Rather than take notes all the information on this method is found on www.sharesguru.com/forum/index.php

To Download copy of this presentation look for CGVI on

http://www.lainie.com.au/sharesguru/index.html

For latest CGVI figures, or screen for stock using CGVI:

http://www.sharefilter.com/* Email the addresses to a friend to help their Investing *

C G V I Explained

cgvi040705 DISCLAIMER

1. NOT Financial Advice & Not A Financial Adviser

2. Only an exercise in F/A Type Share Price Analysis

3. I Accept No Responsibility for your use of Concept

4. Only a training guide to help understand Basic Share Data and some ways you are able to use that data.

5. You should always seek the Applicable Professional Advice suitable to your situation Plans & Needs.

6. Presentation is mainly for The New Investor in shares.

“ C G V I “

A “COMPARATIVE GROWTH & VALUE INDICATOR”

FOR SELECTING SHARES“If you can’t calculate a “CGVI” for

a share then you are Speculating”

A Jodi Robertson Scientific Business Slide Presentation

A Method of Selecting Shares forPension Endowment & Family Trust

• Method is for The New Investor Based On

• FORBES Business Magazine June 1988

• Method Gives a single Comparison Value

• Allows calculation of a price at 3 Levels

Is There A Single Value Indicator To Give Guidance

• Scanning 1500 shares is a large Task

• A Comparison Filter Value is required

• Is “ CGVI ” that numeric Filter indicator

• 14 Years Using the Method says “ YES !“

By Presentation End You Will Understand how to

• Calculate a Comparison Value for Shares• Understand How and When to use CGVI• Compare two shares CGVI Values• Find Shares worth further Consideration• Resist buying shares where Price is too high• Avoid Shares that may not Grow in Value• Release Shares that may not Grow in Value

Now Have you ever. . . . . .

• Consulted an Expert & USING their advice:• Bought shares that went down• Bought shares that went nowhere• Bought shares that went bust• Bought shares that tripled in price• Bought shares that went up five times• Wondered if YOU could know more & do better ?

Adding 3 Important Share Indicators gives a “CGVI”

• The Earnings Yield = EPSc / $ Share Price• ( Above is Inverse of the PE the Price Earnings Ratio )

• The Dividend Yield = DPSc / $ Share Price

• The Re-Invest Rate = (EPSc – DPSc) / $ NTA

• CGVI : Remember “Bigger usually Better”•

THE “CGVI” FORMULA

EPSc + DPSc EPSc - DPScCGVI % = ------------------ + ------------------ $ SHARE PRICE $ NTA Backing

EPSc = Earnings Per Share in cents

DPSc = Dividend Per Share in Cents

$ NTA = Net Tangible Assets Backing Per Share

$ Share Price. All data in Daily Financial review.

Warning: If first part of calc is less than 9.3 or second part less than 7 then this share’s calcs may be suspect

CGVI TYPE Filter was for Small to Medium USA Enterprises &

• Four Years Min. Data History available• Profitability increase of 10% p.a. 4 years• So Don’t bother to analyse a share if:-• $NTA figure is just too low or• DPSc to EPSc ratio is just too low• As CGVI Levels & Prices may be misleading• Exclude abnormal one offs in DPSc & EPSc• It has been Excellent for “All ” ASX shares

Using NAB National Bank as Example DATA: NAB $28.88. DPSc 166 NTA$ 10.34. EPSc 270

1. Add EPSc to DPSc & divide result by $ Share price.

2. From EPSc take DPSc and divide by $NTA

3. Add these two numbers to get a share’s CGVI.

Step 1 270 + 166 = 436 divide by $28.88 = 15.09

Step 2 270 - 166 = 104 divide by $10.34 =10.05

Step 3 CGVI = 15.09 + 10.05 = 25.14

Accumulate to Price of $ 43.90. BUT Check The Trend.

CGVI of 25.1 equates to Optimum Buy Price of $ 31.30

Quick & Easy Data SourceThe Daily Financial Review

• We look at the Data Tables columns• Find Entry for SUNCORP 27th Aug 2004• In the Columns:-• Last Sale DPSc NTA EPSc• $14.80 70 $5.45 123• No need to buy Fin. Review daily but at

the two 6 monthly reports it is worthwhile.

