Sunday, August 12, 2012

Stock picking through Citiseconline

In this tutorial, I suggest how Citiseconline may be used to choose a company to buy or invest in. To begin, login to your Citiseconline account and choose the following sub-menu: Research..Fundamentals..Investment Guide:

Next highlight the data (CTRL-a) in the investment guide table and copy it (CTRL-c).

Then, open the Notepad application and paste the table data (CTRL-v) onto it.

Select the data from Notepad (CTRL-a) and copy it (CTRL-c). Then open Microsoft Excel and paste the copied data onto the Microsoft application (CTRL-v):

Next, right-click on column F and click Insert:

A new blank column will be inserted. On cell F1, type in the formula as indicated in this picture:

Copy cell F1 (CTRL-c) and paste it (CTRL-v) onto the rest of the cells in column F:

Now, on the Data menu of the Excel application, click the Sort icon:

Then, in the Sort dialog box, untick the "My data has headers" tickbox, Sort by Column F, and Order from Largest to Smallest:

The Excel table data will now look like this:

Select the first six rows by highlighting the left side of these rows. Then right click and choose Delete:

The data will now be reduced to as follows:

For a given stock, column C represents the current price, while column E represents the target price or the fair value of the stock as estimated by Citiseconline. The target price represents the future price value of the stock which Citiseconline thinks the stock will attain within more or less a year from now. Column F represents the percent growth of the stock price assuming that the price moves from the current price in column C to the fair value in column E. Column F is now sorted in descending order, and the stocks are listed according to their potential growth in their current stock prices, beginning with the largest growth potential down to the least.

Based on this list, ABS (ABS-CBN) has the highest growth potential of 130%. Before buying ABS, however, you have to check the story line behind ABS to see why Citiseconline puts such great value on it. The next company on the list is CEB (Cebu Pacific Airlines), and the third is FPH (First Philippine Holdings).

To see the underlying stories behind these 3 stocks, in the Citiseconline webpage, choose the following sub-menu: Research..Archive. Now, check the story line of ABS by choosing ABS from the stock list:

The news reports and commentaries about ABS will be listed:

Notice that the second report mentions that Citiseconline has terminated coverage on ABS. Note also that several recent reports show ABS missing earnings estimates: Net income drop, net income drops, below consensus forecast, misses COL forecast.

All these reports indicate that the 130% potential growth for the stock price of ABS cannot be relied on. Citiseconline has ceased analyzing the company, and most probably, ABS is not performing that well, and so Citiseconline does not want to include it anymore in its list of companies covered. To be safe, then, do not buy ABS as its earnings are in a declining trend.

Next, we check the story line behind CEB:

Again, like ABS, CEB seems to be recently declining in earnings as well: performance disappoint, earnings decline, all in the negatives. Therefore, it would not be a good idea to buy CEB. The investment guide of Citiseconline often is not updated so you have to confirm the story line to check whether a good potential growth in stock price has an underlying fundamental story basis at all.

Finally, we check on FPH:

Based on the headlines alone, overall, FPH looks like a good company to invest into. Simply put, it has fundamentals. We check one of the stories to check if this is a safe investment:

The story line looks all right. Nothing scary like the company not meeting forecasts or estimates. Next we check the technicals through bloomberg. Go to

We check for an approximate one-year trend:

The stock price chart shows that the price is in an uptrend. It would have been best to come in at the start of 2012, but even at this time, it may still be a good time to come in, given the fair value of 117 Pesos as estimated by Citiseconline. This corresponds to a gain of about 50%.  It would have even been better to come in before 2012, but it is usually safer to wait for a breakout to confirm an uptrend. Prior to 2012, as shown in the chart, the price was in a side-ways, neutral trend. Then in November 2011, there was a breakout. Once you have the breakout from a side-ways, rectangular trend, then it is a good sign to come in.

