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Reporting & Confession Season

QAV Bible › Report­ing & Con­fes­sion Sea­son
The Sys­tem · Times to Pay Par­tic­u­lar Atten­tion to the Mar­ket

Reporting & Confession Season

A few times a year the num­bers behind every com­pa­ny refresh at once. Here’s how Tony watch­es the mar­ket through con­fes­sion sea­son and report­ing sea­son — and the Stock Doc­tor fil­ters and process he uses to turn ~2,500 ASX com­pa­nies into a work­able short­list.

Dur­ing “con­fes­sion sea­son” (the lead up to report­ing sea­son, when a num­ber of com­pa­nies will down­grade their earn­ings expec­ta­tions), Tony uses the Recent Updates fil­ter in Stock Doc­tor to keep an eye on any news com­ing out from com­pa­nies in his port­fo­lio. He also pays close atten­tion to news sto­ries in the Aus­tralian Finan­cial Review for reports on com­pa­nies that have changed their guid­ance.

Con­fes­sion sea­son runs rough­ly from late April through to late May/early June for com­pa­nies with a 30 June year-end (the most com­mon in Aus­tralia). The log­ic is that by late April, man­age­ment can see with enough clar­i­ty where the full-year num­bers will land — close enough to be sure, far enough out that they have time to warn the mar­ket before the black­out peri­od locks in. ASX con­tin­u­ous dis­clo­sure rules (List­ing Rule 3.1) do the rest: if your result will be mate­ri­al­ly dif­fer­ent from what the mar­ket expects, you have to say so prompt­ly.

Update 2025-03-11 — In the past, TK has tak­en the posi­tion that he will buy dur­ing report­ing sea­son, before the results come out, because he trust­ed com­pa­nies to respect Con­fes­sion Sea­son and give investors warn­ings if results are going to dis­ap­point. He has now changed his pol­i­cy. He will not buy until after results come out.
Update 2025-07-15 — Today TK told me that we can buy com­pa­nies dur­ing report­ing sea­son that report out­side of the usu­al Jun 30 EOFY.

Dur­ing report­ing sea­son (every August and Feb­ru­ary, when new full and half year finan­cial reports come out), we have to quick­ly review all ~2,500 com­pa­nies on the ASX to deter­mine which ones we want to run through the check­list. This is also the case dur­ing major mar­ket tur­bu­lence, like we’ve had in the first half of 2020, as most com­pa­nies have been revis­ing their finan­cial guid­ance as a result of the coro­n­avirus lock­down and eco­nom­ic col­lapse.

In nor­mal mar­ket con­di­tions, ear­ly on in report­ing sea­son, when the reports start trick­ling in, Tony uses a man­u­al approach. By using the Recent Updates sec­tion of Stock Doc­tor and fil­ter­ing for “Com­pa­ny Finan­cials Updat­ed” in the Update Types check­box sec­tion, he gets a dai­ly list of com­pa­nies that have report­ed. When a com­pa­ny issues their report, he will open them up in SD and look at the fol­low­ing:

  • Sen­ti­ment
  • Avg dai­ly val­ue trad­ed
  • Pos­i­tive oper­at­ing cash­flow
  • Looks at price/cash ratio to see if it is < 7

The pur­pose of those data points will become appar­ent after you review the Check­list Walk­through. When the reports start com­ing in thick and fast, he will use a SD fil­ter to reduce them down to a short­list.

As of 2020-05-27, these are the fil­ters Tony is using. All of the fol­low­ing are true:

Stock Doc­tor fil­ter set
  • Equi­ty: Total ($) Any
  • Aver­age Dai­ly Trade ($000) Greater Than 0
  • EPS Before Abnor­mals (cents) Any
  • EPS After Abnor­mals (cents) Any
  • EPS Before Abnor­mals (cents) Fore­cast yr 1 Any
  • Trad­ing Sta­tus Trad­ing
  • Share Price ($) Any
  • Price to Con­sen­sus Tar­get (%) Any
  • Mar­ket Cap­i­tal­i­sa­tion ($M) Any
  • Cash Flows: Net Oper­at­ing ($) Greater Than (usu­al­ly zero — we just want to make sure it has pos­i­tive cash flow)
  • Free Cash Flow per Share (¢) Any
  • Star Stock Sta­tus 6 select­ed
  • Shares Out­stand­ing (M) Any
  • Div­i­dend Yield (%) Any
  • Finan­cial Health Rat­ing 6 select­ed
  • Finan­cial Health Trend 4 select­ed
  • SDMAX Sta­tus 3 select­ed
  • All Direc­tors’ Hold­ing ($) Any
  • CEO/MD + Chair­man hold­ing ($) Any
  • ROE % (Return on equi­ty) Any
  • Price to Cash­Flow Any
  • PE (Price Earn­ings) Ratio Any
  • NTA per Share ($) Any
  • Price Change 5 Years (%) Any
  • Price Change 6 Months (%) Any
  • Con­stituent of ASX 300 Any (option­al — some of us use it to fil­ter for com­pa­nies our Super Funds will allow us to invest in)
  • Con­sen­sus Tar­get Date Any (added 2022-03-04)

In a sep­a­rate box to the fil­ter set-up box in Stock Doc­tor, there is a GICS clas­si­fi­ca­tion box. Make sure you UNCHECK “unclas­si­fied”, which stops the fil­ter from pick­ing up ETFs.

But make sure “Inc. cur­rent hold­ings in your port­fo­lio” down the bot­tom of that win­dow is CHECKED. Make sure this is checked even if you don’t have a port­fo­lio set up in SD. We dis­cov­ered that they set a dum­my one up for you when you reg­is­ter, and it includes some stocks which you won’t see in your down­load if this box isn’t checked.

As men­tioned above, if you signed up to SD using our dis­count link after 2021-12-16, you should see the QAV Fil­ters pre-set up and ready for you to use.

After he has the fil­ters set up, Tony then does some manip­u­la­tions to the data to arrive at his watch­list. Here’s Tony’s word­ing on his process (which cor­re­sponds to the TK ver­sion of the check­list). The steps are:

  1. I copy the exist­ing data from the first tab into the tab called Back­up of last Down­load. This makes things eas­i­er if there are errors dur­ing the down­load and data entry process.
  2. Open the down­load CSV file and copy and paste the data into the first tab, QAV Down­load Data. It is eas­i­er if this data is copied start­ing at the first line of stock data and past­ed into cell A13. I record the date of this down­load in cell C11, so I know how old the data is when I use it in the future, before the next down­load.
  3. For ease of use, I then sort this data by small­est to largest price to oper­at­ing cash­flow (col­umn Z).
  4. I colour code stocks with a price to oper­at­ing cash­flow > 7, for eas­i­er look up in the future.
  5. Any man­u­al data needs to be entered into the 2nd tab, Man­u­al­ly entered scores. These are kept in a sep­a­rate tab so they are not over­writ­ten by a new SD fil­ter down­load. They may need to be updat­ed though, and should be checked for changes since the last down­load before con­sid­er­ing a stock pur­chase. We put out a buy list every week which has a man­u­al data tab, so you can check our scores. Please remem­ber to do your own con­fir­ma­tions of data before mak­ing any invest­ment deci­sions, because humans make errors. Even Cameron, from time to time (rumour has it).
  6. The first tab then cal­cu­lates the QAV score for each stock. This is over at the right-most end of the spread­sheet.
  7. I then copy data from the first sheet into the tab called Watch­list.
  8. In the Watch­list tab, after copy­ing in all the data, click on the Data sort com­mand in Excel, which will prompt you with the pre-exist­ing sort para­me­ters that can be used to sort the spread­sheet to make a watch­list.
  9. The top of the data tables are then the watch­list.
  10. I colour code the rows accord­ing­ly.

Watch his walk­through video for help in how this process works. This reduces the list to 50–100 stocks, which he then runs through the check­list to find the 15–20 that will end up in the port­fo­lio. We talked about this process in depth in episode 303.

QAV con­tent is edu­ca­tion­al and is not finan­cial advice. Tony Kynas­ton is not a finan­cial advis­er and does not pro­vide per­son­al finan­cial advice. Past per­for­mance is not a reli­able indi­ca­tor of future per­for­mance. Please con­sult a licensed finan­cial advis­er before mak­ing invest­ment deci­sions.
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