Result of This CalculationSuncorp is a worthy BUY Study

• ** PROGRAM FOR SCIENTIFIC ANALYSIS For (MERGER/ACQUISITION/TAKEOV• * SCREEN 1.RECNO. 817 * COMPANY ** SUNCORP FYR **• ** Selected Record Data held in PRVCALCF File• * Previous data record No 817 Company: SUNCORP FYR Date: 08-27-2004• * Previous buy price of share $ 14.80 1 Times Optimal Buy level• * Dividend cents/share (12mths rolling) 70.00* D:E Pay 57 % ff nCGV= 26.6• * Net tangible asset backing per share $ 4.75• * Earnings cents/share (12mths rolling) 123.00 Exclude Abnormal

• * Comparative Growth & Value Rating is= 24.20 YLD= 4.7%pa. Ef ff= 6.8%pa

• * PROG: CV100205 24 LOOKS FOR A SHARE WITH A CGVI GREATER THAN 24 * & *Y

• * Ist STAGE FILTER SELECTS SUNCORP FYR CGVI= 24.20% A BUY STUDY *

• * CALC Opt= 15.0 4.7y. Acu= 21.8 3.2y. Hld= 33.0 2.1y.•

Probability & Kelly Optimization & Stop Loss

• * COMPANY: SUNCORP FYR * CGVI = 24.19843• * THEORETICAL OPT BUY TO $15.03 Accum to $ 21.83 AMf!. Hold to $ 33.03 PPMg=123 %*• *PRICE $14.80 $15.15 $15.50 $15.85 $16.20 $16.55 $16.90 $17.25 $17.60• *YIELD* 4.73% 4.62% 4.52% 4.42% 4.32% 4.23% 4.14% 4.06% 3.98%• *CGVI% 24.20 23.90 23.61 23.33 23.07 22.82 22.58 22.35 22.12• *STUDY WAIT? ACCUM ACCUM ACCUM ACCUM ACCUM ACCUM ACCUM ACCUM *LEVEL*• * UDR = 0.70. W/L RATIO: 23.3% OF PREFERRED ?. LAST PRICE MOVE: DOWN?

• * Subjective Probability look for count of 10 next two lines.• *PE 12.0 AAR 13.8% Y Pgm 0.87 Y Nfm 1.5 Y EYL 8.3% Pge 1.45 N Nfe 1.1 Y YES= 3• *PCI 35 Y UDR 1 Y CCV 24 Y MOS% 2 Acc% 47 Y Hld%123 Y V12 3 Y YES=!! 6• ENTER PRICE TREND FOR 3 & 12 MNTH Eg DD UD• U = UP F = FLAT D = DOWN ?

• * S/PROB MODIFIED CV= 21.78 OK AS STILL >20• * WARNING: PRICE DOWN WARNING Check Price Trend• * Sectional Portfolio Pool = $70k One seventh = $10k. share: SUNCORP FYR

• * Count= 9 PROB.= 90 %. KELLY%= 80 %. Inv= $ 8000 ORDER: 541 Shares *

* STOP LOSS IF Trend Down:= $ 12.73 TO Prof Maximise: $ 13.70 NO IFS / BUTS *

New single Screen display of CVGI Calculations

When Should I Use CGVI.Historical Review may Surprise

• Shares / Personal Investment Magazine

• Brokers Recommendation Sheets

• Twice Yearly at Six Monthly Reporting Time

• Write CGVI on these media for History / Review

Two Uses for CGVI

• 1. Compare two shares in similar Sector• TOL [ 15.03 %] & PRK [ 16.97 % ]• SUN [ 18.04 %] & SGB [ 14.84 % ] • 2. Compare two shares Different Industries• NAB [ 24.41 %] & BSL [ 21.73 % ] • BKW [ 33.59 %] & SOL [ 25.48 % ]• ( Data is from Financial Review 5th June 2004 )

Interpretation of CGVI LevelsCGVI Level STUDY Action

• CGVI >30 A Special Buy

• > 24 TO 30 Optimal Buy

• 20 to 24 Accumulate To

• 17 to < 20 Hold To

• 12 TO < 17 stay out

• Verify & Special Study

• Study further re Buy

• Accumulate if we hold

• Keep Holding & look

• Price probably too high

Conversion of a CGVI Level to a NOTIONAL PRICE

• Having found a CGVI for a share you can equate that level to a Price

• Forbes says “Market Average” is about 17• We will Fix this as a “Hold To” point• Forbes shows “Optimum Buy” as level 25• We will Fix this as our best BUY point• Lets Fix 20 as an “Accumulate To” point

CGVI 17 is Equilibrium Level

• Price tends to move to an Equilibrium Level• Dps NTA Eps data changes six monthly• Between reports Price is the only change &• For a Share to MOVE towards a CGVI of 17• If it’s CGVI > 17 It’s Price tends to rise• & If it’s CGVI < 17 It’s price tends to fall• New data can change CGVI dramatically

CONVERT CGVI% to $ PRICE

• These are a little trickier see the FORUM explanation

• OPB = ( EPSc +DPSc ) /(ABS ( 25 -(( EPSc - DPSc) / NTA$)) )

• ACC = ( EPSc +DPSc ) /(ABS ( 20 -(( EPSc - DPSc) / NTA$)) )

• HLD = ( EPSc +DPSc ) /(ABS ( 17 -(( EPSc - DPSc) / NTA$ )))

• Low NTA or Poor Payout ratio can give aberrational or even nonsensical pricing results at all levels.

