The results for the Return on Enterprise Value backtest were very impressive, so I thought readers would be interested in seeing a list of the top 1% of stocks ranked based on Net Cash Flow / Enterprise Value.  Here are the current results:

• Career Education Corp. (CECO) 0.71
• Visteon Corporation (VC) 0.71
• Veeco Instruments Inc. (VECO) 0.55
• Unisys Corporation (UIS) 0.54
• Power-One, Inc. (PWER) 0.53
• Momenta Pharmaceuticals, Inc. (MNTA) 0.48
• OmniVision Technologies, Inc. (OVTI) 0.42
• Vishay Intertechnology (VSH) 0.42
• Icahn Enterprises, L.P. (IEP) 0.40
• ITT Corporation (ITT) 0.39
• Humana Inc. (HUM) 0.37
• American National Insurance Company (ANAT) 0.35
• Aaron’s, Inc. (AAN) 0.35
• WPX Energy Inc (WPX) 0.33
• Healthsouth Corp. (HLS) 0.32
• Navistar International Corporation (NAV) 0.32
• GT Advanced Technologies Inc (GTAT) 0.31
• Telephone & Data Systems, Inc. (TDS) 0.29
• Micron Technology, Inc. (MU) 0.29
• Tesoro Corporation (TSO) 0.28

Data: StockScreen123

It will be interested to check back on these stocks after a few months. Do any of the names above look interesting to you? Please leave your responses in the comments section below.

The above list of low Return on Enterprise Value stocks should only be used as a starting point for further research. Always remember, past performance does not guarantee future results.

Disclaimer: At the time this post was published, I did not own shares in any of the companies mentioned.

Return on Enterprise Value (ROEV) is a stock valuation ratio that can be useful for comparing the values of different companies. It is simply net cash flow divided by enterprise value. Net cash flow is net profit plus amounts charged off for depreciation, depletion, and amortization.

I was unfamiliar with this stock fundamental until Ken Faulkenberry of AAAMP Blog left the following comment on my Enterprise Value to EBITDA Ratio Backtest post:

Great post; glad to read someone uses this strategy in this day of “passive management”. This kind of valuation of stocks needs much more attention!

Personally I prefer Net Cash Flow / Enterprise Value which would include interest expense. I have written an article titled “Best Stock Valuation Calculation to Value Company Shares is ROEV” for anyone interested.

I decided to backtest Net Cash Flow / Enterprise value and compare it to the excellent results of the EV / EBITDA Ratio backtest.

I used StockScreen123 to conduct a 10-year backtest of the Return on Enterprise Value metric. I filtered out ADRs, non-US companies, companies in the miscellaneous financial services industry category (to mainly filter out closed-end funds), stocks trading below $2, market caps less than $433 million, and companies that did not have a net cash flow/EV ratio due to missing data. The results are as follows:

Return on Enterprise Value: Rolling 3-Yr Periods Excess Returns vs. Universe

As you can see from the table and charts above, stocks ranked in the highest 20% (1st quintile) of Net Cash Flow / EV ratio produced a CAGR of 11.48% from January 1, 2002 to December 31, 2011. Averaging the annual excess returns versus the universe using four different quarterly start dates, the average excess returns for the first quintile is 4.80%. That is just slightly better than the 11.37% CAGR for EBITDA/EV 10-year backtest and the 4.59% average excess returns for the first quintile. The first quintile Sharpe and Sortino ratios for ROEV were almost identical to the EV/EBITDA backtest ratios. The ROEV strategy first quintile outperformed 85% of 1-year periods, while EV/EBITDA only outperformed 72.5% of 1-year periods. More impressively, the ROEV strategy outperformed 100% of rolling 3-year periods. Interestingly, looking at the lowest ranked stocks in the 5th quintile, ROEV averaged -5.29% excess returns versus the universe while EV/EBITDA averaged -5.84%. The bottom 20% of ROEV didn’t quite underperform as much as EV/EBITDA. Given how close the 1st quintile and 5th quintile scores are when comparing ROEV and EV/EBITDA, I’m not really sure you can say statistically that ROEV is better than EV/EBITDA. I really wish I could run a 20- or 30-year backtest on return on enterprise value. (Let us know if you can?)

Given these backtest results, I’m strongly considering working Return on Enterprise Value into my investment process, but it’s still difficult to tell if it is truly better than EBITDA/EV. What do you think? What other fundamentals would you like to see backtested here? Please leave you responses in the comments section below.

Given that we recently backtested the highly effective Enterprise Value to EBITDA ratio that was presented in Quantitative Strategies for Achieving Alpha, I thought folks might be interested in seeing the current results for this screen. Here are the top 1% stocks ranked on EV/EBITDA:

• American Equity Investment Life (AEL)
• National Western Life Insurance (NWLI)
• Career Education Corp. (CECO)
• First American Financial Corp (FAF)
• Unisys Corporation (UIS)
• The Hanover Insurance Group, Inc. (THG)
• State Auto Financial (STFC)
• Veeco Instruments Inc. (VECO)
• Hartford Financial Services (HIG)
• Power-One, Inc. (PWER)
• General Motors Company (GM)
• Visteon Corporation (VC)
• CIGNA Corporation (CI)
• Assurant, Inc. (AIZ)
• Vishay Intertechnology (VSH)
• American National Insurance Company (ANAT)
• Lincoln National Corporation (LNC)
• Meadowbrook Insurance Group, Inc. (MIG)
• WellCare Health Plans, Inc. (WCG)
• Principal Financial Group, Inc. (PFG)
• OmniVision Technologies, Inc. (OVTI)

Data: StockScreen123

It will be interested to check back on these stocks after a few months. Do any of the names above look interesting to you? Please leave your responses in the comments section below.

The above list of low EV/EBITDA stocks should only be used as a starting point for further research. Always remember, past performance does not guarantee future results.

Disclaimer: At the time this post was published, I did not own shares in any of the companies mentioned.

