Gurus’ filters for Indian markets

BENJAMIN GRAHAM  - Warren Buffett’s mentor.

Benjamin Graham, also called the father of value investing, advocated buying stocks below their intrinsic value.

Modified Graham filters for Indian markets

1. Earnings yield more than 10.5%
2. Debt to equity 0 to 1
3. Current ratio greater than 2
4. Total debt less than 2 times net current asset value (NCAV)
5. 5-year earnings growth rate of at least 10% CAGR
6. Current and average 5Y ROE of more than 12%

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Joel Greenblatt - The market magician

Joel Green is known for his Magic Formula, with which he picks highquality

companies available cheap

Modified Greenblatt filters for Indian markets

1. ROCE consistently more than 20% over the past 5 years
2. Rank the companies on the basis of earnings yield and then
on the basis of the latest ROCE.

3. Take 30 stocks based on the combined rank.

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JOHN NEFF - Contrarian to the core

A mutual fund manager, John Neff follows a contrarian strategy and focuses on stocks available at cheap valuations

Modified Neff filters for Indian markets

1. P/E less than 15
2. Positive free cash flow in the last three years
3. Sales and earnings growth in the last five years between 7% and 50%
4. Total return ratio – 5Y EPS growth plus dividend yield divided by current P/E – of more than 1

5. ROE more than the 15%

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SIR JOHN TEMPLETON - The spiritual investor

Sir John Templeton was a contrarian, valueconscious investor, who founded the Templeton Growth Fund. Later he turned to spirituality.

Modified Graham filters for Indian markets

1. Trailing 12-month (TTM) EPS greater than financial-year EPS
2. TTM EPS greater than previous-year TTM EPS
3. Annualised 5Y EPS growth greater than zero
4. TTM and financial-year operating margin greater than zero
5. TTM and financial-year operating margin greater than the industry median
6. Debt to assets less than the industry median
7. Current P/E less than the 5Y median

8. 5Y median P/E less than 75

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PETER LYNCH - The art of beating the Street

Peter Lynch asserted that in the investment world the individual investor has an edge over Wall Street experts

Modified Lynch filters for Indian markets

1. 5-year earnings growth of more than 15% but less than 30%
2. Debt to equity of less than 1
3. ROE of more than 15%
4. P/E less than 15

5. Institutional holding less than 30%

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PHILIP FISHER - Ultra long-term investing lay at the core of Fisher’s

investment style

Modified Fisher filters for Indian markets

1. TTM sales growth positive

2. 5Y annualised sales growth greater than 5Y industry median

3. TTM net-profit margin greater than industry median

4. 5Y median net profit margin greater than 5Y industry median

5. Net profit margin greater than industrial median in all 5 years

6. Price to earnings growth (PEG) between 0.1 and 0.5

7. Dividend payout less than 30%

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WALTER SCHLOSS - Hunting for bargains 

Walter Schloss liked to buy stocks below book

Modified Fisher filters for Indian markets

1. Exclude service companies

2. Debt to equity less than 0.30

3. Price to book value less than 1

4. Promoter’s holding at least 25%

5. Companies with operations of at least 10 years

6. Average 3-year ROCE more than 12%