Warning on the Use of CGVI in Relation to Prices

• When we calculate price levels of “Optimum Buy”• “Accumulate To” or “Hold To” we are not• SAYING these Prices have to be met. • What we find is that for a share to move to a new

CGVI & Level it’s Price will have to change while the current 6 month EPSc DPSc & NTA$ data is constant; of course Price can change daily

• The changed CGVI level only gives a guide & • Not a guarantee of Value or what may happen!.

Other Uses For CGVI +

• So Without Further Data Input you can set:• An “Optimum Buy” Price level• An “Accumulate To” & “Hold To” Price Level• A Stop Loss or Profit Max. price level for a share• A “Subjective Probability” for Investment Success• A “Kelly Portfolio Optimization ” of $ To Invest • For the latter two read “The Essential Buffett”

Independent Back-Testing Studyusing METASTOCK shows

• From our Experience That In a majority of studies

• Hi CGVI + shares Outperform Low CGVI shares

• In Long Term Holding & In Short Term Trading

• And L/T Holding Outperforms S/T Trading

• Hi CGVI + Shares are of real interest to the Investor

The Great Portfolio BuildersHigh CGVI + Shares Tend To

• Feature in Takeovers More Often

• Issue Splits/Bonus Par or Premium Shares

• Have Price moves Generally Upwards

• Prompt Profit Maximize rather than Stop Loss• ( But you should always calculate these & Be Ready )

HAVING A HIGH CGVI IS JUST NOT ENOUGH

The Share Price Trend is Still A Most Important Indicator

• CGVI is not enough

• Need to look at Chart

• IS Trend Up / Down

• Is Trend sideways

• Further Study required

• Look for clear TREND

• Never Buy on DOWN

• Wait on TREND Change

Best Source of Information is The Co’s. Annual Report

Even If CGVI is HIGH must Check PRICE TREND

NEVER BUY WHILE PRICE TRENDS DOWN

National Australia Bank NAB

ION Ltd. Had a High CGVI but Trend Gave a Warning

SFC Schaffer Corporation Ltd A CGVI Find

At $3.75 & CGVI = 50 (was worth a Try)

As High as $15.35 & CGVI= 21.07

This is Type of Share You may find very early

Paid $1.20 dividend pa for years, 2004 & 2005.

PROFIT MAXIMISATION ~ OUT AT THE TOP

FELL to under $5. You Need to Have STOP LOSS Limit Ready dependant on your average cost.

Timing Is Important. Remember: Blue over Red ~

Blue over Red ~ Red over Blue & Green

Does CGVI really work for the NOVICE or Investor?

• One Analysts experience in researching High CGVI Shares & price progress from first finding. Last column is for 08/04

•ALS . . $ 3.02 . . $ 4.50 . . 49 % . . . .$ 5.39 . . . 78 % . $8.52

CEY . . $ 1.30 . . $ 2.30 . . 77 % . . . $ 2.64 . . . 103 % . $3.01

COF . . $ 1.90 . . $ 3.85 . . 103 % . . $ 4.41 . . . 132 % . $4.60

FUN . . $ 0.60 . . $ 1.36 . . 127 % . . . $ 1.69 . . . 181 % . $2.15

FWD. . $ 1.55 . . $ 3.51 . . 126 % . . . $ 4.60 . . . 196 % . $7.60

NBL . . $ 0.72 . . $ 1.31 . . 82 % . . . . $ 1.68 . . . 133 % . $1.28

SDI . . $ 1.00 . . $ 5.30 . . 430 %. . . . $ 6.95 . . . 595 % .$9.45

SFC . . $ 4.25 . . $13.95 . . 228 % . . $12.55 . . . 195 % .$13.69

SHV . . $ 2.00 . . $ 4.12 . . 106 % . . . $ 5.38 . . . 169 % . $6.60

14 Years Experience Shows Value of So Simple a Concept

• You may find some NEW Shooting Stars COF SHV SFC SGN CEY SUN NAB GNS FWD ( More recently WES SMS BSL BKL SOL BKW )

• You may be saved from Non Optimal buying ( BIL MAY LLC AMP LEI ) Until Data Changes CGVI Maybe even greater help in preserving your portfolio

• So Simple. Just 4 bits of Data & a little effort

Happy Investing But Don’t Forget To Smell the ROSES

THE END

Example of a ”CGVI Plus” calculation and it’s usage on a

Computer may follow.One word of caution is that anything displayed is not a recommendation to

BUY nor Sell, It is a demonstration of what we can do with financial data in

better understanding Share Investment.