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Frequently asked questions

  • No one-size-fits-all approach
    • No valuations based on P/E ratios
    • Complex algorithms to estimate growth
  • Classification of stocks based on Peter Lynch value investing principles in one tool
    • We classify stocks ourselves based on proprietary developed algorithms, thus giving an investor a better and quick picture of what type of company they are dealing with.
      • a. quickly understand types of companies: fast growers, slow growers, turnarounds but also;
    • Identify stocks of cyclical companies that are generally less interesting.
  • Transparency of historical scores.
    • Many tools are not transparent about scores and results. Good and honest backtests are hard to find.
    • We have two backtests (AEX and SP500) that outperform with explanations of the studies.
    • We also have a backtest showing the differences between bad and good scores
  • Unique models such as:
    • Model for estimating a company’s competitive advantage by looking at qualitative and quantitative aspects
    • Rating/Score construction based on foundation and valuation, value principles in a simple tool.
  • Simplified by classification and score/rating, but also advanced investors can do something with this.
    • Clear, but also detailed if you want to dive deeper.

A tool based on proven strategies of Peter Lynch, Buffet and others.

Context: “What do we do with stocks like NVIDIA, META etc. that are showing tremendous growth because the sector is growing very fast but are not in the green at BIF. After all, are the stocks that have mainly provided the returns in recent years.”

For NVDA: We (unfortunately) don’t always catch all the winners, but we don’t have to. Based on our conservative growth estimates, we think companies like NVDA are very highly valued. And thus it has higher risk relative to reward relative to other stocks. In the meantime, NVDA dropped from 329 to around 120 at the top of 2022.

NVDA price

META, however, we found interesting, so we didn’t miss that one either. As you can see, the risk goes down when the share price goes down. In the case of META, the sector is not growing fast, but the sentiment around the stock is changing. You benefit from that as a value investor.

→ Just because a stock has had a good performance in the past doesn’t mean the performance in the future is going to be good. That’s why companies like META and NVDA are not on Green right now.

META price

Scores are updated (almost) every day. New company data is scanned every day (from our data provider), and the valuation is also calculated. Currently, this happens at one time for all stocks, but we want to start setting this for each country 1 hour after the market opens. When a user looks up a stock, the valuation (price) of the stock is calculated in real time.

So sometimes the score/rating in the dashboard (where you can search stocks) may differ from the scores on the indices/industry page. This may be because something has changed in the price (and thus points for intrinsic value) which may result in a different rating.

The data provider we use is Financial Modeling Prep SAS. They supply Moody’s and universities, among others, as well as other share analysis websites. For the most part, they get the data directly from the SEC (Security Exchange Commission) website. That is exactly how the companies provide the data. For european data, they have other partners. See some more examples of other clients here: Cheveron, Wallstreet.io, Wallmine, Morning BREW, tykr.

If you subscribe monthly, this allows you to continue to track the risk-reward of your stock. As in the META example above, Scores can change quickly with volatility. We scan scores every day for fundamentals and price. Mainly price changes every day with individual stocks. Stocks are simply volatile. Since price at which a stock trades is a big part of our philosophy, you’ll want to stay a monthly subscriber to stay up to date with for your portfolio and investment strategy.

The data comes from the same data provider as mentioned earlier. Our tool currently does not (yet) distinguish between country of origin. We are investigating whether we can start including the variable of countries for the determination in our scores. At the moment we leave the choice to the investor in which countries to invest.

In the valuation piece, we show the assumptions we use for the Discounted Cashflow Model (DCF) model: discounted cash flow model. We show the growth assumptions we expect for the company. With that, we estimate future profits/cash flows and we discount that based on a discount rate of 10% (expected rate of return). This is done because the DCF model is based on the idea that money you receive in the future is worth less than money you have today.

By “discounting” cash flows using a standard discount rate of 10% + X% to compensate for equity issuance, we apply a factor to convert future cash flows to their present value. In other words, we bring the value of future cash flows back to today.

By adding the discounted cash flows together, we consider the present value of all future cash flows and determine the total value of the business today. This is because investing in a business means that you expect to generate income from those cash flows in the future. By discounting the cash flows and adding them together, you get an idea of how much the business is worth today based on that future income.

So putting the discounted cash flows together gives you a picture of the total value of the business and helps you make investment decisions or determine the right price to pay for the business.

A company with a classification is assessed in a different way. In addition to classification, company-specific characteristics are also taken into account.

The tool is designed to help you become a better fundamental investor by allowing you to identify good fundamental companies faster and more efficiently. By using the BIF tool, you can find companies that have solid fundamentals, enabling them to grow better and keep competition at bay. Such companies often have the potential to generate better profits and achieve higher company valuations.

In the long run, the stock prices of these fundamentally strong companies are more likely to converge toward their intrinsic value. As a fundamental investor, you can benefit from this movement. By investing in companies with solid fundamentals and an undervalued share price, you can have the potential to benefit from share price appreciation as the market recognizes the company’s true value.

The BIF tool allows you to perform a thorough analysis based on fundamental factors, including financial indicators, company performance and growth potential. By using this information, you can make better investment decisions and increase your chances of success as a fundamental investor. The ultimate goal is to achieve consistently good long-term results by investing in companies that can actually create value and have growth potential.

Context: How often on average scores change in the SP500. → backtest run changes view. 

Still to be analyzed (for hard numbers). Can be very different by stock. Some stocks are just on a frontier, then it can go fast. In volatile times it can go fast, especially for stocks that are on limits. Due to fluctuations in price changes scores for valuations, but also new company figures can cause a change in fundamentals. We see price fluctuations faster/more often than changes in fundament. Although growth (a component of foundation) can change so much quarterly.