NTA Backing
EPSc Earnings Per Share in cents DPSc
Dividend Per Share in Cents NTA Net Tangible
Assets Backing Per Share Share Price. All data
in Daily Financial review. Warning If first part
of calc is less than 9.3 or second part less than
7 then this shares calcs may be suspect
10
CGVI TYPE Filter was for Small to Medium USA
Enterprises

• Four Years Min. Data History available
• Profitability increase of 10 p.a. 4 years
• So Dont bother to analyse a share if-
• NTA figure is just too low or
• DPSc to EPSc ratio is just too low
• As CGVI Levels Prices may be misleading
• Exclude abnormal one offs in DPSc EPSc
• It has been Excellent for All ASX shares

11
Using NAB National Bank as Example DATA NAB
28.88. DPSc 166 NTA 10.34. EPSc 270 1. Add
EPSc to DPSc divide result by Share
price. 2. From EPSc take DPSc and divide by
NTA 3. Add these two numbers to get a shares
CGVI.
Step 1 270 166 436 divide by 28.88 15.09
Step 2 270 - 166 104 divide by 10.34 10.05
Step 3 CGVI 15.09 10.05 25.14
CGVI of 25.1 equates to Optimum Buy Price of
31.30
Accumulate to Price of 43.90. BUT Check
The Trend.
12
Quick Easy Data SourceThe Daily Financial
Review

• We look at the Data Tables columns
• Find Entry for SUNCORP 27th Aug 2004
• In the Columns-
• Last Sale DPSc NTA EPSc
• 14.80 70 5.45 123
• No need to buy Fin. Review daily but at the two 6
  monthly reports it is worthwhile.

13
Result of This CalculationSuncorp is a worthy
BUY Study

• PROGRAM FOR SCIENTIFIC ANALYSIS For
  (MERGER/ACQUISITION/TAKEOV
• SCREEN 1.RECNO. 817 COMPANY SUNCORP FYR
  
• Selected Record Data held in PRVCALCF File
• Previous data record No 817 Company
  SUNCORP FYR Date 08-27-2004
• Previous buy price of share 14.80
  1 Times Optimal Buy level
• Dividend cents/share (12mths rolling) 70.00
  DE Pay 57 ff nCGV 26.6
• Net tangible asset backing per share 4.75
• Earnings cents/share (12mths rolling) 123.00
  Exclude Abnormal
• Comparative Growth Value Rating is 24.20
  YLD 4.7pa. Ef ff 6.8pa
• PROG CV100205 24 LOOKS FOR A SHARE WITH A
  CGVI GREATER THAN 24 Y
• Ist STAGE FILTER SELECTS SUNCORP FYR CGVI
  24.20 A BUY STUDY
• CALC Opt 15.0 4.7y. Acu 21.8 3.2y. Hld
  33.0 2.1y.

14
Probability Kelly Optimization Stop Loss
COMPANY SUNCORP FYR CGVI 24.19843
THEORETICAL OPT BUY TO 15.03 Accum to 21.83
AMf!. Hold to 33.03 PPMg123 PRICE 14.80
15.15 15.50 15.85 16.20 16.55 16.90 17.25
17.60 YIELD 4.73 4.62 4.52 4.42
4.32 4.23 4.14 4.06 3.98 CGVI 24.20
23.90 23.61 23.33 23.07 22.82 22.58 22.35
22.12 STUDY WAIT? ACCUM ACCUM ACCUM ACCUM
ACCUM ACCUM ACCUM ACCUM LEVEL UDR
0.70. W/L RATIO 23.3 OF PREFERRED ?. LAST
PRICE MOVE DOWN? Subjective Probability
look for count of 10 next two lines. PE 12.0
AAR 13.8 Y Pgm 0.87 Y Nfm 1.5 Y EYL 8.3 Pge
1.45 N Nfe 1.1 Y YES 3 PCI 35 Y UDR 1 Y CCV
24 Y MOS 2 Acc 47 Y Hld123 Y V12 3 Y YES!!
6 ENTER PRICE TREND FOR 3 12 MNTH Eg DD UD U
UP F FLAT D DOWN ? S/PROB MODIFIED CV
21.78 OK AS STILL gt20 WARNING PRICE DOWN
WARNING Check Price Trend Sectional Portfolio
Pool 70k One seventh 10k. share SUNCORP
FYR Count 9 PROB. 90 . KELLY 80 . Inv
8000 ORDER 541 Shares ENTER NO OF 70K
POOLS IN TOTAL PORTFOLIO ? STOP LOSS IF Trend
Down 12.73 TO Prof Maximise 13.70 NO IFS /
BUTS

