My readers are the best. ?Here is another example:

undertherockstocks

26 May 2014 at 7:44 am??(Edit)

David ?

You may also like?http://www.SECLive.com?for reading filings. It?s a nice user interface and hopefully it will support additional filing search functions in the future.

There are a a lot of things to commend SECLive — setting up lists to track companies, etc., but the best feature is the ability to download tables to Excel for free. ?I’m planning on doing a post on insurance reserving as a result, and you may see other articles on dollar-weighted returns as a result. ?Can’t tell you how much time I have spent reformatting HTML pasted into Excel.

It is amazing what is out there for free. ?Count your blessings, and if you are a fundamental investor, use some of these tools.

I love my readers. ?Here is another question from a reader:

I would appreciate your advice on how to learn more about investing and how to make myself useful to people in the business as a step towards getting in.

There are two questions here:

1. How to learn more about investing?
2. How to make yourself more valuable to prospective employers (so that you might be hired)?

So let’s answer them:

How to learn more about investing?

There are three main answers here:

1. Study the classics
2. Study areas where there are current problems
3. Read widely

When I talk about the classics, I am talking about the writings of Ben Graham, Buffett, Munger, Phil Fisher, and notable investors who have spilled their theories to the world. ?Also men like Seth Klarman, Howard Marks, Ray Dalio, George Soros, Bill Gross, Jeffrey Gundlach and other clever investors who understand the markets well.

Second, if there are current problems in the market, do your research, and try to understand them well. ?This may take more effort, because current problems are not well-understood, or they would have been solved already.

The correct answer is not immediately obvious. ?Prior to the crisis, it is a minority view. ?After the crisis, everyone knew it would happen 😉 .

Try to view the markets in a comprehensive way. ?Think of the buyer and the seller, and their motives. ? ?Look for minority opinions, and analyze them — maybe that have it right. ?Most of the time, you will throw their opinions away, but in rare cases you might find something valuable.

Finally, read widely. ?Try to understand the changing economy. and where value is being added where current valuations don’t reflect it. ?Understand the economic world, and dedicate time to it. ?I dedicated an hour par day while I was an actuary to understanding all manner of investments for ten years before I had my first job in investing at age 38.

And read economic history. ?It is very valuable to understand how things worked in the past, because it offers clues to those of us in the present who don’t think “It’s Different This Time.”

How to make yourself more valuable to prospective employers (so that you might be hired)?

First, prepare yourself. ?If you are not good at speaking extemporaneously, practice the things that you will say in an interview. ?Think about the most likely questions, and likely variations, and have your answers ready. ?Rehearse these answer in front of a mirror, and do it many times, until you have it down cold. (solid).

Second, do your research on the firm, and understand its problems. ?You don’t have to have the whole answer, but if in the interview, you understand the challenges, and have some idea of how they might be addressed, you will impress those interviewing you. ?You have done the homework; you are more than capable of analyzing other tough issues.

Third, be willing to question the received wisdom, and suggest solutions that are abnormal. ?So long as you don’t sound like an idiot, this will do one of two things:

1. You will come up with a clever idea that no one else has thought of, or,
2. You will show yourself to be willing to think more broadly than most do. ?Remember, it only takes one significant insight to establish a career. ?Of course, more is better, but one significant insight will do a lot.

Fourth, be good with the basics. ?Understand the basics of investing well. ?Just as a kid should know his 100 addition, subtraction, multiplication, and division facts cold, so should investors know the basics of investing without much effort.

Fifth, give it your all. ?Show dedication beyond what is required. ?I’m not asking you to kill yourself, I did this while raising a family of eight children. ?But whatever the situation is, give it your best, even if you have to take some of the work home.

If you do these things, you will be very valuable to the firm that you serve. ?Even more, you will be valuable to many firms that might like to hire you.

So make yourself ?valuable, and prosper.

One of the challenges in investing is understanding whether stocks are really earning above expectations or not. ?Many companies, especially the large ones have their adjusted or modified GAAP earnings. ?I can sympathize with the companies if the adjustments make the adjusted earnings more like free cash flow. ?But if not, I disagree.

GAAP accounting is very good, better than IFRS, but not perfect. There are two uses for earnings figures, and they are different, because they serve different time periods.

When analyzing quarterly earnings, heed the adjusted earnings figure, but review that calculation to see that is is on the same basis as it was over the last year. ?Shenanigans are often played here.

Second, look over a 3-, 5-, and 10-year periods: see how much actual earnings lagged behind management estimates. ? ?Yes, there are temporary fluctuations in earnings. ?But when they repeat again and again, it indicates that management is sloppy. ?This is structural and not sporadic.

Don’t invest in companies that regularly have significant one-time disappointments. ?What is regular should be treated as regular. ?Companies that regularly have to adjust earnings higher then GAAP deserve lower valuations.

Here’s another way of thinking about it: writedowns usually reflect the past, indicating that past profitability wasn’t so high. ?If writedowns come frequently, it means that management has made bad/liberal accounting decisions. ?This could be a stock to avoid.

Thus in the short run, look at adjusted earnings, but critically. ?In the long run, look at unadjusted earnings, because managements should be responsible for their long-term errors.

In the fourth quarter of 2011, I decided that I needed to analyze the 13F filings of major investors who I thought were bright. ?The first stage was looking at track records, and then finding the 13F filings. ?Some investment management companies ?make them difficult to find. ?And, prior to three quarters ago, formatting issues allowed managers to make it a lot more difficult to compare 13F data across managers.

But now data must be submitted in a uniform format, using extensible markup language [XML]. ?That can be fed into Excel with little effort, and much of the prior data scrubbing goes away. ?That data scrubbing took an extra day at least.

