Professor Glen Arnold

In a landmark paper Chan, Jagadeesh and Lakonishok (1996) found that both a price momentum inefficiency in shares existed alongside an earnings momentum inefficiency. Let me translate: there is evidence that by buying shares that had risen significantly in the prior six months you will out-perform the market in the following six month, i.e. that […]

Today I’ll continue the series on stock market inefficiency in pricing shares by looking at some academic evidence showing an investor propensity to be slow in reacting to information releases from a company. This introduces the possibility of abnormal returns following the announcement of certain types of news. Post-earnings-announcement drift Post-earnings-announcement drift is the...

I’ve been writing openly about my share buying for four years now.  You have a right to know if my shares do well or badly.  In the tables below I present the returns after taking the hit on broker costs, stamp duty and bid/offer spread. If you want, you can read the Newsletters I wrote […]

Connect (LSE:CNCT), despite standing on a cyclically adjusted price earnings ratio of only 7.6, has a senior management team which receives praise from longstanding shareholders on bulletin boards; even after failing to raise profits for many years. Shareholders accept the managers have been dealt a very difficult hand, but have played it well.  Typical comments: […]

Connect Group (LSE:CNCT) in addition to distributing newspapers, magazines and parcels, has a business supplying airlines, trains and travel points with video, newspapers, TV and digital games called DMD. It also has a large business supplying books wholesale, selling them retail online and selling to libraries, called Connect Books. DMD’s main numbers £m 2 x […]

Connect (LSE:CNCT) is developing some interesting businesses, which might, one day, provide growth in earnings and dividends. Pass My Parcel This is clever extension of the core business, using resources already within the company.   For decades Connect News has been sending out hundreds of vans every morning to deliver newspapers and magazines to thousands of […]

Three-quarters of Connect’s (LSE:CNCT) turnover and profits still comes from the business that was demerged from WH Smith into Smiths News in 2006 – that of distributing newspapers and magazines to thousands of shops daily. According to its rival, John Menzies, “the print media sector is estimated to be worth around £2.6bn pa, split roughly […]

Yesterday’s Newsletter showed Connect (LSE:CNCT) on a price earnings ratio of 7.6, both when using the one-year EPS number or the average EPS over ten years.  The share thus seems cheap.  But I need to address whether that is because it has a high likelihood of bankruptcy. Piotroski analysis Joseph Piotroski (2000), in a well-regarded […]

I’ve bought shares in Connect (LSE:CNCT), formerly known as WH Smiths News, at 104.6p each (market capitalisation of £256m). The Group distributes newspapers and magazines to UK retail outlets, and owns Tuffnell, the parcel delivery business, and sells books. Based on last year’s earnings per share they stand on a PER of 7.6.  More importantly, […]

The searchers for stock market pricing inefficiency seemed to be on firm ground when examining smaller firms. The problem is that the ground is firm most of the time, but has long periods when it is downright dangerous. Early results A number of studies in the 1980s found that smaller firms’ shares outperformed those of […]