• COMPANY SUNCORP FYR CGVI 24.19843
• THEORETICAL OPT BUY TO 15.03 Accum to 21.83
  AMf!. Hold to 33.03 PPMg123
• PRICE 14.80 15.15 15.50 15.85 16.20 16.55
  16.90 17.25 17.60
• YIELD 4.73 4.62 4.52 4.42 4.32
  4.23 4.14 4.06 3.98
• CGVI 24.20 23.90 23.61 23.33 23.07 22.82
  22.58 22.35 22.12
• STUDY WAIT? ACCUM ACCUM ACCUM ACCUM ACCUM
  ACCUM ACCUM ACCUM LEVEL
• UDR 0.70. W/L RATIO 23.3 OF PREFERRED
  ?. LAST PRICE MOVE DOWN?
• Subjective Probability look for count of 10
  next two lines.
• PE 12.0 AAR 13.8 Y Pgm 0.87 Y Nfm 1.5 Y EYL
  8.3 Pge 1.45 N Nfe 1.1 Y YES 3
• PCI 35 Y UDR 1 Y CCV 24 Y MOS 2 Acc 47 Y
  Hld123 Y V12 3 Y YES!! 6
• ENTER PRICE TREND FOR 3 12 MNTH Eg DD UD
• U UP F FLAT D DOWN ?
• S/PROB MODIFIED CV 21.78 OK AS STILL gt20
• WARNING PRICE DOWN WARNING Check Price Trend
• Sectional Portfolio Pool 70k One seventh
  10k. share SUNCORP FYR
• Count 9 PROB. 90 . KELLY 80 . Inv
  8000 ORDER 541 Shares

15
New single Screen display of CVGI Calculations
16
When Should I Use CGVI.Historical Review may
Surprise

• Shares / Personal Investment Magazine
• Brokers Recommendation Sheets
• Twice Yearly at Six Monthly Reporting Time
• Write CGVI on these media for History / Review

17
Two Uses for CGVI

• 1. Compare two shares in similar Sector
• TOL 15.03 PRK 16.97
• SUN 18.04 SGB 14.84
• 2. Compare two shares Different Industries
• NAB 24.41 BSL 21.73
• BKW 33.59 SOL 25.48
• ( Data is from Financial Review 5th June 2004
  )

18
Interpretation of CGVI LevelsCGVI Level
STUDY Action

• CGVI gt30 A Special Buy
• gt 24 TO 30 Optimal Buy
• 20 to 24 Accumulate To
• 17 to lt 20 Hold To
• 12 TO lt 17 stay out

• Verify Special Study
• Study further re Buy
• Accumulate if we hold
• Keep Holding look
• Price probably too high

19
Conversion of a CGVI Level to a NOTIONAL PRICE

• Having found a CGVI for a share you can equate
  that level to a Price
• Forbes says Market Average is about 17
• We will Fix this as a Hold To point
• Forbes shows Optimum Buy as level 25
• We will Fix this as our best BUY point
• Lets Fix 20 as an Accumulate To point

20
CGVI 17 is Equilibrium Level

• Price tends to move to an Equilibrium Level
• Dps NTA Eps data changes six monthly
• Between reports Price is the only change
• For a Share to MOVE towards a CGVI of 17
• If its CGVI gt 17 Its Price tends to rise
• If its CGVI lt 17 Its price tends to fall
• New data can change CGVI dramatically

21
CONVERT CGVI to PRICE

• These are a little trickier see the FORUM
  explanation
• OPB ( EPSc DPSc ) /(ABS ( 25 -(( EPSc - DPSc)
  / NTA)) )
• ACC ( EPSc DPSc ) /(ABS ( 20 -(( EPSc - DPSc)
  / NTA)) )
• HLD ( EPSc DPSc ) /(ABS ( 17 -(( EPSc - DPSc)
  / NTA )))
• Low NTA or Poor Payout ratio can give
  aberrational or even nonsensical pricing results
  at all levels.

