UPSIDO.com now brings Excel export to individual investors

We wanted to write that our newly released Excel export functionality was a world news to all individual investors – but we know it is not true. However, what we do know is that no other financial service for individual investors in the world provide Excel export on financial ratios and accounting information etc. at our affordable price (only DKK 99 /EUR ~13 per month). This is sensational because it allows you to build and do your own calculations and models based on our financial data. We will never be able to deliver a perfect service that meets everyone’s needs. This makes Excel export very convenient because our users can then create their own models and calculations in a faster pace than we can build new models and features.

Below you see the new Excel export feature. Less important, there is also a print functionality now.

Every financial table in the UPSIDO.com application has these functionalities. Above you can see selected financial figures for the past five years for Carlsberg (one of the largest breweries in the world). Say you want to calculate the yearly growth rates for revenue, you can now export it to Excel by clicking on the Excel icon.

Above you can see the Carlsberg figures in Excel. We have calculated the yearly revenue growth rate. Be aware which language your UPSIDO.com application is running. If you are viewing UPSIDO.com in English and export it to your Excel which runs in Danish you might have difficulties with the punctuation. Remember the language settings – it will help you save a lot of effort and time.

Happy Birthday – UPSIDO.com Turns Three!

Today is a very significant day in the life of UPSIDO.com and the whole market for do-it-yourself investors. Today UPSIDO.com turns three years old.

Came from our own need

When we became thinking about UPSIDO.com, we were all investing in stocks but did not think there was any good service for individual investors that invest primarily in Nordic stocks. Everything was/is about free lousy financial information in old-fashioned  portals – we wanted to change that. We wanted to develop a paying service that gave individual investors the right information and tools without advertising taking up all the space and degrading the usability to a Times Square. This took us on a one year trip where we developed the first beta version.

So everything we are doing is the anti-thesis to what all the others are doing. Our enemy is the old portals such as Euroinvestor.

Rome was not built in three years but we are getting closer…

When started out with our beta version the design was all green and with absolutely no usability. Everything was about getting the calculations of financial ratios right – something everyone underestimate the degree of difficulty.

The original UPSIDO.com was all numbers. We did not even have a screener – our most popular and valuable tool.

(UPSIDO.com’s current homepage – we have had five different in three years!)

(The screening tool that lets you find new investments very quickly)

Since the beginning we have listened to all the feedback from you and we have done everything to implement it, whenever we thought it was a valuable add-on.

Growth

Today thousands of people use UPSIDO.com in their daily investment activity. We see growth in users, pageviews, visits etc. We expect the next three years to very exciting with huge international growth. The most interesting thing about our business is that we are approaching profitability on a quarterly basis at a very fast pace – and that is what sustainability is all about: profit.

Birthday present

A birthday is best celebrated with presents and therefore we want to give all our users a birthday present very soon. Many of our users have wished for excel export functionality and printing opportunities. We will soon launch these new features and some other new things.

Thank you

It is a pleasure to develop a service that many individual investors appreciate and tell us on a regularly basis. Without the continuous support from all of you this journey would never have happened and we would be able to put all our energy into UPSIDO.com for the next three years.

We also love to provide, in our opinion, a more professional service for individual investors in a more user-friendly way than many other financial services. For many people our subscription model for a financial service has been strange because many people are used to financial portals with free content (Euroinvestor, Yahoo Finance etc.). We love the fact that we paving the way for a better future with no ads, better information and tools (but also getting the job done faster!) – but asking for a small amount every month. We truly believe it is the future and we  are beginning to see that people are appreciating the new model.

UPSIDO.com has not been a picnic so far but it has been the most rewarding experience for all of us. We are really looking forward to next three years.

Thank you for everything!

Genmab is a lesson learned: Biotechnology is a pure gamble

For not very obvious reasons, individual investors invest a disproportionate share in biotechnology stocks. This is for many reasons unwise in terms of investment philosophy and the Danish/American biotech company Genmab is the latest example that support these reasons. Let us explain why.

Biotechnology is a pure binomial event

Most biotechnology companies such as Genmab are unprofitable for around 10 years before they maybe launch a commercial product on the market and become profitable. In this light, the company is constantly dependent on external financing from individual and institutional investors.

Biotechnology companies go through different development stages from pre-clinical to four different clinical phases. Each phase collects new data on the new product’s effect on the disease. In our opinion every phase is a gamble with a binomial outcome – it either goes well or bad.

