I regularly read articles from “The Motley Fool Singapore”. One person that is frequently mentioned there is John Neff.
“John Neff (born 1931) is one of the best known mutual fund investors of the past 40 years, notable for his contrarian and value investing styles as well as heading Vanguard’s Windsor Fund. Windsor was the best performing mutual fund during his tenure and became the largest fund closing to new investors in the 1980s. Neff retired from Vanguard in 1995. During Neff’s 31 years, from 1964 to 1995, Windsor returned 13.7% annually versus 10.6% for the S&P 500.” – Wikipedia
It is reasonable to assume that he is doing something right to have beaten the market with an annual return 30% higher than S&P 500. He openly shares his approach and the few main metrics that he focused on are:
1) Price / Earnings to understand expectations. He wanted this to be low, but not too low because it could mean that there might be problems with the company.
2) Earnings per share growth which ideally lies between 7% and 20%. Too high and it might not be sustainable.
3) Return on Equity to measure management effectiveness. He believes this to be a good gauge of management effectiveness.
4) Good Dividend Yield
5) Total Return Ratio which is basically the summation of EPS growth and dividend yield over PE.
Using the above-mentioned metrics, I have created a screener in SGXcafe named “John Neff” that will be available for everyone to use to screen Singapore stocks.