Before buying into FPH, it would be even safer to check other brokers besides Citiseconline to see what their opinions are regarding FPH. We can, for instance, check on the analysis of AB Capital Securities:

In this case, not only does Citiseconline recommend FPH, but AB Capital Securities recommends the company as well. This double affirmation confirms that FPH has fundamentals; that is, there is basis for believing that it is currently underrated or undervalued, and that it is actually worth more than what it is currently worth today. Note, however, that AB Capital Securities estimates a more conservative fair value of 85 Pesos per share, in contrast to the 117 Pesos estimate by Citiseconline.

In summary, Citiseconline provides an investment guide that can aide investors in finding which companies are the best buys. The investment guide, however, may not be updated, and so, it is always best to check the story lines to see if there is any basis on why Citiseconline highly recommends certain stocks. Besides having good potential stock price growth, and a good underlying story, it is wise also to check that the 1-year stock price chart is on an uptrend. It might be dangerous if it were on a downhill trend. Lastly, check with other brokers to see if they have similar positive opinions about a stock or not. If one has several positive confirmations about a company, then there is less reason to fear, particularly if the whole economy is on depression mode due to some recession or disaster. If the company has true substance, then its price will most likely eventually recover and rise in the future until it reaches its fair value. The more knowledge you have, the less impulsive you become, and the less emotionally-driven your decisions become with regard on what to buy and more importantly, on when to sell.

Sunday, August 5, 2012

Comparing fund performances

Investors are usually faced with the problem on which fund to invest their hard-earned money in. This tutorial gives a brief guide on how to compare the performances of similar funds, and by doing so, enabling the investor to prune out funds that are lackluster in performance, and choose funds that are actually doing what they are supposed to do: earn money.

To compare mutual fund or unit investment trust fund (UITF) performances, first obtain a list of all funds, for a specific geographical region. For example, for the Philippines, you may type in the following keywords in your favorite search engine such as Google: "bloomberg funds Philippines"

The search engine may then lead you to the following site which lists all the funds, whether mutual funds or UITFs, in the Philippines:

Next, right-click on a specific fund which you may be interested in, and open it in a different tab. For example, to investigate the BDO Peso Bond Fund:

The Bloomberg page for the BDO Peso Bond Fund will appear:

Once the page appears, click on “Mutual Fund Chart for BDOPBF” link, and the interactive chart will appear:

Return to the list of funds page ( and pick another fund which you want to compare the BDO Peso Bond Fund with, and take note of the Bloomberg symbol. For instance, to compare the BDO Peso Bond Fund against the Union Bank Peso Bond Fund, you would note that the symbol for the Union Bank Peso Bond Fund is IFDPPBP:PM

Go back to the page displaying the interactive chart for the BDO Peso Bond Fund, and add the symbol IFDPPBP:PM

Notice that Union Bank Peso Bond Fund chart (green) has been superimposed upon the BDO Peso Bond Fund chart (orange):

You can display up to 4 funds. For instance to compare the BDO and Union Bank Peso Bond funds against the First Metro Save & Learn Fixed Income Fund:

It is obvious that for the past 6 months, the First Metro Save & Learn Fixed Income Fund has easily outclassed the BDO and Union Bank Peso Bond Funds. However, this has not always been the case. For instance, you may click on the 3-year horizon to view the past performance for the past 3 years:

Doing so, one will notice that it is only recently that the First Metro Save & Learn Fixed Income Fund has gained momentum. For the majority of the past three years, it was actually the Union Bank Peso Bond Fund that was dominating. The BDO Peso Bond Fund pales in comparison to the other 2 funds:

If we shift to a 5-year horizon, it is evident that the Union Bank Peso Bond Fund is the leader of the pack.

Unfortunately, Bloomberg only allows chart interactions for the time-horizons of 6 months, 1 year, 3 years, and 5 years. Nonetheless, it permits us to obtain information for the recent performances of a very large diversity of funds. By doing so, it helps us make wiser and more informed decisions.

In making comparisons, it is best to compare funds that all fall under the same category. For example, in this case, we compared the BDO Peso Bond Fund against the Union Bank Peso Bond Fund and against the First Metro Save & Learn Fixed Income Fund. All 3 funds are similar in that they are bond funds, and mostly invested in government treasury bonds. It would not make sense to compare a bond fund against an equity fund, since these 2 funds are invested in very different securities.