QVM lite

I was thinking about HOME (Home Retail Group), the recent rumours of a takeover of LRD (Laird), and the success of the “Tiny Titans” Screen on Stockopedia.

The Tiny Titans screen was developed by O’Shaughnessy in his book “What Works on Wall Street”. Stockopedia has shown annualised returns onf nearly 25%, with a maximum drawdown of 12%. That’s reasonably low compared with the other screens. The rules are very simple:

  • Mkt Cap £m < 150
  • Mkt Cap £m > 15
  • P/S < 1
  • RS 1y > 0
  • Spread (bps) < 1000

It made me think that the following screen is likely to be a good idea:

  • P/S <1 (cheap)
  • RS1y > 0 (momentum)
  • net cash (quality, sort-of)

Having net cash makes them more attractive as takeover candidates. Removing the restriction on market cap might also help in this regards, as it could allow a bigger fish to make a chunkier acquisition than they could with a tiny company.

Just a thought.

About mcturra2000

Computer programmer living in Scotland.
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