22
Warning on the Use of CGVI in Relation to Prices

• When we calculate price levels of Optimum Buy
• Accumulate To or Hold To we are not
• SAYING these Prices have to be met.
• What we find is that for a share to move to a new
  CGVI Level its Price will have to change
  while the current 6 month EPSc DPSc NTA data
  is constant of course Price can change daily
• The changed CGVI level only gives a guide
• Not a guarantee of Value or what may happen!.

23
Other Uses For CGVI

• So Without Further Data Input you can set
• An Optimum Buy Price level
• An Accumulate To Hold To Price Level
• A Stop Loss or Profit Max. price level for a
  share
• A Subjective Probability for Investment Success
• A Kelly Portfolio Optimization of To Invest
• For the latter two read The Essential Buffett

24
Independent Back-Testing Studyusing METASTOCK
shows

• From our Experience That In a majority of studies
• Hi CGVI shares Outperform Low CGVI shares
• In Long Term Holding In Short Term Trading
• And L/T Holding Outperforms S/T Trading
• Hi CGVI Shares are of real interest to the
  Investor

25
The Great Portfolio BuildersHigh CGVI Shares
Tend To

• Feature in Takeovers More Often
• Issue Splits/Bonus Par or Premium Shares
• Have Price moves Generally Upwards
• Prompt Profit Maximize rather than Stop Loss
• ( But you should always calculate these Be
  Ready )

26
HAVING A HIGH CGVI IS JUST NOT ENOUGHThe Share
Price Trend is Still A Most Important Indicator

• CGVI is not enough
• Need to look at Chart
• IS Trend Up / Down
• Is Trend sideways

• Further Study required
• Look for clear TREND
• Never Buy on DOWN
• Wait on TREND Change

Best Source of Information is The Cos.
Annual Report
27
Even If CGVI is HIGH must Check PRICE TREND
National Australia Bank NAB
NEVER BUY WHILE PRICE TRENDS DOWN
28
ION Ltd. Had a High CGVI but Trend Gave a
Warning
29
SFC Schaffer Corporation Ltd A CGVI Find
This is Type of Share You may find very
early Paid 1.20 dividend pa for years, 2004
2005. PROFIT MAXIMISATION OUT AT THE TOP
As High as 15.35 CGVI 21.07
FELL to under 5. You Need to Have STOP LOSS
Limit Ready dependant on your average cost.
At 3.75 CGVI 50 (was worth a Try)
30
Timing Is Important. Remember Blue over Red
Blue over Red Red over Blue Green
31

• Does CGVI really work for the NOVICE or
  Investor?
• One Analysts experience in researching High CGVI
  Shares price progress from first finding. Last
  column is for 08/04
• ALS . . 3.02 . . 4.50 . . 49 . . . . 5.39
  . . . 78 . 8.52
• CEY . . 1.30 . . 2.30 . . 77 . . . 2.64
  . . . 103 . 3.01
• COF . . 1.90 . . 3.85 . . 103 . . 4.41
  . . . 132 . 4.60
• FUN . . 0.60 . . 1.36 . . 127 . . . 1.69
  . . . 181 . 2.15
• FWD. . 1.55 . . 3.51 . . 126 . . . 4.60 .
  . . 196 . 7.60
• NBL . . 0.72 . . 1.31 . . 82 . . . . 1.68
  . . . 133 . 1.28
• SDI . . 1.00 . . 5.30 . . 430 . . . .
  6.95 . . . 595 .9.45
• SFC . . 4.25 . . 13.95 . . 228 . . 12.55
  . . . 195 .13.69
• SHV . . 2.00 . . 4.12 . . 106 . . . 5.38
  . . . 169 . 6.60

32
14 Years Experience Shows Value of So Simple a
Concept

• You may find some NEW Shooting Stars
• COF SHV SFC SGN CEY SUN NAB GNS FWD
• ( More recently WES SMS BSL
  BKL SOL BKW )
• You may be saved from Non Optimal buying
• ( BIL MAY LLC AMP LEI ) Until Data
  Changes
• CGVI Maybe even greater help in preserving
  your portfolio
• So Simple. Just 4 bits of Data a little
  effort

33
Happy Investing But Dont Forget To Smell the
ROSES
THE END
34
Example of a CGVI Plus calculation
and its usage on a Computer may follow.One word
of caution is that anything displayed is not a
recommendation to BUY nor Sell, It is a
demonstration of what we can do with financial
data in better understanding Share Investment.