Saturday, September 6, 2008

Stock Screen: Warren Buffett Picks

On BusinessWeek,com, S&P's Howard Silverblatt has a great screen with the selection criteria that Warren Buffet uses for his portfolio. Stock Screen: Buy 'Em Like Buffett

Warren Buffett has earned a reputation as one of the preeminent value investors of all time. His Berkshire Hathaway (BRKA) holding company has stakes in insurance, publishing, retailing, and manufacturing, among other businesses, and more than $28 billion of cash on hand, in addition to $102 billion of securities.

But like others in the financial services industry, Berkshire Hathaway has fallen on troubled times. Its second-quarter earnings report, posted in mid-August, showed a 7.5% decrease in earnings from the year-earlier period, mostly the result of a 43% drop in underwriting profits and a mere 2.6% rise in investment income. In that report, Buffett disclosed he had purchased, for Berkshire's investment portfolio, a new stake in NRG (NRG), and added to already existing stakes in Sanofi-Aventis (SNY) and Ingersoll-Rand (IR).

But how does Buffett make his picks? What exactly is "Warren's Way?" In his rare public remarks and widely followed annual letters to Berkshire shareholders, Buffett makes it sound very simple: He says he buys stocks that are "available at a sensible price."

In fact, Buffett uses sophisticated screens to determine which companies belong in his portfolio. Specifically, he uses these five investment criteria:

•Free cash flow net income after taxes, plus depreciation and amortization, less capital expenditures) of at least $250 million.

•Net profit margin of 15% or more.

•Return on equity of at least 15% for each of the past three years and the most recent quarter.

•A dollar's worth of retained earnings creating at least a dollar's worth of shareholder value over the past five years.

•Ample liquidity. Only stocks with a market capitalization of at least $500 million are included.

In the Standard & Poor's "Warren Buffett" screen, we've added one more criterion to eliminate overvalued stocks. Overpriced stocks are identified by comparing our five-year discounted cash flow (DCF) (BusinessWeek.com) estimate with the current price.

Here are the 49 names that emerged when the screen was completed:

Alcon (ACL)
ASML Holding (ASML)
Autodesk (ADSK)
C.R. Bard (BCR)
Baxter International (BAX)
Becton, Dickinson (BDX)
BG Group (BRGYY)
Brown-Forman (BFB)
Canadian National Railway (CNI)
Charles Schwab (SCHW)
Franklin
Resources (BEN)
Freeport-McMoran (FCX)
Garmin (GRMN)
Genentech (DNA)
Grupo Televisa (TV)
Halliburton (HAL)
Infosys Technologies (INFY)
Intercontinental Hotels (IHG)
Johnson & Johnson (JNJ)
Lam
Research (LRCX)
McDonald's (MCD)
MEMC Electronic Materials (WFR)
Microsoft (MSFT)
Mobile Telesystems (MBT)
National Semiconductor(NSM)
Novo-Nordisk (NVO)
Occidental Petroleum (OXY)
Oracle (ORCL)
Partner Communications (PTNR)
Philadelphia Cons. (PHLY)
Philippine
Long Distance (PHI)
Qualcomm (QCOM)
Research in Motion (RIMM)
Reynolds American (RAI)
SAP (SAP)
Satyam Computer Services (SAY)
Schlumberger (SLB)
SEI Investments (SEIC)
Sigma-Aldrich (SIAL)
Stryker (SYK)
Taiwan Semiconductor (TSM)
TD Ameritrade (AMTD)
Telefonica (TEF)
Tenaris (TS)
T. Rowe Price (TROW)
Turkcell
Iletisim (TKC)
Vimpel Communications (VIP)
Wipro (WIT)
Wolters
Kluwer (WTKWY)

Disclosure: The Div Guy owns shares of JNJ at the time of this post.

This article was written by The Div Guy. If you enjoyed this article, please vote for it by clicking the Buzz Up! button below.