The EBITDA to enterprise value (EV) ratio is a widely used valuation multiple to assess the relative value of companies. It is calculated by simply taking earnings before interest, taxes, depreciation and amortization (EBITDA) and dividing by enterprise value (EV). Of course, you need to know the definitions of both of those terms to really be able to understand this stock fundamental.

EBITDA is equal to net income with interest, taxes, depreciation, and amortization added back into it. EBITDA is somewhat useful for analyzing and comparing profitability between companies and industries because it removes differences due to tax rates and eliminates the effects of financing and accounting decisions. However, many value investors shun this fundamental due to its past abuse during the tech bubble. Charlie Munger is quoted as saying, “I think that, every time you saw the word EBITDA [earnings], you should substitute the word “bullshit” earnings.”

Enterprise Value takes into account the entire value of a company. It is equal to market capitalization plus debt minority interest and preferred shares, minus total cash and cash equivalents. However, for this backtest I simplified the formula similarly to the way Richard Tortoriello did in Quantitative Strategies for Achieving Alpha and just used market cap plus debt minus cash.

An advantage of the EV/EBITDA multiple is that it is capital structure-neutral, and, therefore, this multiple can be used for direct cross-companies application. The reciprocate multiple EBITDA/EV is used as a measure of cash return on investment. Given that EBITDA ignores capital structure by excluding interest and EV doesn’t discriminate between equity holders or debt holders, also accounting for the entire firm, this ratio provides a complete snapshot on the relative value of entire companies. You can use EV/EBITDA when you want to see the cash-generating power of the entire firm, and you don’t care whether it’s equity or debt financing this cash-generating operation. That’s why EV/EBITDA is used for pure valuation.

I used StockScreen123 to conduct a 10-year backtest of the EBITDA/EV ratio. I filtered out ADRs, non-US companies, companies in the miscellaneous financial services industry category (to mainly filter out closed-end funds), stocks trading below $2, market caps less than $433 million (approximately matching the average cut-off Tortoriello used), and companies that did not have a EBITDA/EV ratio due to missing data. The results are as follows:

Review the full Enterprise Value to EBITDA ratio backtest spreadsheet on Google Docs.

EV to EBITDA : Rolling 3-Yr Periods Excess Returns vs. Universe

As you can see from the table and charts above, stocks ranked in the highest 20% (1st quintile) of EBITDA/EV produced a CAGR of 11.37% from January 1, 2002 to December 31, 2011. Averaging the annual excess returns versus the universe using four different quarterly start dates, the average excess returns for the first quintile is 4.59%. That is very similar to the 5.3% Richard Tortoriello reported in Quantitative Strategies for Achieving Alpha for the period 1988-2007. Tortoriello found EV/EBITDA to be one of the most consistent (in terms of Sharpe Ratio) factors he tested. In the recent paper, Analyzing Valuation Measures: A Performance Horse-Race Over the Past 40 Years, Wesley Gray and Jack Vogel also found the EBITDA/EV ratio to have been the best performing metric historically. They found that it outperforms many investor favorites such as price-to-earnings, free-cash-flow to total enterprise value, and book-to-market.

Do you use the EV/EBITDA ratio? If not, why not given these results? What other fundamentals would you like to see backtest here? Please leave you responses in the comments section below.

Over the holidays, I read Quantitative Strategies for Achieving Alpha by Richard Tortoriello. I found this book to be very different than most of the books I’ve read on investing. Tortoriello spends a substantial portion of the book walking the reader though his process for evaluating various stock fundamentals. He then tests each of these fundamentals using twenty years of high quality backtesting data from the Standard & Poor’s Compustat Point in Time database. Unlike other books that discuss investment theory and qualitative analysis, this book is very empirical. The stock fundamentals Tortoriello analyzed include many value investor favorites. Based on that alone, I think many intermediate to advanced value investors could benefit from this book. Beginners might find this book a bit overwhelming.

While Quantitative Strategies for Achieving Alpha would obviously appeal to so called “quants”, I also think it is a book that value investors should not overlook. Tortoriello introduces the book by stating, “This book was written with qualitative investors in mind, particularly those who wish to “understand” the stock market from a quantitative (empirical) point of view and who desire to integrate quantitative screens, tests, or models into their investment process—or simply into their thinking.” While quantitative approaches often tend to focus on technical analysis, this book will appeal more to value investors given that it examines the theory of why each fundamental factor works and it relegates technical analysis to just one chapter on price momentum.

From page 39 of The Science of Hitting.

As I read through each chapter and flipped through the extensive results tables in the appendix, I started imagining Ted Williams’ strike zone graphic in The Science of Hitting. Could I use Tortoriello’s process and analysis to start building my own strike zone chart of where to find the fattest pitches in the stock market? By the time I made it through the second chapter, I was pretty excited with the idea of using Tortoriello’s method myself. With access to Portfolio123 data and this method, I might just be able to build myself a map of when and where to swing for the fat pitches.

Before I get too far ahead of myself, let me discuss why I like this book so much. Unlike Joel Greenblatt’s The Little Book That Beats the Market, Tortoriello’s Quantitative Stategies for Achieving Alpha provides all the details necessary for replicating his work. The method is clearly and fully described in a 26-page methodology chapter. There are no secret or ambiguous steps to his stock screens. I was never able to replicate Greenblatt’s Magic Formula (and I haven’t seen anyone else replicate his backtest results), but I feel confident that I can replicate Tortoriello’s work.  In fact, I’ve already started and will start sharing those results soon.

The method Tortoriello lays out begins with investment basics, building bocks, and finally mosaics.  An investment basic in this context is a grouping of investment strategies that generally work. The basics listed by Tortoriello are as follows:

• Profitability
• Valuation
• Cash Flow
• Growth
• Capital Allocation
• Price Momentum
• Red Flags

A chapter is dedicated to each of these investment basics in Quantitative Strategies. Each of these basics are then composed of building blocks.  Tortoriello states, “A building block is a specific strategy that has investment value and works for a clearly understandable, nonstatistical reason.” Finally, these building blocks can then be pieced together to form a mosaic. The mosaics take the form of two factor screens, multi-factor models, and integrated investment strategies that combine quantitative results with qualitative vetting and risk management.

