Do you know the best and easiest way to find undervalued (value investment) companies in Europe?
This is a question I get quite a lot.
I have a great source of ideas that surprisingly few value investors have even heard of.
Before I tell you exactly where to go (and show you a special offer) let me start with the story of how I found it.
My initial sources of value investment ideas were the following:
The 52-week low list of all the major markets in Europe
Free stock screener (Financial Times)
Looking at the portfolios of well-known value investors that invest in Europe
I think you can already see what my problem was.
I simply had too many companies to look at. And as I work through a comprehensive checklist when I analyse a company I hardly had time for anything else.
Also my method of selecting companies, even though it was based on long-term market outperforming US investment strategies like low price to book and low price to earnings ratios I was never really sure if and how successful these strategies would be in Europe due to the limited amount of long-term investment studies done on European companies.
The Magic Formula
I think it was around 2006 when I read Joel Greenblatt's book called The Little book that still beats the market.
The Magic Formula Joel suggested in the book made lot of sense to me and I started moving my investment selection to magic formula companies.
Luckily at the time I had access to a Bloomberg terminal, and with substantial formulas and screening I was able to put together a list of the cheapest worldwide magic formula companies.
I continued using Bloomberg and the magic formula with a lot of success until 2009 when I ran into a new and completely unknown website called Magic Formula Investing Europe (MFIE)
These guys had exactly the same problem as I had. They wanted to buy European and UK Magic Formula companies but there was no good magic formula screener for these companies.
So they decided to do something about it.
So in the depths of the financial crisis, shortly after Lehman Bros went bankrupt, the guys from MFIE signed a contract for a high quality, expensive data agreement and started building their own magic formula screener.
Even though the salesperson from the data company was glad to be making the sale (he probably didn't have any other customers at that time) he did cautiously ask them if they knew what they were doing.
So from that small uncertain beginning, at probably the worst time in terms of market performance over the last 50 years, MFIE was born.
After I saw what they were up to I immediately contacted them and asked if I can help them with their project. As the screener and the website was a part-time project they gladly accepted my offer and I helped them with some back testing they were doing on the magic formula and other investment strategies.
In the meantime I started using their screener and quickly realised that this was exactly what I was looking for. An accurate screener that uses high quality data to identify the most undervalued companies in the UK and Europe.
Adding a newsletter
A few months after I started using the screener they mentioned and they were getting a lot of requests from investors saying that they really like the ideas behind the screener but that was all too much work for them.
Was there a simpler solution that could give them clear buy and sell instructions with someone else doing all the analysis?
As none of the guys at MFIE were native English speakers they asked me if I would write a newsletter for them. I immediately said yes as I am a firm believer in their screeners based on the back tested research they have done.
And so it was that in July 2010 I started writing a newsletter called The Systematic Value Investor for them. Each month recommending four of the most undervalued companies I could find on their screeners, two in Europe and two in the USA.
Getting back to where you can easily find the most undervalued companies in Europe.
The MFIE stock screener is not free but it's a small price to pay to gain access to the most undervalued companies in Europe identified using a high-quality database with rankings updated on a daily basis.
A strategy even better than the Magic Formula
Another reason for you to seriously consider their services is they continuously add to the screeners as they discover research studies that have shown substantial market outperformance over long periods of time in up and down markets.And this at no extra cost to you.
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For example their self developed ERP5 best selection screen gives substantially better results than the magic formula.
Here you can see this screens’ market outperformance in a chart.
You can see all the screeners they currently have here:
Greenblatt Magic Formula
Piotroski Stock Screener
O' Shaughnessy Tiny Titans
ERP5 Stock Screener
Free Cash Flow Yield
Much more than just Europe and the UK
And they keep on adding additional countries too. At the moment the following countries are covered:
Europe, Scandinavia and Switzerland
USA and Canada
I strongly suggest that you give the screener a try.
But before you do that here is the proof that convinced me that this is the best screening solution there is.
Take a look at the screener back tested results first.
Here you can see how well the newsletter has done compared to the European STOXX 600 index.
Once you have convinced yourself and you want to give it a try you can sign up for a short subscription (to give it a try) to either the screener or the newsletter or both at this link
They currently offer a saver combo where for €129 you get access to all the newsletter and screeners for 3 months, as well as all previous newsletters.
Disclosure: I receive a commission on the sale of only the newsletter.
And if you have any questions please feel free to ask the guys at MFIE. As I said there are first-class people to deal with and will be more than happy to answer all your questions.
Your screening analyst
P.S. The best investing books you can read
A lot of readers have asked me for the names of the best investment books I have read.
In order to best answer their questions I wrote an article you may also find of value. To go to the article simply click the link below:
Nine books every investor should read