Benjamin Graham: Defensive Investor

Buys by the criteria Benjamin Graham set out for the defensive investor in “The Intelligent Investor”: a market cap of at least 2 billion dollars, debt no higher than equity, positive earnings per share in each of the last six quarters, and year-over-year growth — each of the two most recent quarters above the same quarter a year earlier, so that seasonality does not decide the outcome. On price, the rule is a price-to-earnings ratio of 15 at most and, multiplied by the price-to-book ratio, no more than 22.5 — the Graham Number. Graham’s dividend condition is dropped for lack of data, and his ten-year history is approximated with the six most recent quarters. Only shares our own deep-dive analysis rates green are bought — yellow or no analysis at all is not enough. New positions are added four times a year; a share is sold as soon as it no longer meets the criteria or is no longer rated green.

This portfolio buys shares.