Each of the building blocks tested in this book are sorted by the value of the factor being tested and then divided into five equal sized portfolios. Each of these quintiles are backtested with 12-month holding periods from 1987 to 2006.  The portfolios are rebalanced every 12-months and compounded annually to more realistically replicate what an individual investor might be expected to do to avoid higher short-term capital gains tax and trading costs. To help ensure that the test is not impacted by seasonal or statistical effects, the backtest is also started at four different points during the calendar year.  The results of the quarterly tests are used to calculate the average excess returns for each quintile.  The test results for the Enterprise Value to EBITDA ratio are provide below as an example of the many result summaries presented in this book.

When two factor tests are constructed, both factors are not weighted equally by Tortoriello. Instead, he first forms a set of stocks based on the first factor and then from that set he selects stocks based on the second factor. Not much rationale is provided for why this method was preferred, except to say that the first factor ends up being weighted more heavily and that the portfolio sizes end up consistent. This is a bit different from the way Greenblatt equally weighted both factors in his Magic Formula.

As you saw in the backtest example, many statistics are provided for each of the quintiles.  These include your typical compound annual growth rate, average excess returns, and the percent of periods outperforming.  In addition, the author includes some more academic statistics such as Sharpe Ratio, Beta, and Alpha. The author gets points with value investors for disparaging Beta as a measure of risk and its use in calculating Alpha. However, he still provides these statistics with every summary, I guess to cater to some quants that expect to see those stats. In addition to these statistics, many of the basic building blocks are also tested by industry sector.

Tortoriello uses a fairly intuitive and and basic set of criteria to evaluate each of the strategies tested in this book.  He write, “Our criteria for a strategy that works are (1) the top quintile outperforms the market by a significant margin; (2) the bottom quintile significantly underperforms; (3) outperformance and/or underperformance have been consistent over the years; and (4) there is some linearity in the performance of the quintiles, indicating a strong relationship between the strategy and excess returns.”  In addition, he also mentions that he prefers strategies with low volatility and low maximum loss for the top quintile and high volatility and high maximum loss for the bottom quintile.  Most importantly, Tortoriello doesn’t forget to emphasize that a strategy that worked well in the past may not work as well in the future.

The book concludes with two chapters on pulling together the most successful building blocks.  These included, but are not limited to, the following factors: EV to EBITDA, Free Cash Flow to Price, ROIC, Cash ROIC, 52-Week Price Range, 7-Month Relative Strength, External Financing, 1-Yr Reduction in Shares, EPS Score, and FCF Per Share Score. Several two-factor, three factor, and a complex multi-factor model built using Monte Carlo simulation to optimize weightings are presented. The use of Monte Carlo simulation makes me a bit uncomfortable with the potential for data mining and model overfitting, but at least it introduced me to another approach.

While the analysis in Quantitative Strategies for Achieving Alpha is valuable, this book is not an easy read. I would not recommend taking this book to the beach. Instead, I found it ideal to read this book over short intervals in a quiet study or during the quiet morning subway ride I take to work. I found myself referring back to the methods section and some individual building block backtest results several times. This is one of those books you’ll want to own and markup versus borrowing it from the library.

This book has inspired me to test out many of the stock fundamentals that are popular with value investors. Within the next few days, I’ll provide my own backtest of the Enterprise Value to EBITDA ratio from 2001 to 2011 using StockScreen123. What other fundamentals would you like to see tested?

Happy new year fellow investors! I hope you enjoyed the holidays as much as I did. It was great spending time with my family this past week, taking a break from work, and reflecting on the future.

2011 was a challenging year, especially for fellow investors and website owners. The long hoped for economic recovery hasn’t really materialized yet. Web ad sales have been terrible and interest in stock market blogs was flat at best.

Thankfully, the portfolios I track for Fat Pitch Financials did pretty well in 2011.  The flagship Fat Pitch Financials Port that I track at Marketocracy returned 5.98% last year. Since inception, it is up 56.58% or 6.35% annualized. The Special Situations Real Money Portfolio had a rough year, but it was still able to return 7.14% in 2011. Since inception, the Special Situations Real Money Portfolio is 187.7% or 25.4% annualized! Finally, the Workouts model at Covestor recovered nicely in the last quarter of 2011, so it was able to return 9.51% in 2011. Since inception, it is up 7.07% or 6.01% annualized (Edit: Workout model numbers updated with end-of-year results). My hope that in 2012 I will start attracting some subscribers to the Workouts model now that it is starting to outperform the market.

I plan on kicking off 2012 with a return to fundamentals. I recently finished reading Quantitative Strategies for Achieving Alpha by Richard Tortoriello. My favorite investment tool, StockScreen123 also just upgraded its backtesting function to include dividends in returns, four new benchmarks that include dividends (total returns), and a new screening function for examining stock splits. I’m planning to combine what I learned in Tortoriello’s book with the new features of StockScreen123 to create a series of posts that examine how well the fundamental ratios most watched by value investors performed over the past decade. My end goal is to create a Ted Williams style strike zone chart that will show me when to swing for the fat pitch stocks in 2012.

Shai Dardashti just sent me a survey asking:

What are the “Top 5″ blogs (or online resources) you particularly enjoy reading?

This is apparently part of Shai’s excellent New Years Resolution for 2012, which is to learn faster and more efficiently. I think this is a great effort.  I encourage you to also respond to his survey. Just click on What are the “Top 5″ blogs (or online resources) you particularly enjoy reading? to share your favorite sites.

Here are the responses so far:

Please also share your responses to this survey in the comments section below.

