lundi 16 septembre 2013

Stockopedia review

Version Française : à venir.

I’ve been recently offered a trial subcription to Stockopedia and it gave me the opportunity to test their stock screener.

This is my review. I’m of course grateful for this gift, however I’ll try to be unbiased. Being French and the Stockopedia founders British, I’ll also try not to add to our national reputation of arrogance (largely unfounded of course).

The investment process looks more or less like this (value and opportunity blog copy/paste)
A) Stock screening & quick analysis
B) Deeper Analysis
C) Buy decision (or not buy)
D) Sell at some point in time
Obviously we’re talking about step A).

Currently I’m using a personal “database”, basically just a bunch of Excel sheets. Every time I look at a stock, I make a spreadsheet, and I try to update it (with new financial releases) when I look again at the stock a few months/years later.
Why Excel ? I already have the software, I know how to use it, you can draw graphs, make some personal calculations, keep some notes on the company you’re looking at (for instance why you invested/did not invest in this company ; it’s always funny and self-sobering to look back at your decisions and thought process a few months/years later).
Currently this “database” is around 12 Gb (and clearly Excel was not meant for that, I do have some crashes from time to time) and the manual updating process is quite (meant as a British understatement) laborious. And the other hand, it forces me to read the annual report, look at the accounts, try to make sense of them, in short it forces me to make the transition from a stock to a real-life company. 

Crash test of the stockopedia stock screener

I do use stock screeners from time to time to generate ideas, because my database is not exhaustive and I can easily miss opportunities.
There is much much less coverage and screeners for the French market compared to the US and UK markets. The only free one I know is the FT screener (link), and it’s pretty rudimentary, but, hey, it’s free.
The stockopedia screener is neatly presented and is pretty intuitive to use (and anyway who bothers reading manuals, these days?).

A wide choice of ratios and financial metrics (ratios based on earnings, sales, FCF, debt, growth,…) is available and furthermore you can combine them. Actually you’re offered with so many choices that I felt kind of overwhelmed at first. But I think the designers have foreseen this and some simple “push button” screens following a well-known strategy are also built-in. The nice thing is you can start from this base and tweak it to build a custom screen.

Once you’ve selected your database, you run the stock screener and voilà !

A feature I like is that you download your results in excel or other file (pdf, csv, xls,…) for further analysis offline.
So let’s do a crash test on the French market; to start I used a simple EV/EBIT ranking (actually the inverse ratio = earnings yield, defined by stockopedia as operating profit / enterprise value).
Here is what you get (only part of the list).

On this list, there are many companies I’ve invested in or looked closely as buying opportunities, or covered by other value blogs: ADL Partner (see article here), GEA (see article here), STAL (see article here), Maisons France Confort (MFC, see article here, or ennismore funds description here), just to name a few.
I checked the numbers against mine and published results and found them generally accurate, so it means that the database is reliable (more on that below). The database seems also to cover the French stock exchange pretty exhaustively.

Minor bugs

It’s interesting to look at the top companies of the EV/EBIT list.

Promeo sold a division in 2012, thus boosting the operational result. The actual Promeo financial statements make the distinction between current operational results and operational results but the screener uses only the operational result, hence the artificially low EV/EBIT ratio.

Same thing for Richel Serres (company makes greenhouses). It sold a major subsidiary last year, thus boosting the net result, but not the operational result, or Interparfums (perfume maker ; current operational result 58  m€ vs 213 m€ for Stockopedia ; the difference is due to an exceptionnal settlement after the termination of a contract/licence with Burberry).

I was NOT surprised NOT to see CIFE (ticker INFE) high in the list. The company has roughly double the cash reported by stockopedia, but it’s hidden in the non-current assets (see my old article here), and a stock screener can’t know that. 

However I don't want to make the impression that the database is flawed. For the other companies I checked, the numbers were correct and up to date.

Other features

Of course you can build a much more elaborate screen, blending price/value indicators (earnings yield,…) vs “quality” indicators (whatever that means for you : high ROE, ROA, ROCE or operating margin or net margin, or FCF yield, just to name a few).

Stockopedia has a built-in pretty elaborate ranking engine. As I said previously you can always use this as a template and build your own. Here’s a screen shot :

I own a lot of shares of companies in this list  (Infotel, Gerard Perrier, Linedata, Neurones, MFC, ) and have seriously looked at most of them as possible buy candidates (LSS, PUS, LCO,...), so from my point of view (meaning my own buying criteria) , I find the results rather impressive.

I'm also surprised by the large number of companies on this list in the Computing Services Sector (INF, LCO, OSA, SOP, NRO) ; I don't know if it's the result of an actual undervaluation or the result of the choice of screening criteria.
I know that there's a sizeable difference between operational and net result for these companies because of taxation issues (specific to these companies that pay lots of salaries but with little supplies/raw material costs), so some careful double checking is needed here.


To sum it up I think the screener is a very useful tool that gives you a solid list to narrow the choices and start digging deeper.

I've also been impressed by the reactivity of the Stockopedia team to answer requests and fix bugs.

I wouldn’t rely on the screener results alone to make the decision to invest, and I don’t think it is Stockopedia goal either but it’s a tremendously time-saving tool.

I think also this is very useful when trying to expand your investment horizon outside your home market. I remember a Buffet article / interview saying that at the beginning of his career he started looking at all the US stocks one by one alphabetically. I doubt I would have the patience and available time to apply this method for the UK or German stock markets, which are pretty large.

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