1 June 2014

Which formula?
Over the past 5 years we gathered quite a few screens and
ratios. We started off with Joel Greenblatts Magic Formula,
based on his bestseller The little book that beats the market.
Greenblatt explained in very simple words that you should buy
companies with above-average return on capital at below-
average prices. We were the rst to test this formula on
European data and make the formula available globally.
Greenblatt wasnt the only one with a working formula. We
discovered a paper written by Joseph Piotroski in which he
explained another very simple formula with incredible results.
Piotroski found that if you invest in low price-to-book
companies, but lter out the ones with poor prospects using
his own F-Score, you will beat the market with a considerable
margin. James OShaughnessy on the other hand liked to
search for value stocks but he combined this with a momentum
component. His tiny titans strategy looked for low price-to-sales
micro caps of which the share price increased signicantly.
We used all these valuable insights to test some alternative
strategies. We designed the ERP5 factor, combining
Greenblatts ranking with price-to-book and ROIC of the last 5
years. Our tests also showed that if you combine the Greenblatt
Magic Formula with F-Score, returns increase while reducing
risk. In our last paper, the tests showed that the best strategies
are multi-factor and have either a momentum factor or price-to-
book as primary factor. The strategy with the highest return was
to take the top 20% of stocks with the highest 6 month price
index and then order this by price-to-book. We redesigned our
screener from the ground up so everyone could put these
strategies into practice.
Last year we added another screen, called Trended Value,
described by OShaughnessy in the 4th edition of his
bestselling quant book What works on Wall Street. According
to his tests, this strategy showed an annual return of 21%
annually during the test period. (1964-2009). Instead of
focussing on particular ratios, he combined 6 value ratios into 1
and ranked stocks based on this value composite.
1 SVI Newsletter - June 2014
Content
p1: Which formula?
p3: Agfa-Gevaert
p4: Supremex
p5: Portfolio update - Europe
p6: Portfolio update - North
America
p7: Recommendations sold -
Europe
p8: Recommendations sold -
North America
p8: Sources
p9: Disclaimer



Publisher
MFIE Capital bvba
Bunderakker 31
9270 Kalken
VAT: 0448.752.385
Author: Olivier Dambrine
info@valuestockscreener.com


SYSTEMATIC VALUE
INVESTOR
MFIE Capital | June 2014
1 June 2014
He took the top 10% and sorted the results by 6
month price index. We were one of the rst to
adopt this screen and make it available on the
most important markets. We also adopted a
variant of this screen as the basis for our
newsletter. Our study showed that putting the
price index as primary factor increased returns,
so thats what we used to select stocks.
These screens were not the only ones, we added
the Altman Z-score, Beneish score, and many
other factors that showed predictive power in
different studies.
With all these screens in place, you might be
wondering which ones are the most popular?
Well, our stats show that during the last 3 month,
our members ran 102.000 screens in total. Most
screens start with selecting the 6M Price Index
(28%) or book-to-market (12%) as primary factor.
What you can also see in the table above is that
the Magic Formula is still very popular at 11%.
The ERP5 factor is almost as popular and the
VC2, which was only launched a few months ago
already took 5th place. This seems to indicate
that a lot of members use the trended value
screen to nd their bargains.
Now, 28% of the screens use the 6M Price Index
as a primary factor, but what do they use as a
secondary factor? Well, most people sort those
results based on earnings yield.


2 SVI Newsletter - June 2014
With all these new gures and stats, what
screen should you use? Well, it depends.
Selecting the top 20% 6M Price Index stocks
and then sorting by earnings yield seems to
be the most popular choice, but we will keep
all other strategies so you have the option to
look at our stock universe from different
angles. All formulas have been proven to be
very effective so youre bound to nd
excellent stocks in each one of them.
This month we present a Belgian company
providing printing and healthcare imaging
systems. We also found a Canadian company
that manufactures all types of envelopes and
related products.
Protable investing
Olivier