In conjunction with the chronic need for external financing, biotechnology companies have periods with exceptional hype. These hypes are often driven by clinical results. Look how Genmab advanced to DKK 400 per share in 2007 and is now at DKK 58.15 per share in 2010.

Many events have led to Genmab’s decline in market value but a lot of the volatility throughout it’s years has been related to news around their clinical results. The problem as an investor is that you never know how the results will turn out. In that respect, it is easier to predict the sales and earnings of Hennes & Mauritz. Lately, the former CEO of Genmab, Lisa Drakeman, was fired and has left big hole in the company since she was one of the founders. This led to a decline in the share price. Today another negative event hit Genmab. UK’s National Institute for Health and Clinical Excellence (NICE) will not recommend one of Genmab’s products which will put the company out of a big market. Again, this is an event you could never have anticipated properly.

The conclusion

Biotechnology is until the point of profitability a pure gamble and should be treated this way. This means that the individual investor should have a low share of the portfolio in biotechnology. Even though these companies could become the next big thing and do good in the world, they should be treated like an ultra high risk investment. Many individual investors ignore this obvious logic.

Fortunately for the users of UPSIDO.com our UPSIDO Rating gives biotechnology companies a very low score indicating high risk. The company has no earnings and negative free cash flow plus constantly needs external financing until point of profitability.

An option for individual investors that want to play the biotechnology industry is to buy options in biotechnology companies before important IV-phase clinical results (the phase before commercialization). The nature of biotechnology companies being a binomial event makes it a great option play – take advantage of the volatility and play the industry with options. It also gives you an opportunity to have a higher upside without putting up with much capital as if you bought the commen share.

For the normal long-term conservative investor avoid the biotechnology industry all together and go for certainty. Use the UPSIDO Rating to sort out the risky biotechnology companies.

New in UPSIDO.com: Help Videos! (Danish only…English coming soon)

If you are a newcomer or a regular user to UPSIDO.com you can now watch user guide videos that introduce you to our tools and information. All the videos are free to watch. We have produced the first five videos (watch below) and will soon upload more videos.

We have decided on a simple framework for our videos. Every view (tools, stock views etc.) will have their own user guide video introducing you to the view. Besides the user guide videos every view will also have an investment lession video where we will go deeper into how the specific tool or page is used in your investment decisions. The videos will in the beginning be in Danish only but as we get finished with all the user guide and investment lesson videos in Danish, we will produce all the same videos in English as well.

You can watch our Youtube channel “UPSIDOcom” here where we will post the videos as they get produced. They will also be uploaded on UPSIDO.com and watched from the upcoming “Help” menu.

Screening – User Guide

Comparison – User Guide

Strategies – User Guide

Notes – User Guide

Introduction – User Guide

New in UPSIDO.com: activity feed, add to watchlist and portfolio, send strategy to screening

If you have not noticed yet you will get chance to hear about it know. We have changed the start page to include an activity feed which provides you with updates on news and latest financial reports on the companies you are following in your watchlists or portfolios. Very soon the activity feed will be improved with aggregation of news to give you a better overview of all the activities. We have huge plans with the activity feed and it will be used in all aspects of UPSIDO.com, so we hope you will find it useful.

Now you can easily add a stock to your watchlists or portfolio anywhere at UPSIDO.com. Just click “Add to Portfolio” in the stock view, screnning or comparison view etc. A little box will appear where you can assign which watchlist or portfolio the stock should be added to – easy and simple.

(screenshot from our screening tool)

We have also listened to all our loyal users that have wished for more transparency and options in the strategy view. Now you can see the criteria going into the strategy. If you disagree with our selection criteria you are now able to send the strategy to the screening tool and built on it to satisfy you own needs.

Soon we will also be launching a completely new free service that will help you get the most out of UPSIDO.com…

An intelligent extension to value investing

Today we want to elaborate on value investing and how it has been modified in recent years. You will hear about an ordinary American accounting professor that has found a signal model based on the value investing framework, that has outperformed the market over decades. The most interesting thing is, that with a little work it can easily be applied with our investment tool.

Research matters

We firmly believe that quantitive analysis based on fundamental information puts the investor in the best possible position when it comes to investing in stocks. A famous quote by Peter Lynch sum up our philosophy:

“Investing without research is like playing stud poker and never looking at the cards.”