I just started playing around with a an online reference manager and social network for researchers called Mendeley. I’ve found it to be a great tool for organizing my PDFs and online links to academic papers. Mendeley allows you to organize, tag, backup, sync, and annotate your PDFs. The desktop software for Mendeley is easy to use and has a great interface. The really unique aspect to this reference organizing tool is that you can create public groups to collaborate with others interested in the topic you are researching.

I was surprised to find that there wasn’t a value investing group on Mendeley.  I solved that little issue real by quickly setting up a group simply called Value Investing. I welcome fellow value investors to join this group and share their collections of papers.

I’m still looking for a collection of Benjamin Graham papers I have somewhere on my hard drive that I will add to the group as soon as I find them.  So far I have some classic Piotroski and Altman papers listed in the group. Please add your favorite value investing references to the list. I could see this group becoming a great resource for value investing students and researchers given the excellent collaboration features that Mendeley groups provide.

The content for Bud Labitan’s Moats: Competitive Advantages Of Buffett& Munger Businesses book is now complete. The book is in the final editing phase. Anyone who wants to proofread, edit, and enhance a chapter can join the editing team by visiting http://www.frips.com/book.htm.

The book currently includes over 70 businesses.  These include the following:

• Acme Brick Company, assigned to Adam Ward, UNO-CBA.
• American Express Co. (AXP), Dr. Maulik Suthar, Gujarat, India.
• Applied Underwriters, assigned to Adam Ward, UNO-CBA.
• Ben Bridge Jeweler, assigned to Beryl Chavez Li, University of Manchester, UK.
• Benjamin Moore & Co., assigned to Mr. Jack Wang CPA, Lexico Advisory.
• Berkshire Hathaway Group
• Berkshire Hathaway Homestate Companies, assigned to Beryl Chavez Li, University of Manchester, UK.
• BoatU.S., assigned to Peter Chen, Singapore.
• Borsheims Fine Jewelry, assigned to Tariq Khan, UNO-CBA.
• Buffalo NEWS, Buffalo NY,
• Burlington Northern Santa Fe Corp. assigned to David Leoy.
• Business Wire, assigned to Larry Harmych.
• BYD, assigned to Kevin Walsh, UNO-CBA.
• Central States Indemnity Company, assigned to Azalia Khousnoutdinova, UNO-CBA
• Clayton Homes, assigned to Erin Sestak, UNO-CBA.
• Coca Cola (KO) assigned to Sebastian Jung, UNO-CBA
• ConocoPhillips (COP), assigned to Adam D. Studts, PE, UNO-CBA.
• CORT Business Services, assigned to Erin Sestak, UNO-CBA.
• Costco Wholesale (COST), assigned to Jubin Jacob, AUC-SOM.
• CTB Inc., assigned to Todd Sullivan.
• Fechheimer Brothers Company, assigned to Ben Albaitis.
• FlightSafety, assigned to Mark Murillo, Memorial High School
• Forest River, assigned to Richard Konrad, CFA, Value Architects Asset Management.
• Fruit of the Loom®, Dr. Maulik Suthar, Gujarat, India.
• Garan Incorporated, assigned to Dr. Edwin Fuentes
• Gateway Underwriters Agency, assigned Daniel Rudewicz, CFA of Furlong Financial, LLC.
• GEICO Auto Insurance assigned to Florian Beil, UNO-CBA
• General Re, assigned to Raghu Dasari, UNO-CBA.
• H.H. Brown Shoe Group, assigned to Mervyn H. Teo (Singapore)
• Helzberg Diamonds, assigned to Natalja Callahan, UNO-CBA
• HomeServices of America, assigned to Sebastian Jung, UNO-CBA
• IBM
• International Dairy Queen, Inc., assigned to Tariq Khan, UNO-CBA
• Iscar Metalworking Companies, assigned to Kevin Walsh, UNO-CBA.
• Johns Manville, assigned to Manpreet Singh Saran.
• Johnson & Johnson (JNJ), Beryl Chavez Li. & Jubin Jacob.
• Jordan’s Furniture, assigned to Zehao Sun.
• Justin Brands, Dr. Maulik Suthar, Gujarat, India.
• Kraft Foods (KFT), assigned to Andrea Tagart, UNO-CBA.
• Larson-Juhl, assigned to David Arthur Dawes
• Lubrizol, with Scott Thompson, MBA.
• M&T Bank Corp (MTB), Cliff Orr, Kellogg-Northwestern.
• Marmon Holdings, Inc., assigned to Robert Williams.
• McLane Company, Dr. Maulik Suthar, Gujarat, India.
• Medical Protective, assigned to Michael Murillo, KCUMB
• MidAmerican Energy Holdings Company, assigned to Dr. Maulik Suthar, Gujarat, India.
• MiTek Inc., assigned to Mr. Jack Wang CPA, Lexico Advisory.
• Moody’s (MCO), assigned to Raghu Dasari, UNO-CBA.
• National Indemnity Company, assigned to Jen Iwanski, UNO-CBA.
• Nebraska Furniture Mart, assigned to Julie Rosenbaugh, UNO-CBA.
• NetJets®, assigned to Christian Labitan.
• PacifiCorp., assigned to Beryl Chavez Li, University of Manchester, UK
• Precision Steel Warehouse, Inc., assigned to Adam D. Studts, PE, UNO-CBA.
• Procter & Gamble (PG), assigned to Beryl Chavez Li, University of Manchester, UK
• RC Willey Home Furnishings, assigned to Azalia Khousnoutdinova, UNO-CBA.
• Richline Group, Daniel Doyon, Purdue University.
• Scott Fetzer Companies, Cliff Orr, Kellogg-Northwestern.
• See’s Candies, assigned to Jen Iwanski, UNO-CBA.
• Shaw Industries, Richard Konrad, CFA, Value Architects Asset Management
• Star Furniture, assigned to Pamela A. Quintero.
• The Pampered Chef® assigned to Julie Rosenbaugh, UNO-CBA.
• TTI, Inc., assigned to Peter Chen, Singapore.
• United States Liability Insurance Group, assigned to Stephen Chan, University of Manchester, UK.
• US Bancorp (USB), assigned to Richard Konrad, CFA, Value Architects Asset Management.
• USG Corp (USG),
• Wal-Mart (WMT) with Florian Beil, UNO-CBA.
• Washington Post (WPO), assigned to Andrea Tagart, UNO-CBA.
• Wells Fargo (WFC), assigned to Natalja Callahan, UNO-CBA.
• Wesco Financial Corporation, assigned to Stephen Chan, University of Manchester, UK.
• XTRA Corporation, assigned to Ryan M Shuck, UNO-CBA