1 June 2014
Agfa!Gevaert
Business summary
Agfa-Gevaert is a Belgian
multinational corporation that
develops, manufactures and
distributes analogue and digital products and systems, as well
as IT solutions. It has 3 divisions: (1) Agfa Graphics offers
prepress and printing systems, (2) Agfa Healthcare supplies
medical imaging systems and related IT solutions to mainly
hospitals and (3) Agfa Speciality Products supplies traditional
lm products and other specialist products.
How did I nd this company?
I discovered this company by taking the 20% companies with
the highest 6 month price index, sorted by VC1.
Business update
Agfa-Gevaert reported a 11,8% lower turnover in Q1 impacted
by weakness in emerging markets and currency effect. The
company management had to deal with a multiple week strike
but nevertheless has been able to increase its gross prot
margin. The Q1 net result was !1m compared to !-12m in Q1
2013. Thanks to a positive cash ow, the company has been
able to reduce its debt by 12%, from !217m to !191.
Management expects challenging conditions to continue in the
second quarter, but its committed to deliver a double-digit
EBITDA percentage in the medium term. The company should
be able to benet from the declining price of silver. Every drop
in the price of silver of $1 results in an increase of gross prot by
!4,5m.
Summary
Agfa-Gevaert is a Belgian company with a long and rich history.
It has managed to weather quite a few storms in the last few
years and has reinvented itself. Its management is focussed on
improving fundamentals which should eventually be reected in
the stock price.




3 SVI Newsletter - June 2014
Ratio Company Industry
P/B 1.2 3.46
P/S 0.14 5.37
P/E 7.28 54.92
Div Yield - 0.55
EBITDA/EV 37.74% -
FCF/EV 17.95% -
EY 29.61% -
ROIC 19.88% -
Valuation ratios
Share details
Share price (30/5): !2,3
ISIN: BE0003755692
NYSE Euronext Brussels
Shares outstanding: 171.85m
Free Float: 171.85m
Market Cap: !395.6m
Average volume: 361.47k
52wk Range: !1.32 - 2.83
1 June 2014
Supremex Inc.
Business summary
Supremex Inc. manufactures
and sells a range of stock
and custom envelopes, and related products in Canada and the
United States. It offers all types of stock envelopes and custom
envelopes for instance for direct mail. It also offers related
products such as membership cards and labels.
How did I nd this company?
I found this company by using the ERP5 Best Selection Screen,
ranking companies based on ERP5 and ltering out companies
with a Piotroski score less than 7.
Business update
The company reported a slight increase in revenues in Q1 of
0.7% to $33.9m. Sales in the US increased by 55.8% while in
Canada it declined by 4.2%. EBITDA increased to $7.3m
compared to $7m in Q1 2013. Earnings per share amounted to
$0.12. Cash ow from operating activities increased to $5.3m
compared to $4.9m last year. The company launched a share
repurchase program to buy up to 5% of its shares in the next 12
months.
The company plans to grow by continuing its expansion in the
US and by improving its product mix in Canada. It also keeps
bringing out new innovative solutions such as the RFID payment
card protector, a protective sleeve that block unauthorised RFID
readers.
Summary
Supremex is a small and relatively cheap envelope manufacturer
in Canada that has been showing good protable growth.
Through dividend payment and share repurchases,
management is trying to return value to its shareholders.




4 SVI Newsletter - June 2014
Share details
Share price (30/5): $2.65 CAD
ISIN: CA86863R1055
Toronto Stock Exchange
Shares outstanding: 28.96m
Free Float: 12.96m
Market Cap: $76.75m
Average volume: 17.7k
52wk Range: $1.18 - $2.75
Valuation ratios
Ratio Company Industry
P/B 1.2 0.77
P/S 0.59 0.42
P/E 7.57 16.44
Div Yield 6.04 2.15
EBITDA/EV 22.27% -
FCF/EV 14.55% -
EY 13.72% -
ROIC 37.55% -
1 June 2014
Portfolio update ! Europe
The performance of the portfolio YTD stayed at at 13,5% YTD (vs 13,4% last month). The performance
was most heavily inuenced by:
Stafine Group. Very pleased about keeping this company in the portfolio. The company conrmed its
2014 guidance and said it experiences strong demand from both new and existing customers. Different
analysts increased its price target, one of them to GBX1.178.
Linedata Services gained 17%, Montupet 11% and MGI Coutier 14%.
Biggest loser was Reply which only fell 5% but has a 6,6% weight in the portfolio. Le Belier fell back 8%
and Trinity Mirror dropped 13% but then recovered after it got a target price increase by Numis
Securities to GBX280.
This month we keep Montupet and MGI Coutier in portfolio. They were the top performing stocks last
month. Sell Impellam Group (+34%) Keep Cegedim as its still in the model.