Way to many individual investors do not make any research before investing. Often investment decisions are based on news in the daily business newspaper or a tip from your neighbour. Guess what. It produces very poor investment results. As an individual investor, you should use an investment tool that allows you to make good and productive research.

The best institutional investors also make quantitive research in a certain framework – could be macroeconomic, small or large cap, growth, asset plays, turnarounds or sector picking etc. One framework has stood the test of time – value investing. This framework was developed by Benjamin Graham and David Dodd in their classic book “Security Analysis” published in 1934.

(Book cover from the 1951 edition)

Value investing has since then undertaken an evolutionary development with Warren Buffett  adding the management/branding/product element in the investment equation. Warren Buffett has also relaxed on the strict requirements to P/E and P/B values put forward by B. Graham. Peter Lynch, a famous American portfolio manager, has also modified the original value approach with the same elements such as W. Buffett but also adding the “local knowledge” which is about investing in brands/products you can see are popular on main street.

More recently in 2000 an extension to the original value investing was published and has firmly produced good results even during the financial crisis. Its approach to investing is very interesting.

Piotroski’s signal model

In 2000 an American accounting professor, Joseph Piotroski, published a scientific paper “Value Investing: The Use of Historical Financial Information to Separate Winners from Losers”. The model is built on the old value investing approach that you should invest in those companies with price-to-book values. J. Piotroski took this idea and made a model that should separate the weakest companies among cheap candidates. In many cases a low price-to-book ratio indicates that something is wrong with business. At other times the company has just lost the “vote” of Wall Street.

The model is built on nine financial ratios:

1. Positive earnings (profitability)
2. Positive cash flow from operating (good liquidity management/inflow)
3. Increasing earnings (sign of growth)
4. Cash flow from operating larger than earnings (prevent earnings from being a non cash flow driven event)
5. Decreasing long-term debt to assets (Leverage)
6. Increasing current ratio (good liquidity situation)
7. Constant or decreasing outstanding shares (need of external funding to service future obligations)
8. Increasing gross margin (looking for improvement of factor costs)
9. Increasing asset turnover (looking for productivity increases on the asset base)

The company is given a one or zero for each ratio. The strategy is then to find companies with price-to-book ratios plus having passed eight or nine of the tests. The next step is then to find the 20% companies with the lowest price-to-book ratio.

Piotroski’s signal model on the North European countries.

Now we have a modified value investing approach. Let us find the 20% companies with the lowest price-to-book ratio on the North European stock exchanges with our stock screener. Based on our stock screener we could estimate, that constraining the price-to-book ratio to maximum 0,8 gave us the 20% companies with the lowest ratio. To use a good case we will analysis the company with the largest market value and a price-to-book ratio under 0,8. Our case is the german automaker Volkswagen.

Stock screening – UPSIDO.com

Piotroski analysis of Volkswagen

1. Positive earnings in 2009? Yes (1 point)
2. Positive cash flow from operating in 2009? Yes (1 point)
3. Increasing earnings in 2009? No (0 point)
4. Cash flow from operating larger than earnings in 2009? Yes (1 point)
5. Decreasing long-term debt in 2009 vs. 2008? No (0 point)
6. Increasing current ratio? No (0 point)
7. Constant or decreasing outstanding shares? Yes (1 point) – a very little increase in shares due to stock options (so no funding problem)
8. Increasing gross margin? No (0 point)
9. Increasing asset turnover? No (0 point)

As we can see from our analysis Volkswagen only scores four out of nine points. Therefore Volkswagen does not qualify as a value investing despite the fact the company has  ”on the paper” attractive value indicators:

• P/E 5 yr: 10,64
• P/B: 0,78

What does the analysis tells us? All measures on profitability except for increasing earnings were positive. Its long-term leverage has gone up during 2009 and its short-term liquidity strength (current ratio) went down in 2009. Not very good signs in terms of financial strength. However this weakening in financial strength did not lead to an issuing of common shares. In terms of pricing power (changing in gross margin) and productivity (asset turnover) Volkswagen saw declines in both metrics.

How fast could we produce this analysis? Very quick actually. With UPSIDO.com’s stock view information we could measure eight out of nine ratios very quickly. Only the amount of shares we had to find on the company’s homepage.

Credit analysis identifies 11 potential weak companies

UPSIDO.com has recently provided a comprehensive credit analysis on companies listed on the Copenhagen Stock Exchange for its partner Økonomisk Ugebrev. The analysis shows that 11 companies have high risk of bankruptcy within the next two years.

