Author Archive for Brian

Is Whole Foods a Big Moat Company?

Whole Foods (WFMI) was one of the stocks that big-moat used often as an example in the Big Moat book. Here we are a few years later and the outlook for WFMI has changed a lot. We’ll start by looking at the 2 year chart.

WFMI - 2 Year Chart

Looking at the chart shows an obvious downward trend which means we’re not going to be going long anytime soon. But maybe this means the stock is getting close to the margin of safety price. Take a look at the Big Moat analysis for WFMI below, click the thumbnail to view the full size image.

WFMI - Big Moat Analysis

The numbers are OK, but not great. Equity growth was non-existent over the last year. But still, if this is one you’ve been following for a while and you understand the business, it might still be on your list for an investment. You’re just waiting for the price to have that margin of safety and for the trend to start back up.

The real question though, and this is the main reason for this post, is what about management? For years, the Whole Foods management was seen as the cream of the crop, but now it has become public that the CEO was posting negative comments in message boards about Wild Oats, a competitor, for years. This certainly isn’t something negative to the degree of cooking the books like Enron, but is it enough to make you question an investment in Whole Foods?

Two Stocks trading lower than the MOS price

The market has had some wild rides both up and down lately, luckily Big Moat investing takes into account 10 years of history to judge whether a company’s worthiness. If you’ve been having trouble finding Big Moat companies then there is some good news, two companies on the current Big Moat Numbers list are trading below the margin of safety price.

Get the current Big Moat Numbers list

Are you a Big Moat Turtle?

I recently read a book on stock trading that I feel is a perfect complement to Big Moat Investing because it addresses some very important factors when trading. The book is Way of the Turtle: The Secret Methods that Turned Ordinary People into Legendary Traders

The author, Curtis Faith, was part of a group called the Turtle Traders who were put together to see if anyone could be taught to be a successful trader. Curtis turned out to be the most successful Turtle even though every person was given the same education. This book describes the education everyone received, but more importantly, it tells why many were not successful. The main factor that caused people to not be successful was their inability to control their emotions and accept being wrong. This book addresses this concept in a way that I feel will be very beneficial to everyone looking for success with their Big Moat investing.

Way of the Turtle - Curtis Faith

Spreadsheet Update

A few updates were made to the Big Moat Analysis Spreadsheet. This version of the spreadsheet will check to see if a new update is available so that you will always be up to date.

New Big Moat Lists and New Analysis Spreadsheet Available

Good news everyone! I have just released an update to the original Big Moat lists. All of the analysis was completed on approximately 7,000 stocks in the month of May. Just like before, there are several options available for purchase depending on how much data you would like to receive. Click here to visit the purchase page.

If you have been looking for Big Moat candidates then purchasing the lists will minimize the amount of time you spend searching for a stock that meets the Big Moat rules. Now you can use the list to shorten your search and determine if a company has a margin of safety.

Existing customers are eligible to purchase the updated list for $49 for the $79 package (approx. a 40% discount) or $80 on the $129 package (also an approx. 40% discount). To get the discount, please use the contact form to send your request for an update with the Paypal Receipt ID and the email address used for your original purchase. I will then email instructions on how to complete the purchase for the update. Because I have to handle updates manually, please allow for at least 3 days for a response. (My response will come via gMail which is treated as spam by some providers, be sure to check your Spam folder if you haven’t received a response in over 3 days.)

I have also released an update for the Big Moat Analysis spreadsheet. I have corrected the previous issues that many of you were seeing and, once again, the spreadsheet it still available free of charge.

Free MOS Calculator to find Big Moat Stocks

I’ve had a lot of requests for a Big Moat MOS calculator over the last year and I finally put the finishing touches on the spreadsheet this week. The best thing, ITS FREE! Download it here.

If you purchase the list of Big Moat stocks, you can use the spreadsheet to get the current MOS and sticker price. This will allow you to spend more time following stocks that meet the Big Moat criteria instead of searching for stocks.

The spreadsheet was created using Excel 2003 and I haven’t done testing with earlier or later versions of Excel but I imagine that it will work fine. Please use the Contact Us form to let me know if you find that something isn’t working. I’ll do my best to answer questions but support for the spreadsheet will be limited.

Free real time quotes are coming

It looks like Google will soon provide free real-time stock quotes!  This was recently announced on the official Google blog and it appears that it’s not too far off.  Now if only we could combine free real time quotes with Yahoo!’s charting we’d really have something powerful.

An article to print and read often

This article, titled Rich Man, Poor Man, and written by Richard Russell has been available for quite some time but I came across it for the first time today. The article espouses the benefits of compound interest, in fact, its his Big Moat. But don’t worry, his Rule #2 is (and yes, it’s in all caps) DON’T LOSE MONEY. Of special interest are these few paragraphs:

The wealthy investor tends to be an expert on values. When bonds are cheap and bond yields are irresistibly high, he buys bonds. When stocks are on the bargain table and stock yields are attractive, he buys stocks. When real estate is a great value, he buys real estate. When great art or fine jewelry or gold is on the “give away” table, he buys art or diamonds or gold. In other words, the wealthy investor puts his money where the great values are.

And if no outstanding values are available, the wealthy investors waits. He can afford to wait. He has money coming in daily, weekly, monthly. The wealthy investor knows what he is looking for, and he doesn’t mind waiting months or even years for his next investment (they call that patience).

But what about the little guy? This fellow always feels pressured to “make money.” And in return he’s always pressuring the market to “do something” for him. But sadly, the market isn’t interested. When the little guy isn’t buying stocks offering 1% or 2% yields, he’s off to Las Vegas or Atlantic City trying to beat the house at roulette. Or he’s spending 20 bucks a week on lottery tickets, or he’s “investing” in some crackpot scheme that his neighbor told him about (in strictest confidence, of course).

And because the little guy is trying to force the market to do something for him, he’s a guaranteed loser. The little guy doesn’t understand values so he constantly overpays. He doesn’t comprehend the power of compounding, and he doesn’t understand money. He’s never heard the adage, “He who understands interest — earns it. He who doesn’t understand interest — pays it.” The little guy is the typical American, and he’s deeply in debt.

The lesson here is to not be the little guy.

DBRN: How much profit?

Following up th/e previous post on Dress Barn’s numbers, we’ll take a look at how you would have made out investing in DBRN using Big Moat entries and exits.

Start Date: 1/1/2003
End Date: 10/19/2006

# of Trades: 29
# of Winning Trades: 10
# of Losing Trades: 19

$ of Profit: $9847.20
% Return: 98.47%

Largest Single Winning Trade: $8294.52
Largest Single Losing Trade: ($2857.20)

based on an initial investment of $10,000

Big Moat Analysis: Dress Barn (DBRN)

Chico’s and Coldwater Creek are retailers that are favorites of many people looking for Big Moat companies.  Today I saw that Dress Barn was one of Nasdaq’s most active stocks so I decided to run the numbers on DBRN.

DBRN (11/28/06)

The numbers look good and the stock closed at $24.46 today which was up almost $3 on the day.  Looking at the YTD chart, the stock has been trading sideways most of the year and all three arrows are currently red.  This is definitely a stock to watch but currently not quite a buy at this time.