Professor Glen Arnold

I first looked at N Brown (LSE:BWNG) in May 2017, when the share price was £2.68, and concluded that I would buy when the money came through from selling a property. While I was waiting the share shot up to over £3.50.  I decided not to buy. Now that it has fallen back to £2.74 […]

About two years ago I started a series of Newsletters which told the story of Warren Buffett starting from the beginning.   They were short case studies designed to help me understand the rationale behind his investments.  They were useful for teaching or reinforcing the principles of investment. Now, amazingly, that series of Newsletters has just […]

Tuesday’s Newsletter used the owner earnings method to value shares in Dewhurst. The estimates ranged from £5.74 to £17.51, compared with the current share price of £5.46. Today we’ll look at return on net tangible assets, and approach the valuation issue from this angle. Profits, assets and liabilities £’000s  Year end September 2017   2016 […]

Dewhurst (LSE:DWHA) is a family dominated (three generations) engineering company supplying lift components, push-buttons for ATMs, elevator parts and similar items it generally manufactures itself. Previous Newsletters fill in the detail on Dewhurst: 12th – 22nd Dec 2014, 15th June 2015, 14th – 17th Dec 2015, 25th – 27th July 2017. I bought Dewhurst ‘A’ shares in April 2014 at...

I toyed with the idea that Haynes (LSE:HYNS) might be a candidate for a Warren Buffett style investment.  For that to make sense, return on net tangible assets has to be high.  To investigate I’ve gone back five years to establish how well the company employs shareholders’ money. I bought Haynes in February 2015 for […]

I bought MS International (LSE:MSI) in 2015 for my Modified cyclically adjusted price earnings ratio portfolio because: The ten-year cyclically adjusted price earnings ratio, CAPE, was 9.3, only two-thirds that of the typical share. Its Piotroski financial robustness tests give it a score of 5 out of 9, so financial distress was unlikely. The Petrol […]

Yesterday’s Newsletter taught us that we need to use a measure of net profits as a percentage of net tangible assets to judge many value investments. We also know that any observations of past returns on tangible assets are useful only in so far as they convey information about the future. To connect the future […]

I’ve been slapdash in my thinking.  I know….you’ve probably thought that about much of my writing, but the particular issue I want to focus on today is on the way in which I’ve measured return on invested shareholders’ capital. This is a crucially important measure: the amount generated in profit for shareholders as a percentage […]

So, after writing this long series of Newsletters questioning whether the stock market prices shares in an unbiased manner to the point where there are no opportunities for out-performance  (at least not on a consistent basis over time and after allowing for risk), where do I stand? Substantially efficient While modern, large and sophisticated stock markets exhibit […]

I’ll conclude my series on the efficient market hypothesis (and inefficiency) with a look at common misunderstandings of what market efficiency means and the implications of market efficiency in today’s Newsletter, and in tomorrow’s I’ll pull the threads together. There are good grounds for doubting some aspects of the EMH and a reasoned debate can […]