Review: Conscious Investor

Introduction

We have noted several times on our main web page how essential it is for investors to get the right financial information and how summarised information is easily available to the public via subscription services like Value Line.

The secret, of course, is how to analyse the information once it is to hand and, if using a Buffett type approach, how to decide what to buy and when to buy it.

If you only want the bare company information, then Value Line offers a reasonably inexpensive subscription service that provides the basic data for the previous few years such as earnings per share, sales per share, profits, asset backings, debt details, profit margins and the like. This will enable you to use Buffettish methods to select companies based on the criteria that you chose.

We have recently looked at a software package and subscription service called Conscious Investor, developed by a Professor John Price, that provides in summary form the same kind of data that Value Line offers. It also comes with a suite of analytical tools that seek to reproduce several of the Buffett type tests.

The service provides company data for corporations listed on the New York, Canadian and Australian Stock Exchanges. You can choose one, two, or all of these services. The basic company data will give you, for current and previous years, such information as:

Debt to equity
Current ratio
Quick ratio
Interest cover
Return on equity
Market capitalisation
Sales per share
Predictive growth

The package enables the user to access and download the relevant data for corporations listed on those exchanges. Available data is updated on a regular basis.

The program consists of a number of inter-active analytical tools that allow you to:

Cull corporations by setting performance obstacles
Calculate an intrinsic value, based on past performance and your calculated future performance predictors
Set a price at which you are prepared to buy the stock, taking into account what growth/income returns you would like to achieve

Stock scanner

This enables you to select an industry, or the market generally, and to cull company lists according to whatever parameters you select over a chosen period of years., including:

You can either set your own parameters or use the default parameters set by Professor Price.

Importantly, the tool provides for growth analysis and predictability based upon a formula devised by the software originators that not only calculates past growth but also ranks it for consistency. You can also indicate the future rate of growth that you are looking for as an additional analysis obstacle.

Quick Analysis

This is a spreadsheet type tool that allows you to input, after making your investigations, all the necessary questions, and answers to enable a judgment. The types of questions included are the questions that Buffett is, according to all accounts, supposed to look at when making investment decisions.

Scenario analysis

This is a ‘what if’ spreadsheet tool that allows you to look at the future prospects of a selected company, inputting your own assumptions, to calculate rolling returns and allow you, if you wish, to make discount flow calculations.

Additional tools

The program also comes with market, industry and company charts and graphing facilities.

Using the program

Using the program is simple enough even for technological amateurs like the Editor of your Newsletter. There is both an online manual, and a series of seminars that you can take at your own pace to help you use the program.

Stock selection

If you do not want to select companies yourself, there are two additional facilities that are very useful: The Conscious Investor Watch list and Members Forum.

Each month, although the frequency may change depending upon market opportunities, Professor Price and his team analyse a stock or two in each selected market, doing the hard work of making all the Buffett type calculations. A typical review of a stock would include:

A business description of the company and its activities
Recent scuttlebutt
An analysis of any ‘economic moat’ that the company has, or in Buffett terms, the company’s continuing competitive advantage
An assessment of management abilities
An analysis of:

Management performance
Growth performance and prospects
Debt and liquidity
Price earnings performance
Retention feasibility

Intrinsic value calculations
A fair price

Conscious Investor does not necessarily recommend a purchase at that price but suggests subscribers make their own decisions based on individual needs and risk profiles.

The company also has a watch list for each of the markets that it services and a model portfolio, which seems to be consistently ahead of the market. We took up one of their recommendations and have to say that we are sufficiently ahead on our investment to have more than paid the subscription.

Member’s Forum

This is a very interesting feature in which members identify their own stock selections, ask questions, and communicate investment strategies. It can alert subscribers to value investments that they, and the Conscious Investor team, may have missed.

Review Summary

If you just want corporate data in an easy to read summary form, and nothing else, Value Line is probably the best bet, as it is a little bit cheaper than Conscious Investor.

If you want a good analysis tool as well as the basic corporate data, then you might consider trying out Conscious Investor. Plus, you get the bonus of the Conscious Investor team’s own stock selections, as well as an interesting and valuable member’s forum.

We are impressed enough with the package to have purchased it for our own use.

Further Information

Further information on Concious Investor can be obtained by submitting your email address here.