Wednesday, March 24, 2010

A Look Back: Ben Graham Nuggets Trounce The Market


Over the last year and few months I wrote a couple of posts high lighting the famous value investor Ben Graham titled "A Few More Ben Graham Nuggets" and "Ben Graham Nuggets Part 2". Both post high lighted a basket of seven stocks, notice the number... "7"... Lucky number seven (ha ha).

For those not familiar with Ben Graham, here is a quick catch up. Graham is considered the Father of security analysis and value investing as practiced by many value investors today. He wrote two best selling books "Security Analysis" (1934) and "The Intelligent Investor" (1949) that are still in print today. He also ran a money management firm called Graham- Newman and taught at Columbia Business School. Among some of Grahams disciples are Walter Schloss, Irving Kahn and the most famous Warren Buffett.

All the issues mentioned met the following criteria:

  • Current ratio of 1.5 or better
  • A Book Value of 1.5 or less
  • A p/e ratio under 15
  • Positive eps growth over last 5 years
  • Very low or NO debt
  • Pay a dividend

These are not dyed- in- the- wool Ben Graham screening techniques, but rather based on Graham's many years of teaching, writing, and investing. However these 14 stocks mentioned fall under bargain issues. Their are many ways for screening when searching for value stocks, such as earnigs yield used by Joel Greenblatt of Gotham Capital and "The Little Book That Beats The Market". Their is also CROIC (cash return on invested capital) coined by Joe Ponzio over at FWallStreet.

CompanyTicker SymbolClosing price on Oct 30Th 2008 $Closing price on March 24Th
2010 $
Cumulative Return

Abercrombie & Fitch ANF27.0644.38+64.01%

Ashland ASH21.9853.43+143.08%

Bel Fuse BELFB18.7022.04+17.86%

Movado GroupMOV14.2911.79-17.49%

Nam Tai ElectronicsNTE7.284.91-32.55%

Seaboard CorpSEB1098.001389.75+26.57%

Thor IndustriesTHO17.5031.78+81.60%




Total Cumulative Return
Graham Nuggets
+40.19% returnS&P Index
cumulative return Oct 30Th 2008 thru Mar 24Th 2010
954.09-1167.72
+22.40% return


CompanyTicker SymbolClosing price on Dec 10Th 2008 $Closing price on March 24Th 2010 $Cumulative Return

Intersil Corp.ISIL9.3614.74+57.48%

Lufkin IndustriesLUFK35.2679.48+125.41%

bebe storesBEBE6.649.40+41.57%

Heidrick & StrugglesHSII20.6628.21+36.54%

Titanium MetalsTIE8.5416.71+95.67

Williams-SonomaWSM8.5927.72+222.70%

Williams PipelineWMZ14.3530.14+110.03




Total Cumulative Return Graham Nuggets+98.49% returnS&P Index cumulative return Dec 10Th 2008 thru Mar 24Th 2010 899.24- 1167.72 +29.90% return



As you can see by the results that these portfolios based on Ben Graham and Value Investing techniques smashed the market returns. Keep in mind that these techniques may be more favorable during down markets or markets with much volatility.

* returns do not take into the account of any DIVIDENDS paid out
dividends add to total return

Author currently long SEB

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