The Special Situations Real Money Portfolio ended the third quarter of 2011 with a balance of $38,633.48 when the market closed on September 30, 2011. The portfolio is down 5.69% for the year. In comparison, the total year to date return for the S&P 500 was -8.68% as of September 30, 2011. In general, 2011 has been a rough year for the stock market so far.

Thankfully, the Special Situations Real Money Portfolio has produced a total return of 221.95% since inception back in 2004. The annualized rate of return to date is still a healthy 23.63%.

Special situation opportunities have been exceedingly hard to find. Many of the available deals have been of lower quality and higher risk variety. I am hoping things will turn around soon.

Balance: $38,633.48
IRR: 23.63%
Return: 221.95%
YTD: -5.69%

My extended summer vacation from blogging is over. I needed a break at the beginning of summer, so I took a couple of weeks off.  However, I then found it extremely difficult to get motivated to start up again.

I caught a form of writers block that has been very hard to shake. The economic funk we are in has put me in a very unmotivated mood. My guess is that the same thing is happening to others. This Great Recession must be causing a massive physiological impact across society.

Have these economic times also had an impact on your motivation and mood? How have you handled it?

I just published my first mobile app! It’s called Inflation Adjuster and it works on Android devices. Inflation Adjuster is a quick and easy to use tool that calculates the dollar price equivalent between two years.

Inflation Adjuster calculates what the buying power of a dollar amount in a certain year is worth in another year. This inflation calculator uses the average annual Consumer Price Index (CPI-U) produced by the U.S. Bureau of Labor Statistics.

The CPI represents changes in prices of all goods and services purchased for consumption by urban households. This index value has been calculated every year since 1913. For the current year, the latest monthly index value is used. This past Wednesday the Bureau of Labor Statistics reported that the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in May on a seasonally adjusted basis and over the last 12 months, the all items index increased 3.6 percent before seasonal adjustment.

In addition to estimating the buying power of a certain dollar amount, the Inflation Adjuster also reports on the total percent nominal price change and the annualized rate of inflation for the selected time period.

Start discovering the REAL value of prices with this simple handy Inflation Adjuster tool today! Please download this free app to your Android phones and provide some feedback. Be sure to provide the name of the device you used to try my App out on when providing feedback. I’m also planning to make additional apps for Android in the future, so I’m open to any suggestions for my next project.

Welcome to the May 16, 2011 edition of the Festival of Stocks. The Festival of Stocks is a blog carnival dedicated to highlighting bloggers best posts on stock market related topics. Fat Pitch Financials is the actual birth place of this online weekly event, so it is always a special occasion when I get the chance to host this roving event.

If you aren’t already familiar with my blog, Fat Pitch Financials, it is a value investing blog with a focus on wide moat companies selling at substantial discounts and Benjamin Graham style workouts. I encourage you to subscribe for free to my blog feed to keep up with my latest postings.

You should also check my Fat Pitch Financials Contributor’s Corner while you are here. It is my premium members only community dedicated to unique arbitrage and special situation opportunities.

Now that you are familiar with Fat Pitch Financials, let’s take a look at this week’s Festival of Stock participants. Here are this week’s entries:

Top Visited Stories at Value Investing News:

1. Kyle Bass Rips John Paulson and Seth Klarman
2. Great European Value Blog
3. Detailed Notes from the 2011 Value Investing Congress
4. The Biggest Housing Bubble of Them All?
5. Why We Don’t Own Commodities

Dividends4Life presents Colgate-Palmolive (CL) Dividend Stock Analysis posted at Dividend Growth Stocks, saying, “Colgate-Palmolive Company (Colgate) is a major consumer products company that markets oral, personal and household care, and pet nutrition products in more than 200 countries and territories. Linked here is a detaild analysis and commentary.”

Pinyo presents Investing versus Gambling in the Stock Market posted at Moolanomy, saying, “Are you sure you are investing in the stock market? Here are some ways to tell if you are gambling or investing.”

Dr. Barry Burns presents Who is Better at Stock Market Trading – Humans or Robots? posted at Top Dog Trading, saying, “Stock Market Trading, emini trading and Forex day trading automated computer programs place more than 50% of all trades! Readers poll shows what you think.”

Michael presents Six Great Ways To Introduce Kids to Stock Investing posted at Dough Roller. Some good ideas on exposing children to stocks at a young age.

Glen Craig presents ShareBuilder Now ING DIRECT Investing, a Redesigned Site, and a Bonus! posted at Free From Broke.

Flexo presents TradeKing Review posted at Consumerism Commentary.

That concludes this edition of the Festival of Stocks. Be sure an leave comments as you visit each of the blogs that participated in this week’s Festival of Stocks. They’ll appreciate knowing folks are reading their articles.

If you are interested in volunteering to host a future edition of the Festival of Stocks, just contact me right away with the name of your site, blog URL, email address, and the date your prefer to host. Submit your blog article to the next edition of Festival of Stocks using our carnival submission form. If you have any trouble with the prior carnival submission form, you can use the BC Workaround Submitter instead. Past posts and future hosts can be found on our Festival of Stocks index page for those of you interested in reviewing the archives.

Welcome to the May 9, 2011 edition of the Festival of Stocks. The Festival of Stocks is a blog carnival dedicated to highlighting bloggers best posts on stock market related topics.Fat Pitch Financials is the actual birth place of this online weekly event, so it is always a special occasion when I get the chance to host this roving event.

