William O’Neil

William O’Neil

Investment prodigy William O’Neil established the CAN SLIM investment strategy through which he became the highest performing broker at Hayden, Stone & Company. He left to start his own brokerage firm, William O’Neil & Co. Inc., in 1963. The CAN SLIM strategy is a blend of quantitative and qualitative approaches. In 1983, he founded the daily newspaper called Investor's Daily, which became the Investor's Business Daily (IDB) in 1991.

Summary

CAN SLIM is an acronym for O’Neil’s investment strategy and can be summed up in his axiom: buy the strong, sell the weak. CAN SLIM stands for:

 

C – Current quarterly earnings per share have increased at least 20% from the same quarters’ earnings reported in the prior year.

A – Annual earnings increase at a compound rate of no less than 25% annually over the last five years. P/E is unimportant.

N – New products, new management and new highs.

S – Supply and demand. The less stock available, the more buying will drive up the price. Look for stocks with fewer than 25 million shares outstanding.

L – Leaders and laggards. Buy stocks that out-perform and shed those that under-perform.

I – Institutional ownership. Favour companies that are ‘under-owned’ by the top professional investors.

M – Market direction. Buy stocks on major downturns, but avoid purchases after a decline of 10% or more gets underway.

Success Formula CAN SLIM

  1. MktCapM is >= US$ 300 million (basis year 2000) adjusted yearly
  2. EPS growth % latest FQ over same FQ one year prior >= 20%
  3. EPS growth % latest FQ over same FQ one year prior >= EPS growth % of previous FQ over same FQ one year prior
  4. EPS for 2 latest FQ >0
  5. EPS growth % p.a. over the last 5y > 25%
  6. EPS increased over each of the last 5 FY
  7. EPS increased over the last 12 months
  8. 52-week Relative Price Strength in top 30% of the entire screening universe
  9. Institutional shareholders >= 5
  10. Take the top 200 stocks which trade closest to its 52 week high

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 CAN SLIM Revised

  1. MktCapM is >= US$ 300 million (basis year 2000) adjusted yearly
  2. EPS growth % latest FQ over same FQ one year prior >= 20%
  3. EPS growth % latest FQ over same FQ one year prior >= EPS growth % of previous FQ over same FQ one year prior
  4. Sales growth % over 1 year > 20%
  5. EPS from Continuing Operations for the latest FQ > 0
  6. TTM EPS from Continuing Operations > EPS for the latest FY
  7. EPS increased over each of the last 3 FY
  8. EPS current FY > fully diluted EPS from Continuing Operations for last FY
  9. Compound annual EPS growth rate % > 25%
  10. Institutional shareholders >= 5
  11. Take the top 200 stocks which trade closes to its 52 week high
  12. Take the top 100 stocks with the highest 52-week Relative Price Strength

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

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