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Messages: What Members Are Asking On-Line

by CI Staff

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Comparing CAN SLIM to a Fund

In the Messages column of the July/August 2007 issue of CI, a reader commented on the use of hypothetical backtesting results of a company using the CAN SLIM approach to manage money. If you wish to compare a mutual fund utilizing real money instead of hypothetical dollars, which uses the CAN SLIM approach, then a look at the CAN SLIM Select Growth fund (CSSGX) may be worthwhile.

According to the Web site of Duncan-Hurst Capital Management, the fund advisor, here is the fund’s objective: “The Fund seeks long-term capital appreciation and will invest primarily in common stocks of all sizes exhibiting accelerated earnings growth, market leadership, and other characteristics consistent with the CAN SLIM Select List.”

—D.K.

CI Editor Responds: Thank you for this information. Our readers are a great source of information and ideas, and we always welcome your comments.

Looking at the performance of the CAN SLIM Select Growth fund illustrates just how difficult it is to turn hypothetical performance into real-world returns. Through the end of July 2007, the fund was up 7.3%, while the AAII CAN SLIM screen was up nearly 34% (keep in mind that our hypothetical performance does not take into account commissions, bid-ask spread, and price and time slippage). This highlights the importance of finding out whether reported performance of an investment is backtested/hypothetical or if it is based on real dollars invested.

[Note that, at the time of this writing, CSSGX is not tracked by our Web site data provider, S&P, so you will not find information on it at AAII.com.]

Calculating Performance When a Stock Screen Has No Stocks

At the AAII Stock Screens page of AAII.com, one of the top-performing value screens for 2007 (through the end of July) is the Graham—Enterprising Investor. However, the performance data appears to show the performance is flat for 2007 and there are no passing companies listed. Can you clarify this for me?

—L.C.

CI Editor Responds: You are correct that, as of this writing, one of the top-performing value screens we track at AAII.com is the Graham—Enterprising Investor methodology. It has gained 28.1% for the year through the end of July. This approach, historically, also has one of the smallest numbers of passing companies each month, with only five companies, on average, passing the screen each month.

However, for the last six months the screen has failed to generate a single passing company. The annual performance of 28.1% was generated by the single company that passed the screen as of the end of December 2006 and was “held” until the end of January, at which point it no longer passed the screen and was assumed to be sold.

This shows why it is important to look at the average number of passing companies for a given screening methodology. If you wish to follow an approach that has a relatively small number of passing companies, you may find yourself without any investment candidates for an extended period of time, as in this example.

Tickers in AAII Portfolio Tracker

I am trying to enter Berkshire Hathaway B shares into my portfolio using the portfolio tracker at the AAII Web site. However, it does not recognize the ticker BRKB. What am I doing wrong?

—K.R.

CI Editor Responds: Different Web sites have different ways of handling multi-class shares of stock, such as Berkshire Hathaway. On AAII.com, the quotes and research section as well as the portfolio tracker are part of a package of services provided by Standard & Poor’s. To find the ticker format that our site will recognize, use the “Enter Name or Ticker” box at the top right-hand side of the AAII.com home page. Type part of the company name into the box and then click the red “GO” button. In the case of Berkshire Hathaway Class B shares, the ticker you’ll see is BRK.B.

Most Web sites offer some type of ticker look-up such as this.

Mutual Funds That Hold a Stock

Do you know of any Web sites that will provide the names of mutual funds that hold certain stocks? I know many sites provide the holdings of mutual funds.

—R.P.

CI Editor Responds: You are correct that many financial Web sites allow you to see the top holdings of mutual funds. Many sites also allow you to see which mutual funds have large positions in a given stock. However, many of these Web sites are repackaging information that you can access for free from the Morningstar Web site (www.morningstar.com).

At the Morningstar home page, enter a stock ticker symbol in the “Quotes” box near the top left of the Web site, and then either press the Enter key or click on the gray arrow to the right of the box. This will take you to the Quote & News page for that company. At the left side of this page, click on the Insider Trading link. You’ll see several tabs just above the Insider Activity table that deal with fund ownership, including Concentrated Fund Owners and Top Fund Owners.

The Concentrated Fund Owners tab lists the funds with the highest concentration of the stock in their portfolios, while the Top Fund Owners tab lists the mutual funds that hold the largest stake in the underlying company.


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