If you aren’t already familiar with my blog, Fat Pitch Financials, it is a value investing blog with a focus on wide moat companies selling at substantial discounts and Benjamin Graham style workouts. I encourage you to subscribe for free to my blog feed to keep up with my latest postings.

You should also check my Fat Pitch Financials Contributor’s Corner while you are here. It is my premium members only community dedicated to unique arbitrage and special situation opportunities.

Now that you are familiar with Fat Pitch Financials, let’s take a look at this week’s Festival of Stock participants. Here are this week’s entries:

Dividends4Life presents Intel Corporation (INTC) Dividend Stock Analysis posted at Dividend Growth Stocks, saying, “Intel Corporation is the world’s largest manufacturer of microprocessors, the central processing units of PCs, and also produces other semiconductor products. Linked here is a detailed analysis and commentary.”

My Journey presents Updating My Perpetual Income Dividend Machine posted at My Journey to Millions, saying, “I started my perpetual income machine dividend portfolio at the beginning of last year and it has quickly become one of my favorite pieces of my financial world. It isn’t large (yet) but it will be! The goal is simple to find undervalued stocks only within the Dividend Aristocrat Index. Last year I only updated the portfolio twice, however, this year I have been investing more and more money into the portfolio per month and thus think it should be updated every 60 days.”

Consumer Boomer presents Is Commodities Investing Safe? posted at Consumer Boomer, saying, “Commodities trading is another way to add to ones investing portfolio but, is it safe? Here’s what you need to know.”

Investor Junkie presents Scottrade Review: The Consistently Good Discount Broker posted at Investor Junkie, saying, “Scottrade is like the Philadelphia Eagles of the investing world. They are never the greatest at any one thing, but they do enough small things right to be a contender. Like the Eagles, Scottrade might never be the champion in any given year, but year after year they are consistently good.”

Tyler presents Dividend Growth Model posted at Dividend Money, saying, “A review of the Dividend Growth Model that examines how to value a stocks based on growing dividends. This method is used by investors who want a growing dividend income in retirement.”

Alexander presents Dividend Portfolio Diversification posted at Dividend Stocks, saying, “When putting together a dividend portfolio, it is important to remember to diversity. In some cases, it can be tempting to chase the high dividend yields related to certain sectors.”

Glen Craig presents Betterment $25 Signup Bonus – Start Investing Smart and Simple posted at Free From Broke.

Outlaw presents Idiot’s Guide to Investing In the Stock Market posted at Outlaw Finance: Investing Blog.

That concludes this edition of the Festival of Stocks. Be sure an leave comments as you visit each of the blogs that participated in this week’s Festival of Stocks. They’ll appreciate knowing folks are reading their articles.

If you are interested in volunteering to host a future edition of the Festival of Stocks, just contact me right away with the name of your site, blog URL, email address, and the date your prefer to host. Submit your blog article to the next edition of Festival of Stocks using our carnival submission form. If you have any trouble with the prior carnival submission form, you can use the BC Workaround Submitter instead. Past posts and future hosts can be found on our Festival of Stocks index page for those of you interested in reviewing the archives.

Welcome to the May 2, 2011 edition of the Festival of Stocks. The Festival of Stocks is a blog carnival dedicated to highlighting bloggers best posts on stock market related topics.Fat Pitch Financials is the actual birth place of this online weekly event, so it is always a special occasion when I get the chance to host this roving event.

If you aren’t already familiar with my blog, Fat Pitch Financials, it is a value investing blog with a focus on wide moat companies selling at substantial discounts and Benjamin Graham style workouts. I encourage you to subscribe for free to my blog feed to keep up with my latest postings.

You should also check my Fat Pitch Financials Contributor’s Corner while you are here. It is my premium members only community dedicated to unique arbitrage and special situation opportunities.

Now that you are familiar with Fat Pitch Financials, let’s take a look at this week’s Festival of Stock participants. Here are this week’s entries:

Top Visited Stories at Value Investing News:

1. Ultimate 2011 Berkshire Hathaway Annual Meeting Guide
2. Ben Graham Formula Stocks
3. 5 Classic Mistakes Individual Investors Make
4. Are You Patient Enough To Be Wealthy? These 12 Dividend Stocks Will Help You Wait
5. Stock Analysis Process – How Geoff Researches Stocks

MikeAhi presents How CAMAX Found a Home in My Portfolio. posted at After Hours Investing, saying, “How the Cambiar Aggressive Value fund appeared on the radar and eventually in one investor’s portfolio.”

The Financial Blogger presents Canadian Dividend Stocks posted at The Financial Blogger, saying, “Are you on top of Canadian dividend stocks?”

Dividends4Life presents Wal-Mart Stores, Inc. (WMT) Dividend Stock Analysis posted at Dividend Growth Stocks, saying, “Wal-Mart Stores, Inc. is the largest retailer in North America and operates a chain of discount department stores, wholesale clubs, and combination discount stores and supermarkets. Linked here is a detailed analysis and commentary.”

My Journey presents Understanding Losses In Your Portfolio posted at My Journey to Millions, saying, “I don’t think most individuals really understand what happens when their investments take a hit and lose value. Investors often do not realize that when you lose X% in your portfolio you are going to need X% + Y to get even.”

Boomer presents Three Dividend Stocks On My Watch List posted at Boomer & Echo, saying, “Today there are just a few high yielding large cap stocks for the value investor to choose from. Here’s a look at three dividend stocks currently on my radar:”

Ken Faulkenberry presents The Best Value Equity Asset Allocation Strategies posted at Arbor Asset Allocation Model Portfolio (AAAMP) Blog, saying, “Examining the best value asset allocation strategies will help investors develop a successful investment management system.”

The Amateur Financier presents Advice to Individual Stock Investors posted at The Amateur Financier, saying, “A list of several suggestions to individual stock investors to help them make wise investment choices.”