14 comments:

  1. Hmmm... So why don't the ones that Buffett says he added to his portfolio show up on this screen? I'd venture to guess that this screen is not the only way he decides what to buy!

    ReplyDelete
  2. This article is funny. Buffett doesn't use sofisticated screens. The problem with your screen is that it doesn't have any valuation inputs. Very poor article and logic behind it...

    ReplyDelete
  3. The article is for entertainment, so I am glad you thought it was funny. I enjoy looking at screens to get some investment ideas. I only own JNJ myself

    ReplyDelete
  4. Philippine Long Distance Telephone has lots of problems with Corporate Governance and Chairman of the Board Manuel Pangilinan, whom is also Chairman of the Governance & Board Nomination committees. It seems that Pangilinan's number two, David Scott Cases Nugent, whom Pangilinan has erased may force PLDT (NYSE: PHI) into having a large litigation fund, due to a Jason Lowen of West Hollywood, CA, whom has handicapped Mr. Pangilinan and proved his ties to The First Family of the Philippines. You must checkout his blog as for an American, he makes points, that are more valuable than any Thompson report I have read, and charges nothing. I would have sold the material, but their are always people whom want to save a place like the Philippines, which is great, as long as it makes me money.

    ReplyDelete
  5. I agree. I do not know if you have seen this forbesparkcon.blogspot.com but it seems that a man named David S. Cases Nugent was employed by one of First Pacific's largest holdings, Metro Pacific Investments Corporation (PSE: MPI); which until 2006 was Metro Pacific Corporation (PSE: MPC). From reading the blog over carefully and research that I did, including talking to some colleagues in the Philippines, Mr. Nugent was Manuel Pangilinan's protege. Mr. Nugent was VP of Corporate Communications, Media Relations and Investor Relations from 2001-2006 and during reorganization he was promoted to Corporate Governance Compliance Officer, a position that answered solely to Manuel Pangilinan, Chairman, PLDT (NYSE: PHI) and Managing Director/CEO/Chairman of First Pacific Co. Ltd. (HKEx: 00142)(ADR: FPAFY) which has taken a huge hit, due to this scandal. Briefly, Nugent stole funds from the company, lied to the SEC about having an education (when he never graduated college), his age, citizenship and he defaulter on USD$30,000 in U.S. student loans. I am not amazed that Nugent is being erased by the various companies, but I am not investing any money in the Philippines, as Manuel Pangilinan, is the "Most Ethical CEO" according to Asia Magazine in the Philippines. It is disturbing that Ernst & Young never performed due diligence when the First Pacific Group and PLDT Group reorganized in 2006. I sold 1500 PLDT (NYSE: PHI) shares today, not because of this David Nugent, but because Nugent worked for all of these companies and then, some Metro Pacific CEO & President Jose Lim has covered up Nugent's existence. This tells me that Mr. Lowen has good instincts and more disturbing, he worked as Senior Counselor and US Agent - First Pacific Company, but was never paid for five years of work. Lastly, Manuel Pangilinan (funded by The Salim Group), has spent USD$500 million for infrastructure and has been on a spending spree, selling PLDT shares from First Pacific and his own pocket to pay for it all. I no longer trust the submissions of Philippine Long Distance Telephone (PLDT) so you cash in as I am telling everyone to SELL! Thank you Mr. Lowen and the Board needs to remove Manuel Pangilinan from PLDT as Chairman of the Governance and Nomination Committee, as he is weighing down the stock.

