Screen by market capitalization

Hello,

Graham says in the Intelligent Investor (Fourth Revised Edition published in 1973) that "let us suggest that to be “large” in present-day terms a company should have $50 million of assets or do $50 million of business.*"

On the same page footnote says "* In today’s markets, to be considered large, a company should have a total stock value (or “market capitalization”) of at least $10 billion."

I checked market capitalizations of the companies on the screener, and in the defensive category none of them reach $10 billion on the first 15 page. Am I missing something? Is there a method to filter by market cap?

Thank you for your answer in advance!

Dear andrasszalaidr,

Thank you for your forum post!

The footnote you're referring to was not written by Graham, but by Jason Zweig. Graham's footnotes have been moved to the end of the book in that edition, to the Endnotes section. This is discussed in Recommended Edition of The Intelligent Investor.

The issue of using Market Capitalization has been discussed briefly in 2013. GrahamValue uses Sales and Total Assets for judging company size, just as Graham recommends; with optional adjustments for inflation.

Graham does not seem to have recommended Market Capitalization; presumably because Sales and Total Assets are less prone to fluctuation, and less vulnerable to the vagaries of the market.

Thank you again for your forum post!

Dear andrasszalaidr,

Thank you for your forum post!

With reference to the below queries sent by you through live chat:

1. is grahamvalue.com connected to a currency-exchange to calculate different currencies, or finnhub.io sends the data in USD?

2. so the annual sales (500 million) criteria is in USD, but if the company is Japanese, it passes with annual sales of 500 million JPY (which is a lot less than 500 million USD)?

3. According to this, to adjust to japanese yen I have to increase Size in Sales to 12500%, only 1000 is possible on the slider

4. I can see now it can go up to 10000. I don't know which currency is the cheapest in relation to USD on the site (maybe krw?), but if Size in Sales could go up to a percentage which adjusts to this cheapest currency that would be awesome!

5. same for Size in Assets

With reference to queries #1 and #2, please see the footnote #5 link of the Quick Reference.

The data provider sends all figures in the given currency for each stock, and GrahamValue does not apply any currency conversion. This is discussed in the footnote #5 link as well.

With reference to queries #3, #4 and #5; both the Size in Sales and Size in Assets sliders have now been modified to go up to 10,000 in steps of 10.

Anything higher would make them difficult to use in regular browsers in steps of 10, which is the maximum possible increment allowable when considering similarly valued currencies; such as the U.K. example given in the footnote #5 link.

Thank you again for your forum post!

Thank you for your answer and all the help so far!

I have 2 questions regarding the above subject.

Value Investing Across Countries And Economies 3. a. says:
"Since similar Bond Yields in the U.K. are now close to 2.3%, this allows for a P/E ratio of up to 43. The Graham Number of a stock would need to be multiplied by 1.70 to adjust it to a P/E of 43. THIS CORRESPONDS to a Graham Number(%) of 59% on GrahamValue, which can be rounded up to 60%."

I don't see how this Graham Number(%) = 59% was calculated for this example, since Graham Number(%) equals Graham Number per previous close, and previous close is different for all companies. There is no specific company in this example. Am I missing something?

I also did a calculation for Japan based on the text: since similar Bond Yields in Japan are now close to 0.234%, this allows for a P/E ratio of up to 247,35. The Graham Number of a stock would need to be multiplied by 5.34 to adjust it to a P/E of 247,35. This corresponds to a Graham Number(%) of ?% on GrahamValue. Am I correct? The lower the bond yield, the higher the P/E ratio?

Thank you in advance!

Dear andrasszalaidr,

Thank you for your comment!

The calculation is explained in Adjusting Benjamin Graham's Price Calculations Today, which is linked to from Value Investing Across Countries And Economies (specifically from the bit you've highlighted).

What that example essentially means is that any stock there having a Graham Number(%) under over 59% would clear Graham's price requirement. The baseline Graham Number(%) calculation itself is independent of the stock.

You're correct. The lower the bond yields, the higher the acceptable P/E ratio. However, a bond yield of 0.234% corresponds to a P/E ratio of 427.35. It appears you typed 247 instead of 427, but the remainder of your calculations are correct.

We would need to multiply the Graham Number of a stock by √(427 ÷ 15) = 5.34, to adjust it to a P/E of 427.35. The reciprocal of 5.34 is 0.1873, or 18.73%. This could be rounded up to 20% on GrahamValue's filters.

Also, with reference to the previous response above on Sales and Total Assets Filters, please note that the increment size for the filters have been changed from 10 to 20 for increased browser responsiveness.

Thank you again for your comment!

Dear Grahamvalue!

Thank you again for your answer!

https://www.grahamvalue.com/blog/adjusting-benjamin-grahams-price-calcul... Screening, Defensive says: The filter values required on GrahamValue's screeners for finding Defensive grade stocks with the adjusted Graham Number would be:
Graham Grade Defensive
Graham Number(%) ≥ 70%

I interpret the above as Graham Number has to be MORE than 70% to qualify for Defensive in the United States.

In your answer you write for U.K.: "What that example essentially means is that any stock there having a Graham Number(%) UNDER 59% would clear Graham's price requirement."

Is it a typo (under instead of more) or am I missing something?

Thank you in advance!

Dear andrasszalaidr,

Thank you for your comment!

Yes, that was a typo and has been corrected to — any stock there having a Graham Number(%) under over 59% would clear Graham's price requirement.

Thank you again for your comment!

Dear Grahamvalue,

Thank you!

One additional question regarding foreign countries: https://www.grahamvalue.com/blog/value-investing-across-countries-and-ec...

From which data provider did you get 32% CPI change in 10 years for the U.K.? Is there a data provider who provides this type of data for all countries, or you had to perform separate calculations?

Thank you in advance!

Dear andrasszalaidr,

Thank you for your comment! All your questions are welcome.

The data required is available either from government sources such as the Office for National Statistics, or from private sources such as Trading Economics.

The latter may provide data for additional countries. GrahamValue only performs the calculation for the U.K. example in the said link, but gives the option of adjusting the values for any country on the screener.

Thank you again for your comment!

Dear andrasszalaidr,

Also, please note that the issue of filters for Japanese stocks has been discussed in some detail about two years ago.

Thank you for your comment!

Dear GrahamValue,

Thank you for the answer and the references.

A next question of mine is regarding foreign stocks: is there any data provider for 10-year AA Corporate Bond Yields(%) of most of the countries?

I find 10-year Government Bond Yields easily, are these sufficient to adjust the Graham Number (Defensive)?

Thank you in advance!