05-12-2014, 08:45 PM
That's great, Dan -- thanks very much for sharing. You've clearly put a lot of thought into it.
I'd love to understand your conviction formula better, and how it is translated into allocations. So if you had 30 stocks, with a total of 75 conviction points, then each point is worth 1.33 percent allocation. And a stock with a conviction score of 4 would get a 5.33 percent (roughly) allocation?
And in the "C" formula itself, I have questions about Y and y. I think that the number of companies that have explicit payout ratio targets is relatively small -- so do you assign these yourself, and based on what criteria? And what do you mean exactly by "portion of the yield that is within the target payout ratio"? If the target is a payout ratio of 60 percent, and the actual payout ratio is 50 percent, then does Y get a value of 1.00?
Thanks!
I'd love to understand your conviction formula better, and how it is translated into allocations. So if you had 30 stocks, with a total of 75 conviction points, then each point is worth 1.33 percent allocation. And a stock with a conviction score of 4 would get a 5.33 percent (roughly) allocation?
And in the "C" formula itself, I have questions about Y and y. I think that the number of companies that have explicit payout ratio targets is relatively small -- so do you assign these yourself, and based on what criteria? And what do you mean exactly by "portion of the yield that is within the target payout ratio"? If the target is a payout ratio of 60 percent, and the actual payout ratio is 50 percent, then does Y get a value of 1.00?
Thanks!