    ReplyDelete
  6. I looked at the same thing and am sending this to an Assistant US Attorney for review, because the Ambassador of the Philippines to the U.S. has been on PLDT (NYSE: PHI)(PSE:TEL) and First Pacific Co. Ltd. (HKSE: 00142)(OTC:FPAFY)(with significant activity in U.S.). Ambassador Albert del Rosario, had inside knowledge as astute blogger Lowen points out, that PLDT (NYSE: PHI) was under investigation by USDOJ until 2005 and then was named Authorized Representative for First Pacific in 2/2006, while he was still in U.S. on two corporate boards and made a deal with NTT Communications. Then this fraud and theft David Nugent whom was Governance Chief became VP for Saatchi & Saatchi Worldwide. Sorry, this Manuel Pangilinan, former Executive Chairman and current CEO of First Pacific; Chairman and former CEO & President of PLDT (NYSE: PHI), whom is also head of their Governance & Nomination Committee at PLDT, needs to be transparent and launch an inquiry regarding his top guy, David Scott Cases Nugent, whom perjured himself to the Philippine SEC without punishment. This is Enron in the Philippines and I am holding my positions until Ernst & Young files a real report.

    ReplyDelete
  7. Fire Manuel Pangilinan as Chairman of the Board of Directors of Philippine Long Distance Telephone. (PLDT) (NYSE: PHI)(PSE: TEL) as he changed PLDT to become an ADR, overseen by the Philippine SEC and following Philippine GAAP instead of U.S. GAAP. It is great that Manuel V. Pangilinan, is able to be the first openly gay Chairman of a major company, but just because he is gay, does not mean that he is fair. Pangilinan offers himself as a Sarbanes-Oxley role model, resigns as CEO & President, and names himself Chairman of PLDT/Smart Communications and Metro Pacific Investments (PSE: MPI). Instead of bringing on truly independent Directors for his Board, he names himself Chairman of the (Board) Nomination Committee and Chairman of the (Corporate) Governance Committee, as well as Chairman of PLDT's Technology Committee. He fooled the Americans, because he acted in "BAD FAITH" naming himself Chairman of PLDT/Smart Communications. Pangilinan is also CEO & Managing Director of First Pacific Company Limited (HKEx: 00142) which owns a substantial voting stake in PLDT (NYSE: PHI)(PSE: TEL). First Pacific is primarily owned by Chairman Henri Salim, whose family created Indofood, with some of the US$300 billion as a crony of Indonesia's horribly corrupt President Suharto. Manuel Pangilinan has opened doors for the gay, lesbian, bisexual and transgender community by coming out, but he named his life partner swindler David S. Cases Nugent, a man on the run from the IRS, as his VP/Governance Chief for US$3 billion Metro Pacific Investments (PSE: MPI) and prior since June 2001 as VP of Metro Pacific Corporation (PSE: MPC). The tragic part is that Ernst & Young has looked the other way. Is it part of their diversity training or were they like Arthur Anderson?

    ReplyDelete
  8. I am selling 5100 shares of PLDT (PSE: TEL) (NYSE: PHI) as the Philippine government has launched a full scale investigation into First Pacific CEO and PLDT Chairman Manuel V. Pangilinan. David S. Cases Nugent, whose contract just ended with Matt Seddon at Ace Saatchi & Saatchi has screwed up Manuel Pangilinan's power and I doubt he will continue expansion. David Nugent is not a very nice man and liar. Of course, him and Edward Go were the internal auditors?

    ReplyDelete
  9. Manuel Velez Pangilinan, whom has acknowledged that he has lied to U.S. investors from 1999-2009 stating that he was a member of the prestigious Board of Overseers at The Wharton School-Univesrity of Pennsylvania, Napoleon "Polly" Nazareno, CEO & President PLDT/Smart and on the Board of PLDT/Smart and First Pacific Company Limited (0142.HK) (ADR OTC: FPAFY); PLDT's parent company; Ambassador Albert F. del Rosario; whom serves on the Board of PLDT, Metro Pacific Investments (PSE: MPI) and First Pacific; Ray Espinosa, Chairman, SPi Technologies and President of ePLDT, a wholly owned subsidiary of PLDT (NYSE: PHI)(PSE: TEL) and Benny Santoso of Indonesia whom is one of the partners of Indonesian which own First Pacific and its hundreds of subsidiaries and is on the Board of Metro Pacific Holdings, Advisory Committee of PLDT and Board of Directors of First Pacific Company Limited, which is actually a LLC incorporated in Bermuda, NOT Hong Kong (as Reuters states) and Edward Tortorici with SGV Ernst & Young and Ernst & Young Hong Kong have now covered up and rewritten Annual Reports that the Philippine SEC accepted, deleting David Nugent from Metro Pacific Investments (PSE: MPI). I have cleaned up my blog and it is solely focused on Southeast Asian business using facts and taking down blogs that did not convey my message regarding Corporate Governance.