5 SVI Newsletter - June 2014
1 June 2014


Portfolio update ! North America
The performance of the portfolio dropped from 2,5% last month to 1,8% (TWR). The main culprits are:
(1) ITT Educational Services released disappointing Q1 results as student enrolment fell 6,4%.
Management also withdrew its full year guidance. The share price plunged 36% to 17.22. (2) Alliant
Techsystems had been rising steadily during April and especially the rst week of May since it
announced it would spin-off its sporting rie business. It reported Q4 earnings above analyst
expectations, but Goldman Sachs reduced the stock rating from buy to hold. Magellan Aerospace Corp
released good Q1 results and got a target price increase by Paradigm Capital to $13,5. Vecima posted
great quarter results and improved its cash position considerably. The stock price went up by 16%.
This month we sell 6 stocks:
- Leidos and its spin-off Science Applications International Corp (7% total return - 1 year).
- Trans World Entertainment due to weak momentum. (-15% - 1 year)
- Inteliquent (+47% - 2 years). Momentum strong but not cheap.
- Salem Communications Corp (+78% - 26 months) Weak momentum.
- L-3 Communications Holding (+79% - 31 months). Strong momentum but not cheap.


6 SVI Newsletter - June 2014
1 June 2014
Recommendations Sold ! Europe







7 SVI Newsletter - June 2014
1 June 2014
Recommendations Sold ! North America



Sources
- Stock charts & Financials: www.reuters.com
- Financials: www.ft.com
- Portfolio stock prices: www.yahoo.com
- Agfa-Gevaert: www.agfa.com, www.wikipedia.com, www.standaard.be, www.reuters.com
- Supremex: www.supremex.com, www.wikipedia.com, www.stockhouse.com
- Portfolio calculations and charts: www.protmapper.com

8 SVI Newsletter - June 2014
1 June 2014
Disclaimer
This newsletter and its content are provided to
you for informational purposes only and any
discussion of past performance of any security,
other investment or investment strategy should
not be considered as being indicative or a
guarantee of future performance.
It does not constitute personalised nancial
advice nor an endorsement or solicitation to make
any investment.
Please do your own due diligence or hire a
nancial advisor before making any investment
decisions. Its your money and your responsibility.
The information herein is not intended to be
personal, legal or investment advice and may not
be appropriate or applicable for all readers. If
personal advice is needed, the services of a
qualied legal, investment or tax professional
should be sought.
The price and value of securities referred to in this
newsletter will uctuate. Loss of all of the original
capital invested in a securities discussed in this
newsletter may occur.
Certain transactions, including those involving
futures, options, and other derivatives, give rise to
substantial risk and are not suitable for all
investors.
You acknowledge that you understand that, due
to many factors over which neither we, actual and
subsequent events, performances and/or
outcomes may differ substantially from any
estimates, projections or predictions that might
have been made in this newsletter.
9 SVI Newsletter - June 2014
This research is, to the best of our knowledge, based
on generally accessible sources which are reliable
and accurate. However, no liability can be accepted
for any errors or inaccuracies in information derived
from these sources. The information in this
publication has not been checked for accuracies or
relevance to current events. Consequently, no
liability can be assumed for the completeness and
accuracy of this report.
MFIE Capital has a subscription and advertising
based revenue model and it or the analyst will not
receive any compensation for providing specic
information, data, opinions, estimates and
projections as well as recommendations in this
report.
The author received no compensation and is not
afliated with the company reviewed in this report
with the possible exception of being a shareholder.
Company Specic Disclosures
This publication constitutes research of a non-
binding nature on the market situation and the
investment instruments cited here at the time of this
publication on 01.06.2014.
Indicated time horizon of recommendation is 12
months.