Benjamin Graham Defensive Investor Screen: How does it work?
A very demanding intrinsic value-based screen designed for less experienced investors and focused on “important” companies with long histories of profitable operations and strong financial condition.
Benjamin Graham was the mentor of Warren Buffet and is considered the first proponent of value investing, along with David Dodd through various editions of their famous book Security Analysis.
In 1947, Benjamin Graham published “The Intelligent Investor,” a book that outlined in detail his investment philosophy, and which is now considered an investment classic. In the book, Graham describes how his approach would be applied by two different types of investors—those that are “defensive” (i.e. those investors unable to devote much time to the process or inexperienced with investing) and those that are “enterprising” (with greater market experience and more time for portfolio management). Graham felt defensive investors should confine their holdings to the shares of large, prominent, and conservatively financed companies with long histories of profitable operations. By this, he meant a firm of substantial size and with a leading position in its respective industry.
Additionally, Graham sought companies with:
Strong ﬁnancial position (based on the current ratio amp; debt to working capital).
20 years of uninterrupted dividends
No negative earnings in the last 10 years amp; a...