    ReplyDelete
  10. David Nugent
    Vice President and Director
    Ace Saatchi & Saatchi

    (Privately Held; Marketing and Advertising industry)

    August 2007 — May 2008 (10 months)

    Led new business efforts for Manila office of London-headquartered office of Saatchi & Saatchi, directing agency-wide efforts resulting in substantial new business wins with an aggregate billings volume of more than US$10 million

    Won new business accounts from the largest listed business group in the Philippines, and amongst the largest retail groups in Southeast Asia, for food retail,. Real estate, hypermarket and tourism businesses; the cumulative amount of such accounts from one business group had not been achieved by any major Philippine ad agency previously

    Empowered office teams and led change management efforts in an agency-wide restructuring of all internal processes, external agency marketing and rebuilt formerly lapsed relationships with key clients, industry partners and vendors

    David Nugent is dedicated to business growth and development in his native Philippines, and as a media and communications specialist with Metro Pacific Corporation, David Nugent conducted extensive work to support the company's charitable activities and assist the efforts of its Chairman and Founder, Manuel V. Pangilinan.

    David Nugent is striving to develop a voice against child abuse and mistreatment, using a dramatic and sincere writing style to share his childhood struggles in national newspapers in an attempt to encourage others to standup against similar injustices. Nugent experienced an abusive childhood at the hands of his father, and during that time, he formed a strong connection with his grandmother. This connection ultimately brought him back to the Philippines, where he now enjoys a rich and successful life.

    David Nugent joined Metro Pacific Corporation in 2001, and throughout his time conducting communication and media efforts for the firm, he worked closely with First Pacific Company Limited’s various investment holdings, performing both corporate communications and special assignments in varying capacities over several years.

    David Nugent wields an impressive set of communication skills that have aided him as he directed investor relations, corporate communications and media programs for some of the Philippines’ most renown companies.

    David Nugent joined the Philippines-based Metro Pacific Corporation in 2001, serving as Vice President of Media until 2007. The investment vehicle of Hong Kong-headquartered First Pacific Company Limited, Nugent provided a critical investor relations and communications role while Metro Pacific Corporation restructured its businesses in the years following the Asian financial crisis. David Nugent’s many activities included directing the rebuilding of relationships with the Philippines’ and regional investor community during a critical period during which Metro Pacific was engaged in a comprehensive debt workout and restructuring of its management and business operations. Nugent also spoke on behalf of the company through numerous media channels, delivering official statements on any materially important news. Nugent also served as Metro Pacific’s Corporate Governance Compliance Officer, ensuring that Metro Pacific was an early adherent to corporate governance regulations set down by the Philippines SEC back in 2002. Nugent's duties at Metro Pacific also included directing the publication of the company's annual reports from 2002 to 2007. These reports became important documents that summarized each step in Metro Pacific’s rebuilding and eventual resurgence, and they were used for both in-house and client-facing capacities.

    Nugent's work in the Philippines was not limited to Metro Pacific; from 2002 to 2006, he conducted annual report creation duties for PLDT, the largest diversified telecommunications company in the Philippines. David Nugent also composed reports for Metro Pacific Corporation's parent company, First Pacific Company Limited, from 2004 to 2007, and conducted similar work in 2005 for Indofood Sukses MakMur, Indofood’s largest diversified processed foods company and the world’s largest producer of instant noodles.