The credit analysis is built on the principles on credit analysis put forward by professor Altman. His famous formula Altman Z-score gives companies a credit rating based on its historical accounting data. The formula includes total accumulated earnings, current operating earnings, capital structure and asset utilisation. The rating implies the probability of bankruptcy with the next two years. Values above 8,15 corresponds to an AAA-ratingfromS&P and values between 5,65-8,15 corresponds to investment grade ratings. Values between 1,75-5,65 indicates highly speculative investments due to high credit risk. Values below 1,75 indicates extremely high risk of bankruptcy in the near future unless the company becomes cash flow positive or restructure its balance sheet.

The conclusion in the analysis was mentioned in the media. Business.dk brought the story with pictures of the 11 weak companies. RB-Børsen made a more thorough extract from the analysis. We provided the same analysis last year and one of the weakest companies (Mondo) from last year has filled for bankruptcy. The list with weak companies is dominated by real estate and sport entertainment (football clubs and associated activities). On the list, Parken Sport & Entertainment (the company behind Denmark’s largest football club) has been in huge trouble and was forced to issue additionally common stock to pay down debt.

We recommend you as an individual investor to always check the Z-score on the stocks you own or the ones you consider to invest in. You can easily find the Z-score (credit score) under the ratios menu.

As you can see BP’s (British Petroleum) Z-score is 7.05 which indicates a high credit rating and low investment risk in terms of BP’s overall credit risk.

If we look at some well-known companies from the leading UK index FTSE 100 you would be surprised to see which one that are potentially weak.

FTSE 100 companies with low Z-score:

• Thomas Cook Group (2,24)
• Vodafone Group (2,32) – primarily due to their very poor performance in terms of earnings and operating earnings in 2006 and 2007. The past performance is incorporated into the Z-score.
• British Airways (2,43)

Do yourself a favour and check the Z-score on your stocks and build a strong portfolio consisting of companies with high credit ratings.

Companies have jump-started the 2010 earnings season

Yesterday we saw first-quarter earnings from Alcoa (the largest U.S. aluminium producer) and Intel (the world’s biggest maker of computer chips). The conclusion is mixed signals of the recovery.

Intel

The company showed better than expected earnings and sales compared to same period last year. First-quarter earnings was 43 cents compared to 11 cents a share in the same period last year. This clearly shows signs of increased IT-spending from consumers and businesses.

Alcoa

The showed lower-than-expected first-quarter sales that show the capital goods industry is not recovering as fast as expected. Does an increase in sales of 18 percent not tell the market that the economy is recovering? No, not really. The problem is that aluminium prices gained 57 percent from a year earlier so would have expected higher sales. The problem is that the quantities of aluminium is going down. The recovering needs to be based on increases in quantities not rising prices. We want production to rise otherwise the recovery is only numbers increasing from monetisation and low interest rates – which is not a sustainable recovery.

Conclusion

Both companies show good signs of growth in terms of sales and earnings which is ultimately what drives the market forward. The problem is that Alcoa is not showing increases in sales in terms of quantity which is really what matters. Alcoa is a key supplier to the capital goods industry and therefore a leading indicator of future increases in production. Therefore the two reports from Intel and Alcoa give a mixed signal about the recovery. We will be posting updates on the Nordic companies as they report first-quarter earnings.

Vi skifter til engelsk / We will be shifting to English

I dag markerer et skift i vores kommunikation her på bloggen. I takt med, at vi får flere brugere fra andre lande end Danmark samt vores ambitioner om en mere international service, vil vi fremover skrive blogindlæg på engelsk. Dette sprog rammer flest mulige brugere af UPSIDO.com og er derfor den bedste løsning fremadrettet. Vores service vil dog fortsat være på dansk og engelsk, hvilket betyder, at vores support til danske brugere også vil fortsætte på dansk. Vi forventer fremadrettet, at vi vil oversætte vores service til endnu flere sprog i takt med, at behovet stiger.

Vores fremtidige service vil dermed blive på flere sprog, mens vores forretningsmæssige kommunikation udelukkende vil blive på engelsk for at nå ud til flest mulige personer.

Vi håber, at I har forståelse for vores beslutning og fortsat vil læse bloggen, samt følge nyhedsstrømmen omkring vores service, selvom den fremover bliver på engelsk. Og til alle vores udenlandske brugere, håber vi, at I vil se det som en forbedring af kommunikationen.