Jim Yih presents Principles of Investing posted at Retire Happy Blog, saying, “An important look at the principles of investing.”

Tom presents Caution: Don’t Always Invest Based on Others Predictions posted at StupidCents, saying, “The most important decision when it comes to you investments should be asset allocation, or the allocation of your portfolio to stocks and bonds.”

Dividend Growth Investor presents Philip Morris International (PM) Dividend Stock Analysis posted at Dividend Growth Investor, saying, “Philip Morris International Inc. (PM), through its subsidiaries, engages in the manufacture and sale of cigarettes and other tobacco products in markets outside of the United States. The company was spun off from Altria Group (MO) in 2008, in an effort to separate the international operations of the tobacco conglomerate from potential harmful litigation in the US. I own shares in both companies.”

Tom Drake presents Canadian Index ETFs – XIU vs XIC posted at Canadian Finance Blog.

Outlaw presents Top 5 Common Investment Mistakes posted at Outlaw Finance: Investing Blog.

That concludes this edition of the Festival of Stocks. Be sure an leave comments as you visit each of the blogs that participated in this week’s Festival of Stocks. They’ll appreciate knowing folks are reading their articles.

If you are interested in volunteering to host a future edition of the Festival of Stocks, just contact me right away with the name of your site, blog URL, email address, and the date your prefer to host. Submit your blog article to the next edition of Festival of Stocks using our carnival submission form. If you have any trouble with the prior carnival submission form, you can use the BC Workaround Submitter instead. Past posts and future hosts can be found on our Festival of Stocks index page for those of you interested in reviewing the archives.

With the start of the 2011 Berkshire Hathaway Annual Shareholders Meeting, it is time for a new addition of the Ultimate Berkshire Hathaway Annual Meeting Guide. Throughout the meeting and for several weeks after this event, I will be sharing links to live feeds, meeting notes, and articles about this years event. The Ultimate 2011 Berkshire Hathaway Annual Meeting Guide will be the next best thing to being at the event. Please send me your links to all things about the Berkshire Hathaway Shareholders Meeting. Be sure to bookmark this page and return often for the latest updates.

Official Releases

• 2011 Annual Meeting Announcement
• 2011 Annual Meeting Visitor’s Guide
• Q1 2011 Earnings Preview Press Release
• Questions and Answers from 2011 Annual Shareholders Meeting regarding trading in Lubrizol Corporation shares by David L. Sokol
• Audit Committee Report

Live Feeds

• Liz Claman, Fox Business anchor
• Andrew Ross Sorkin, New York Times
• Becky Quick, CNBC
• Alex Rubalcava
• Joe Magyer, Motley Fool
• Jacob Wolinsky, ValueWalk blog
• BorsheimsBRK
• Alex Crippen, CNBC.com Warren Buffett Watch blog
• Clint Carlos
• NYTimes DealBook
• Michael de la Merced, reporter at The New York Times and DealBook

Live Blogging

• Omaha.com’s Warren Watch
• DealBook: Live-Blogging the Berkshire Annual Meeting

Berkshire Hathaway 2011 Annual Meeting Notes

• 2011 Berkshire Hathaway Meeting Notes by Dustin Hunter
• Comprehensive 2011 Berkshire Meeting Notes by Ben Claremon of The Inoculated Investor
• Berkshire Hathaway 2011 Shareholder Meeting Notes (Part 1 and Part 2) by Gurufocus

Notable Quotes

Warren Buffett: Regarding David Sokol issue:  ”What happened is inexplicable and inexcusable. I will never understand what transpired.”

Warren Buffett: “The inexplicable part I’ll tell you what goes through my mind when I think about it. He made no attempt to disguise the fact that he was buying the stock.”

Charlie Munger: “You can always tell a man to go to hell tomorrow.”

Welcome to the April 25, 2011 edition of the Festival of Stocks. The Festival of Stocks is a blog carnival dedicated to highlighting bloggers best posts on stock market related topics.Fat Pitch Financials is the actual birth place of this online weekly event, so it is always a special occasion when I get the chance to host this roving event.

If you aren’t already familiar with my blog, Fat Pitch Financials, it is a value investing blog with a focus on wide moat companies selling at substantial discounts and Benjamin Graham style workouts. I encourage you to subscribe for free to my blog feed to keep up with my latest postings.

You should also check my Fat Pitch Financials Contributor’s Corner while you are here. It is my premium members only community dedicated to unique arbitrage and special situation opportunities.

Now that you are familiar with Fat Pitch Financials, let’s take a look at this week’s Festival of Stock participants. Here are this week’s entries:

Top Visited Stories at Value Investing News:

1. Benjamin Graham’s Accountant
2. Review of Joel Greenblatt’s “The Big Secret for the Small Investor”
3. Valuation-Informed Indexing #38: Stock Prices Are Not a Random Walk — Here’s More Proof!
4. Nassim Taleb’s First Interview Since The Earthquake in Japan
5. Industry ROIC

Tom Drake presents How Stock Options Work? posted at Canadian Finance Blog, saying, “Employee stock options give you the right to buy a specific number of shares of your company’s stock at a time and price specified by your employer.”

Hussein Sumar presents S&P 500 Dividend Aristocrats of 2011 posted at Best Dividend Stocks, saying, “The S&P 500 Dividend Aristocrats Index is the most honorable list of dividend paying stocks as measured by the S&P 500 Index that have consistently increased their dividends for the past 25 years, without missing a single dividend payment.”

Dividends4Life presents ConocoPhillips (COP) Dividend Stock Analysis posted at Dividend Growth Stocks, saying, “ConocoPhillips Co. was formed in 2002 when Phillips Petroleum and Conoco merged and is now is the fourth largest integrated oil company in the world. Linked here is a detailed analysis and commentary.”