    The written communication talents exhibited by David Nugent also asserted themselves in the journalistic world. Nugent contributed provocative and insightful articles to a variety of news outlets in the Philippines, including a profile of Ferdinand Marcos, Jr., the son of former Philippines president Ferdinand Marcos, which was published for the launch of a new Philippines-based magazine. Nugent has written on a variety of other topics for various newspapers and magazines in the Philippines.

    U.S. Employers:

    Nadel Phelan, Inc.
    Jefferson-Waterman Group
    Ogilvy Public Relations


    Education:

    American University
    1991-1996

    Citizenship:

    U.S., Philippines

    References:

    Annabelle Chua, CFO, Smart Communications
    Melody Del Rosario, Assistant Vice President, Metro Pacific Corporation
    Charo Logarto, Director, Ace Saatchi & Saatchi
    Paula Phelan, Ph.D., President & CEO, Nadel Phelan, Inc.
    Jason Lowen, Chairman, Prideoverprofit.org

    ReplyDelete
  11. Born in the Philippines in 1970, David Nugent spent a tumultuous childhood in the United States and the Philippines. David Nugent left the Philippines at a young age, but he felt a strong connection to the country that was often difficult to ignore. Nugent eventually decided to move back to the Philippines in honor of his grandmother, one of the few positive figures from his childhood.

    Upon his return to the Philippines, David Nugent not only made peace with his family’s past transgressions, but he managed to forge a successful professional career. His quest for personal peace took many forms for an adult Nugent wrestling with childhood demons. Nugent tackled memories of his mother while exploring a small piece of land he inherited on the coast of the Philippines, and he visited his Grandmother’s grave in Surigao. Nugent even came to grips with his father, a retired Navy man and U.S. Department of Defense employee who was the source of Nugent’s childhood abuse.

    Before his exodus to the Philippines, Nugent studied Political Science at American University in Washington, D.C. and spent a brief period pursuing a writing career in Paris, France. Nugent may have missed success as a writer in Paris, but the very year he began a new life in the Philippines, a new professional life was born. In 2001, Nugent jump-started a powerful career with Metro Pacific Company, where he led media, investor, and corporate relations for the Filipino investment firm in a vice presidential role. David Nugent has also penned several articles for Philippines-based newspapers and magazines.

    ReplyDelete
  12. David Nugent is a crook whom stole more than $34,000 from the United States Department of Education. I would say borrowed it, but after taking the loans to pay for schooling at American University which he dropped out of in 1996, starting in fall 1994. David Nugent had landed the SM Hypermarkets account for Saatchi & Saatchi Philippines, never worth US$10 million. Why sell yourself as an Investor Relations expert, when Nugent lied for six years while at Metro Pacific Corporation (PSE: MPC) about his year of birth, citizenship, education (having only a GED) and then having the balls to swear it in front of a lawyer and notary public that everything was truthful. Nugent even wrote down the wrong date of when he started and he prepared Annual Reports for PLDT (NYSE: PHI) and Metro Pacific. Why hire this person?

    ReplyDelete
  13. Wasn't Jason Lowen correct about PLDT (NYSE: PHI) (PSE: TEL). Did you see through his lobbying work that PLDT is no longer 'incorporated in the Philippines,' but 'based in the Philippines.' First Pacific Co. Ltd. (HKEx: 0142)(OTC: FPAFY) http://www.firstpacco.com is also no longer 'incorporated in Hong Kong' as it is a LLC incorporated in Bermuda. Manuel Pangilinan was a moron not to negotiate with this fellow. Lowen was offered a VP position from a Top 10 investor relations PR agency in DC?

    ReplyDelete
  14. Warren Buffett strategy is probably the best definition of Long Term Growth Investing.
    I'd advice the following screen based on Warren Buffett's Criteria:
    Warren Buffet Stock Screen

    ReplyDelete

Recent Posts From DIV-Net Members