________________________________________________

Today marks a shift on our blog in terms of our communication. We are getting more and more users from other countries than Denmark and combined with our ambitions of being an international service, our future contributions on the blog will be in English. This language reach out to most users on UPSIDO.com and is therefore the best solution going forward. Our service will continue in Danish and English which means that our support to Danish users will continue in Danish. We are expecting, going forward, that our service will be translated to more language as the need increases.

Our future service will be in multiple language whereas our business communication solely will be in English to reach out to as many people as possible.

We hope that you understand our decision and will continue reading our blog and also follow the news stream about our service even though it will be in English from now on. To all our foreign users, we hope that you will see this as an improvement of the communication.

Willkommen DAX 30 og relativ momentum

Hvis du løbende anvender UPSIDO.com til at træffe beslutninger på aktiemarkedet, så har du sikkert opdaget, at UPSIDO.com forandrer og udvikler sig. I sidste uge opdaterede vi applikationen med simpel teknisk analyse, der havde været kraftigt efterspurgt af vores brugere.

I dag kan vi så offentliggøre en ny opdatering, der blandt andet betyder, at du har nu kan se UPSIDO Ratings, regnskabstal etc. for de 30 største tyske selskaber. Derudover indeholder dagens opdatering en mindre rettelse af vores teknisk analyse side, samt en tilføjelse af relativ momemtum på alle aktier i applikationen.

Willkommen DAX 30

I forlængelse af vores tidligere udmeldelser udvider vi i 2010 vores univers af aktier. Dette betød, at vi for nogle uger siden sagde welcome FTSE 100 (de 100 største aktier på børsen i London) og nu siger vi willkommen DAX 30 (de 30 største aktier på børsen i Frankfurt). Indekset er hovedindekset i Tyskland og repræsenterer nogle af Europas største selskaber.

Du har sikkert, ligesom mange andre private investorer, adgang til at investere i tyske aktier fra din online netbank eller handelsplatform. Dette er også godt nok, men nu kan du også blive klogere på selskaberne inden du køber eller sælger dem. Dette er en enestående mulighed for at få indsigt i de største tyske selskaber og muligvis erstatte nogle nordiske aktier med disse glimrende tyske aktier. Ønsker du for eksempel eksponering mod energiselskaber (forsyning), så har Fortum i Finland hidtil været den eneste aktie vi har dækket. Men med tyske og engelske aktier kan du vælge mellem E.ON., Scottish and Southern Energy plc.

Men DAX 30 giver dig også mulighed for at undersøge nogle andre kendte mærkevarer og selskaber. Her er nogle interessante selskaber fra DAX 30…

(adidas – laver sportstøj og sko)

(Daimler – producerer kendte bilmærker som Mercedes)

(Deutsche Bank – stor kommerciel- og investeringsbank)

(Siemens – stort konglomerat med mange forskellige industriaktiviteter som f.eks. tog)

Relativ momentum

Den anden del af vores opdatering består af nogle få rettelser til vores nye teknisk analyse side, der blandt andet betyder, at vi har flyttet forklaringsteksterne ned i bunden af siden med teknisk analyse. Derudover har vi tilføjet relativ momemtum. Dette er et nøgletal, der viser accelerationerne i aktiekursen. Begge ting er noget vi har rettet  og tilføjet på anbefaling fra vores brugere.

Af ovenstående graf ses det, hvordan Siemens har oplevet stigende kurser med stigende acceleration. Dette betyder, at aktien er i opadgående trend med stigende acceleration. Generelt skal momentum tolkes således:

Er nøgletallet over nul betyder det, at aktien er i stigende trend på kort sigt (20 handelsdage). Har kurven samtidig positiv hældning så er trenden opadgående med forstærket styrke. Flader kurven ud betyder det stadig er aktien stiger, men nu er accelerationen nul og er kurven i positivt område med faldende hældning betyder det, at aktien stadig er i opadgående trend men med faldende styrke. Det er hele er så omvendt for når kurven er i negativt område. Tallet på 20 for Siemens betyder, fordi det er relativ momentum, at aktiekursen er steget med 20% på 20 dage heraf navnet momentum 20 dage. Vi håber, at det giver mening.

Dette var en forklaring af vores opdatering for Påsken. Vi ønsker dig en rigtig god Påske fra hele teamet bag UPSIDO.com.