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Workshop Portfolio

<FOOLISH WORKSHOP>

Plowback Ratio Update      

by Jim Stevens (JimStevens@aol.com)

Burlington, VT (March 1, 1999) -- Tonight it's the Workshop Plowback Ratio Portfolio update. This is one of the screens not followed in the weekly returns and rankings, but it's a model that Workshop readers have shown a lot of interest in since Robert Sheard first started following it last year.

For those not familiar with the "plowback ratio," let me bring you up to speed. Value Line defines Percent Earnings Retained to Common Equity (Plowback Ratio) as "net profit less dividends divided by common equity including tangible assets, expressed as a percentage." It's a measure of how much cash a company is sinking back into its operation.

For the Plowback Ratio Portfolio, I used the following screen: Starting with all 1700 stocks in the ValueLine Investment Survey, filter out all but the 20 stocks with the largest market capitalization that have a plowback ratio of 25% or greater.

On January 7 I started a 1999 Plowback Portfolio so we could monitor the ups and downs of companies making the screen. Here's an update on how that Portfolio is doing through last Friday, February 26.

Sun Microsystems (Nasdaq: SUNW) 13.65%
Oracle Corp. (Nasdaq: ORCL) 29.57%
Int'l Business Mach. (NYSE: IBM) -7.93%
Intel Corp. (Nasdaq: INTC) 1.16%
Dell Computer (Nasdaq: DELL) 9.48%
Amgen (Nasdaq: AMGN) 19.43%
Cisco Systems (Nasdaq: CSCO) 5.39%
Safeway Inc. (NYSE: SWY) -5.23%
Guidant Corp. (NYSE: GDT) 3.18%
Gap (The) Inc. (NYSE: GPS) 15.26%
Lucent Technologies (NYSE: LU) -7.62%
Microsoft Corp. (Nasdaq: MSFT) 8.25%
Schering-Plough (NYSE: SGP) 0.79%
Abbott Labs. (NYSE: ABT) -5.48%
Campbell Soup (NYSE: CPB) -26.93%
Sara Lee Corp. (NYSE: SLE) -3.55%
Bestfoods (NYSE: BFO) -11.85%
Caterpillar Inc. (NYSE: CAT) -0.95%
Coca-Cola (NYSE: KO) -4.66%
Computer Associates (NYSE: CA) -1.47%
Top 5 9.18%
Top 10 8.39%
Top 15 3.53%
All Twenty 1.52%

This performance is still topping the major indexes, but like most of our models it's down quite a bit for the month of February. If you like the type of stocks you see on the list, ones that throw off a lot of cash that they put right back to work making more cash, this screen might make a good place to begin some further research or screening. Remember, it's not backtested. Although I've read that Warren Buffett himself liked using this ratio when selecting companies, there's no way of predicting how the screen will fare over the long term.

Here's the new list of Plowback Ratio stocks from the January 24, 1999 Value Line data. They are listed in descending order of 6-month total return:

Oracle Corp. (Nasdaq: ORCL) 133.86%
Sun Microsystems (Nasdaq: SUNW) 117.05%
Amgen (Nasdaq: AMGN) 81.43%
Intel Corp. (Nasdaq: INTC) 57.19%
Gap (The) Inc. (NYSE: GPS) 56.24%
Guidant Corp. (NYSE: GDT) 45.16%
Cisco Systems (Nasdaq: CSCO) 44.66%
Computer Associates (NYSE: CA) 39.85%
Tellabs Inc. (Nasdaq: TLAB) 39.64%
Microsoft Corp. (Nasdaq: MSFT) 33.81%
Int'l Business Mach. (NYSE: IBM) 33.13%
Safeway Inc. (NYSE: SWY) 30.03%
Dell Computer (Nasdaq: DELL) 29.45%
Lucent Technologies (NYSE: LU) 17.91%
Sara Lee Corp. (NYSE: SLE) 8.98%
Schering-Plough (NYSE: SGP) 8.79%
Abbott Labs. (NYSE: ABT) 4.66%
Caterpillar Inc. (NYSE: CAT) 0.05%
Coca-Cola (NYSE: KO) -20.32%
Campbell Soup (NYSE: CPB) -21.38%

Have a great week!

