James Derrick Slater

James Derrick Slater

James Derrick Slater is a man who, like many stocks, has seen his share of ups and downs. Moving from accounting to starting a firm that specialised in aggressive corporate takeovers and then writing for London’s Sunday Telegraph and teaching, Slater is best known for his books The Zulu Principle and Beyond the Zulu Principle.

Summary

Slater combines value and growth investing in what he calls a price-earnings to growth ratio (PEG). This allows him to find small growth companies that are undervalued by the market. These hidden gems can be bought at a very favourable price before their value starts to increase steeply. Slater’s investing strategy ignores OTC companies and can be broken down into two categories, namely historical PEG and estimated PEG.

Success Formula Future PEG - Zulu

  1. MktCapM is >= US$ 300 million (basis year 2000) adjusted yearly
  2. Future PEG ratio < 1
  3. 12m forward EPS > Latest filing EPS
  4. EPS for each of the last 3 FY is > 0
  5. EPS for last 12 months is > 0
  6. 1y EPS growth % for each of the last 5 FQ is > 0
  7. Trailing 12m Cash Flow Per Share > Trailing 12m EPS
  8. Latest filing Long term Debt to Equity < industry median
  9. 26 week Relative Price Strength > 0

Where: Future PEG ratio = 12m forward estimated P/E–ratio / 12 month forward estimated EPS growth (%)

Hypothetical performance back-tested

Data source: Bloomberg, Calculations: meetinvest

Disclaimer

Hypothetical performance is not necessarily indicative of future results. No representation is being made that any action will achieve profits or losses similar to those displayed. The result may be overstated as neither transaction costs nor bid/ask spreads nor slippage have been considered. Output equally weighted with maximum 5% allocation per position and rebalanced monthly. Holdings are systematically replaced when the screening criteria are not met anymore. No additional buying or selling rules (technical analysis) have been employed.

Historical monthly relative performance

How to read this graph:
A green bar shows how much the guru strategy outperformed the benchmark index in a particular month. A red bar shows how much the guru strategy underperformed the benchmark index in a particular month.

Data source: Bloomberg, Calculations: meetinvest

Disclaimer

Hypothetical performance is not necessarily indicative of future results. No representation is being made that any action will achieve profits or losses similar to those displayed. The result may be overstated as neither transaction costs nor bid/ask spreads nor slippage have been considered. Output equally weighted with maximum 5% allocation per position and rebalanced monthly. Holdings are systematically replaced when the screening criteria are not met anymore. No additional buying or selling rules (technical analysis) have been employed.

Historical portfolio turnover

Data source: Bloomberg, Calculations: meetinvest

Books

Success Formula Historical PEG - Zulu

  1. MktCapM is >= US$ 300 million (basis year 2000) adjusted yearly
  2. Historical PEG ratio < 1
  3. 12m forward EPS > Latest filing EPS
  4. EPS for each of the last 3 FY is > 0
  5. EPS for last 12 months is > 0
  6. 1y EPS growth % for each of the last 5 FQ is > 0
  7. Trailing 12m Cash Flow Per Share > Trailing 12m EPS
  8. Latest filing Long term Debt to Equity < industry median
  9. 26 week Relative Price Strength > 0

Where: Historical PEG ratio = Current P/E–ratio / 5yr average EPS growth (%)

Hypothetical performance back-tested

Data source: Bloomberg, Calculations: meetinvest

Disclaimer

Hypothetical performance is not necessarily indicative of future results. No representation is being made that any action will achieve profits or losses similar to those displayed. The result may be overstated as neither transaction costs nor bid/ask spreads nor slippage have been considered. Output equally weighted with maximum 5% allocation per position and rebalanced monthly. Holdings are systematically replaced when the screening criteria are not met anymore. No additional buying or selling rules (technical analysis) have been employed.

Historical monthly relative performance

How to read this graph:
A green bar shows how much the guru strategy outperformed the benchmark index in a particular month. A red bar shows how much the guru strategy underperformed the benchmark index in a particular month.

Data source: Bloomberg, Calculations: meetinvest

Disclaimer

Hypothetical performance is not necessarily indicative of future results. No representation is being made that any action will achieve profits or losses similar to those displayed. The result may be overstated as neither transaction costs nor bid/ask spreads nor slippage have been considered. Output equally weighted with maximum 5% allocation per position and rebalanced monthly. Holdings are systematically replaced when the screening criteria are not met anymore. No additional buying or selling rules (technical analysis) have been employed.

Historical portfolio turnover

Data source: Bloomberg, Calculations: meetinvest

Books

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