So many companies, so little time

Tomorrow, it's the second anniversary of the Thrifty 30. I added the first shares on an easy date to remember: 9/9/2009.

My, hasn't it grown (in number). I'm realising a portfolio of 30 companies is a lot to manage, especially when you consider I write about every bit of the investment process and reject a lot of the companies after researching them.

There isn't enough time, so, I'm being more savvy about time management.

I adopted the 'one idea, one post' approach partly because I hoped it would involve readers in decision making. But I also thought it would release me from having to research every company fully as an analyst would.

Investors like me investigate many companies. We turn over a lot of rocks, and If we don't like what we find underneath we move on to the next rock. We don't scrutinise every microbe living under a rock, if we're haven't found the crab we're after there (if that is, indeed what people look for under rocks!).

I'm also prioritising the companies I review. The trigger for a review is the publication of a company's annual report, which obviously happens once a year. But there's a balance to be struck between reviewing companies already in the Thrifty 30 portfolio and researching new companies, because of the need for replacements for those I remove.

To keep new ideas flowing, I should spend most time investigating new companies, and only review companies I have to.

The companies I must review are the ones that no longer meet the basic criteria for inclusion in the portfolio, which are:

1. They're cheap, either the shares cost less than net current asset value, or they promise a return of more than 10%.
2. They're not in financial distress, indicated by an F_Score of four or less out of nine.

You can see these statistics for every company in the Thrifty 30 that has recently, or is about to, publish its annual report (except those I've already reviewed) in this spreadsheet:

The p's in the final column mark the companies I must most urgently reconsider. The more p's, the more urgent the review.

Some notes:

Statistically, Northamber appears to be in dire trouble. However it probably has the resources to survive, and the investment case rests less on how much it might return to investors through profit and more on the value of its net current assets, which may be considerably higher than its market value. It's one of those rare companies that might not have to profit to be a good investment because it would return more than its market value even it liquidated.

Printing.com doesn't promise a return of 0%. The figure is zero because it hasn't been listed for 10 years and so the return on equity column is empty. According to Sharelockholmes, Printing.com's average ROE over five years is 19.5%, which divided by its Price to Book Value of 2.7 gives a return of 7%. Not, unfortunately 10% or more.

Solid State is one of the portfolio's star performers having returned 108% so far. It may be that price rise has knocked the value out of it. At current levels it only promises a return of 7%.