Kevin presents Adam’s Golf: A Balanced Micro Cap Golf Stock posted at Invest It Wisely, saying, “Adam’s Golf (ADGF) is the micro-cap of all micro capitalization stocks—you could buy the company outright for just over $42 million dollars. But while its small size may be threatening to some, it is important to remember that sometimes the biggest earners come in the smallest of stocks. This stock, I believe, is one such stock.”

Intelligent Speculator presents Closing Trade: Long WebMD (WMBD) & Short The Knot (KNOT) posted at Intelligent Speculator, saying, “A few trades we would recommend.”

Dividend Growth Investor presents Nestle (NSRGY) Dividend Stock Analysis posted at Dividend Growth Investor, saying, “Nestle S.A. (NSRGY) provides nutrition, health, and wellness products worldwide. The company is a member of the international dividend achievers index, as it has managed to increase dividends every year since 1996. In addition to that, Nestle recently sold its majority stake in Alcon (ACL), which has enabled it to pursue a massive stock buyback strategy.”

Billy Hart presents Investing Basics – What Are Stocks posted at inMessment – Life Investments | Stocks | ETFs | Money, saying, “This post gives a high-level view of what Stock are. Understanding the different ways to invest goes a long way to build your confidence when investing in the stock market. There are nearly as many different options as there are people ready to give their opinion of which one is best.”

Alexander presents Dividend Stock Investing: Going Foreign posted at Dividend Stocks, saying, “Many investors fail to think of foreign stocks as they formulate an investing plan.”

Jim Yih presents Should I Sell in a bear market? posted at Retire Happy Blog, saying, “Many investors may be questioning the advice given by experts, the media and financial advisors. We are in a tough environment and many have blamed this recent downturn on sentiment, emotions and lack of confidence.”

Philip presents Best Way to Save for Retirement Once You Max Out Your Roth IRA posted at PT Money: Personal Finance.

Tom presents Asset Allocation: Protection from Bear Markets posted at StupidCents, saying, “What is asset allocation? It’s the mixture and distribution of different asset classes – typically stocks, bonds, and cash – in a portfolio.”

That concludes this edition of the Festival of Stocks. Be sure an leave comments as you visit each of the blogs that participated in this week’s Festival of Stocks. They’ll appreciate knowing folks are reading their articles.

If you are interested in volunteering to host a future edition of the Festival of Stocks, just contact me right away with the name of your site, blog URL, email address, and the date your prefer to host. Submit your blog article to the next edition of Festival of Stocks using our carnival submission form. If you have any trouble with the prior carnival submission form, you can use the BC Workaround Submitter instead. Past posts and future hosts can be found on our Festival of Stocks index page for those of you interested in reviewing the archives.

Check out this list of top value investors on Twitter based on PeerIndex. PeerIndex is a proprietary measure of social capital based on measures of your authority, resonance, activity, and audience on Twitter and other social media platforms.

While this web authority metric is not perfect, it is fun to see how fellow value investors rank. It appears that I rank twelfth with @FatPitch and Value Investing News comes in at number 27. The average for the Value Investor PeerIndex Group is 29. I think you will find this list to be a good resource for finding new value investors to follow and you might even learn a bit about your own social media habits.

Value investors on Twitter ranked by PeerIndex

What do you think of this list? Is there anyone missing from it? Let me know in the comments section below.

Welcome to the April 18, 2011 edition of the Festival of Stocks. Today is Tax Day in the United States, so I hope you’ve all finished filing your taxes.  If not, don’t forget to file for an extension.

The Festival of Stocks is a blog carnival dedicated to highlighting bloggers best posts on stock market related topics.Fat Pitch Financials is the actual birth place of this online weekly event, so it is always a special occasion when I get the chance to host this roving event.

If you aren’t already familiar with my blog, Fat Pitch Financials, it is a value investing blog with a focus on wide moat companies selling at substantial discounts and Benjamin Graham style workouts. I encourage you to subscribe for free to my blog feed to keep up with my latest postings.

You should also check my Fat Pitch Financials Contributor’s Corner while you are here. It is my premium members only community dedicated to unique arbitrage and special situation opportunities.

Now that you are familiar with Fat Pitch Financials, let’s take a look at this week’s Festival of Stock participants. Here are this week’s entries:

Top Visited Stories at Value Investing News:

1. Collection of Seth Klarman’s Baupost Group Letters: MUST READ
2. Joel Greenblatt Has A Big Secret For You…
3. Mohnish Pabrai Lecture at Columbia University
4. David Dreman on CNBC: Discusses Inflation, The Fed, Stocks and Real Estate
5. Michael Burry Video (Vanderbilt University)

Ken Faulkenberry presents Asset Allocation Management and Risk Management Analysis in 2011 posted at Arbor Asset Allocation Model Portfolio (AAAMP) Blog.

Dividends4Life presents Genuine Parts Company (GPC) Dividend Stock Analysis posted at Dividend Growth Stocks, saying, “Genuine Parts Co is a leading wholesale distributor of automotive replacement parts, industrial parts and supplies, and office products. Linked here is a detailed analysis and commentary.”

Fat Pitch Financials presents Live Chat with Joel Greenblatt posted here at Fat Pitch Financials, saying, “Author and value investor, Joel Greenblatt answered questions live today on his new book, The Big Secret for the Small Investor.”

That concludes this edition of the Festival of Stocks. Be sure an leave comments as you visit each of the blogs that participated in this week’s Festival of Stocks. They’ll appreciate knowing folks are reading their articles.

If you are interested in volunteering to host a future edition of the Festival of Stocks, just contact me right away with the name of your site, blog URL, email address, and the date your prefer to host. Submit your blog article to the next edition of Festival of Stocks using our carnival submission form. Past posts and future hosts can be found on our Festival of Stocks index page for those of you interested in reviewing the archives.

Author and value investor, Joel Greenblatt answered questions live today on his new book, The Big Secret for the Small Investor. Greenblatt also answered questions regarding the Magic Formula discussed in The Little Book That Still Beats the Market. Sadly, not many of the questions touched on his best book, You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits.