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.

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:

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.

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.