The Boring Investment Report identifies the one half of one percent of public companies capable of generating, consistently, year after year, increased free cash flow per share without adding debt. It documents their emerging financial statement trends and risk characteristics.
While there is a formula that can roughly come close to identifying these companies, they are most easily identified by their free cash flow per share graphs. Our software cuts the potential compounders from 5500 (the total number of public companies with market caps of over $5 million) to about 150. We look through the free cash flow graphs of those 150 each quarter in order to identify the thirty to forty with the most consistent records of compounding. As I write this in late 2018, most of these companies sell at significant premiums to their long-term relationship to value, as does the entire market. However, there are generally five or six that sell at or near intrinsic value each quarter.
The Boring Investment Report, published quarterly, provides data and graphs on all those thirty or forty, listed in order of best value.
For instance, in early December, 2018, Cognizant is trading slightly below its intrinsic value, one of only six compounders offered at close to intrinsic value, despite recent market declines.
In addition to free cash flow per share and price to estimated intrinsic value, The Boring Investment Report also contains:
- A summary page comparing free cash flow per share and financial strength trend to stock price.
- A return on assets page with a series of graphs showing trends in margins (gross, operating and net), and asset turnover, the constituent components of return on assets.
- A quality of earnings page comparing growth in free cash flow to growth in debt and growth of capital expenditures.
- A financial strength page with trends in debt as a percent of equity and interest coverage (for non-financial companies) and liquidity trends.
The cost of a subscription to The Boring Investment Report is $8,000 per year. Commission-based payment arrangements may be possible, for instance through Cowen/Westminister.
Please feel free to contact Rod to discuss subscribing or send your contact information and a check to one of the addresses on the Contact tab above.