That said, the central challenge for someone that does not have a Bloomberg terminal is converting the CUSIP numbers [Committee on Uniform Securities Identification Procedures numbers] into ticker symbols. ?Those numbers are owned by the American Banking Association, and they charge a pretty penny to use them. ?I asked the folks at AAII [American Association of Individual Investors] to include a CUSIP field ?in their deluxe stock screening package, and they said something like, “Are you kidding? ?Do you know what the American Bankers Association charges for it?!”

When I started, I asked my bright, then 12-year old daughter to build up our own CUSIP to Ticker database. ?She worked for many hours, producing a significant database for which I paid her well. ?Since that time, I have maintained that database.

After I download via XML all of the manager reports that I want to follow, I sort out all of the CUSIPs I have never seen before, and find their tickers.

What used to take a week now takes a little more than a day in total, start to finish.

One thing that I do differently than some others in analyzing 13F filings is that I am interested in what percentage of the market capitalization the positions represent, and how large the net increase in positions is relative to market capitalization.

After that I look at three things:

1. What are the largest holdings as a group as a whole as a percentage of market cap,
2. What are the largest net increases in holdings as a group as a whole as a percentage of market cap, and
3. What ideas are new, that no one invested in last quarter, and two or more invested in this quarter?

Now I am not saying that I have the formula right, but this feels right to me. ?I invite readers to suggest their own ways of screening through 13Fs to determine the most worthy investment ideas.

But before I leave for the evening, another boon: here are the tickers generated by my 13F methods this quarter:

AAL, ADT, ALSN, AN, BCS, BIOS, BRX, CAM, CAR, CCI, CLH, COH, CSLT, CSTM, CTRP, CTXS, CYH, DAR, DDC, DSW, DV, DVA, ENDP, ENT, EPE, ESRT, EVTC, FLXN, GHC, GLPI, GME, GS, HMHC, HOLX, HW, IBP, IDIX, JNPR, KATE, KIN, KN, KSU, LNN, LPNT, MDR, MTOR, NADL, NCLH, NMIH, NUAN, PAH, PBF, PHH, PLCM, POST, QEP, QLIK, RCII, RDN, REIS, RFMD, RH, RLD, RPXC, SBAC, SC, SFUN, SNMX, STAY, SWI, SYMC, TDG, TLM, TLMR, TQNT, TRLA, TRW, TWI, USG, VECO, VIPS, VOCS, VOXX, VRTX, WPP, XL, XONE, YRCW, ZINC

After the last few articles, you know almost all of the companies that I am considering investing in versus my current portfolio. ?Have look as you like, and maybe a few of them are good investment ideas.

Today I start my quarterly analysis of my portfolio. ?I do it once per quarter to take the emotion out of it and make it businesslike.

But in-between analyses, I read. ?I read a lot of stuff, and occasionally I see ideas where I say, “That looks like a good?idea!” ?After that, I record the ticker symbol and throw away the reason why it seemed good.

Why do I do it this way? ?Several reasons:

1) Quick decisions are rarely good ones. ?Lots of people have slick pitches. ?Far better to wait a while, and analyze the opportunity coldly, and compare it against other ideas.

2) If I buy this, what should I sell? ?Not that you have?to sell but it is a good exercise to make you improve the portfolio. ?It might indeed be a good idea, but you may have better ideas still in your current portfolio.

3) I need to analyze all opportunities through the same prism, and I need to understand them myself, not just what someone else told me. ?If I don’t understand why I am buying, I will not understand when to sell.

The truth is, the need for urgency in investing is overrated. ?If an idea is good today, it will likely be good three months from now. ?Few investment ideas move linearly, and many ideas seem to fail before succeeding. ?Most companies that I have averaged down on have proven to be successes.

So take your time, analyze dispassionately, and compare new possibilities versus existing positions. ?And don’t trade much. ?It takes time for most investment these to work out. ?So choose a small number of new ideas to enter your portfolio, while selling a similar number of old ideas.

I don’t normally do this, and I might not do it in the future, but here are the tickers for the companies that looked like a good idea over the last three months:

ABC, ADP, AGN, AGU, ALTV, AMED, AMGN, ANH, APD, BAGL, BAM, BAX, BBBY, BBT, BCR, BCS, BWP, CAM, CAN, CDI, CHL, CHRW, CLR, COH, COP, CTXS, CVU, DDEJF, DDS, DGSE, DLLR, DLR, DRI, EFII, EGAS, EOG, EP, ESRX, FDO, FSYS, FUL, FWM, GCI, GEL, GG, HA, HK, HLF, HRB, ICE, INOD, INVC, JBLU, JSAIY, KM, KMI, KMP, KR, LH, LNCO, LNVGF, LNVGY, LUK, MAT, MCD, MCO, MFA, MGA, MHLD, MOD, MON, MRO, MSG, MU, MUR, NABZY, NBL, NCR, NOG, NOK, NSANY, NSIT, NSRGF, NTE, OGZPY, OPY, ORCL, OXY, OZM, PBI, PCL, PCM, PDCO, PEP, PERY, PLAB, POT, PZE, QBCRF, RAD, RCII, RCKY, REP, ROST, RYN, SAFM, SANM, SE, SLW, SNBC, SNTA, SWM, SYK, TEN, TGT, TSN, TSO, TU, UCFC, UL, UNP, URBN, VE, VOD, WACLY, WHR, WLP, WMB, WMT, WSBC, XEC

As with anything I write, do your own “due diligence.” ?But thanks for reading me. ?I appreciate all of my readers.