Check out the latest file updates for the Workshop:
New Rankings | Workshop Returns


Workshop Portfolio


9/28/01 as of ~5:30:00 PM EDT

Ticker Company Price
Change
Daily Price
% Change
Price
AETAETNA INC NEW0.943.36%28.94
BABOEING CO(1.04)(3.02%)33.36
CATCATERPILLAR INC1.112.53%44.91
COGCABOT OIL & GAS 'A'0.693.59%19.90
DDDU PONT (EI) DE NEMOURS0.992.74%37.14
DGXQUEST DIAGNOSTICS(0.45)(0.73%)61.42
EKEASTMAN KODAK0.421.31%32.49
GMGENERAL MOTORS1.393.38%42.55
LHLABORATORY CORP AMER HLDG(NEW)1.141.42%81.21
MOPHILIP MORRIS COS(0.76)(1.55%)48.24
NEWPNEWPORT CORP0.261.90%13.97
NVRNVR INC(0.54)(0.38%)140.41
PKXPOHANG IRON & STEEL ADS1.097.51%15.61
PVNPROVIDIAN FINANCIAL1.075.64%20.04
QCOMQUALCOMM INC(0.40)(0.84%)47.16
RJRRJ REYNOLDS TOBACCO HLDGS(0.69)(1.19%)57.31
SLESARA LEE CORPUnchg.Unchg.21.09
UNFIUNITED NATURAL FOODS0.563.18%18.15
WMIWASTE MANAGEMENT(0.01)(0.04%)26.74

Overall Return -- total % Gained (Lost)
  Day Week Month Year
To Date
Since
Inception
(12/24/1998)
Workshop1.30%7.32%(12.02%)(20.66%)(18.91%)
Comparable S&P 500n/an/an/an/a(19.07%)
S&P 500 (DA)1.95%7.48%(8.33%)(21.22%)(14.88%)
NASDAQ2.02%4.71%(17.46%)(39.68%)(31.41%)
DJIA (DA)1.68%7.07%(11.07%)(17.86%)(2.22%)

Internal Rate of Return -- Annualized Rate of % Gained (Lost)
  Since Inception (12/24/1998)
Workshop(17.62%)
vs. S&P 500(17.63%)

Trade Date # Shares Ticker Cost/Share Price Total % Ret
1/8/0126MO40.9448.2417.82%
1/8/0122RJR50.1057.3114.39%
1/8/0167UNFI16.4518.1510.34%
12/24/9824CAT43.0844.914.24%
1/8/018NVR136.63140.412.77%
1/8/0140WMI27.4426.74(2.54%)
1/8/0150SLE22.5421.09(6.42%)
1/8/0161PKX17.8315.61(12.46%)
1/8/0115DD48.8337.14(23.95%)
1/8/0129AET38.1728.94(24.19%)
1/8/0139COG28.7519.90(30.79%)
1/8/0114QCOM75.5447.16(37.57%)
1/8/018LH134.6981.21(39.70%)
12/27/9918GM73.2642.55(41.92%)
1/8/0118BA59.5333.36(43.96%)
1/8/019DGX114.4961.42(46.35%)
12/27/9920EK65.0932.49(50.08%)
1/8/0120PVN55.5020.04(63.89%)
1/8/0115NEWP74.9613.97(81.36%)

Trade Date # Shares Ticker Total Cost Current Value Total Gain
1/8/0126MO$1,064.50$1,254.24$189.74
1/8/0122RJR$1,102.25$1,260.82$158.57
1/8/0167UNFI$1,102.12$1,216.05$113.93
12/24/9824CAT$1,034.00$1,077.84$43.84
1/8/018NVR$1,093.00$1,123.28$30.28
1/8/0140WMI$1,097.50$1,069.60($27.90)
1/8/0150SLE$1,126.88$1,054.50($72.38)
1/8/0161PKX$1,087.75$952.21($135.54)
1/8/0115DD$732.50$557.10($175.40)
1/8/0129AET$1,107.00$839.26($267.74)
1/8/0139COG$1,121.37$776.10($345.28)
1/8/0114QCOM$1,057.62$660.24($397.39)
1/8/018LH$1,077.50$649.68($427.82)
1/8/0118BA$1,071.50$600.48($471.02)
1/8/019DGX$1,030.44$552.78($477.66)
12/27/9918GM$1,318.62$765.90($552.73)
12/27/9920EK$1,301.75$649.80($651.95)
1/8/0120PVN$1,110.00$400.80($709.20)
1/8/0115NEWP$1,124.37$209.55($914.83)
 
Cash: 
Total: 
$10.80
$15,681.03
 

Key
• S&P 500 (DA) = dividend adjusted. Dividends have been added to the total return of the index.
• DJIA (DA) = dividend adjusted. Dividends have been added to the total return of the DJIA.

Note
Note: The Workshop Portfolio was launched on December 24, 1998, with $4,000 which was invested in the Foolish Four strategy. Approximately $15,000 was added on January 8, 2001, to support five additional mechanical strategies. At that time approximately $1000 was transfered out of the Foolish Four strategy to bring the Foolish Four into balance with the other strategies. (That's why the Foolish Four's overall return is not consistent with stock values.) Such rebalancing will take place each year among the strategies so that each will start out with approximately the same value at the begining of the year. No more cash additions are planned. The first four tables above show the overall performance of the portfolio. Below that we also track the performance of each component strategy. All transactions are announced publicly before being made, and returns are compared daily to the S&P 500 and the Dow. (Dividends are included in the yearly, historic and annualized returns.) Stocks are chosen using strategies developed by the Workshop community.


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