Investment Strategies based on Low P/B with Fundamental Scoring, Earning Manipulator Flag, Bankcruptcy Flag and reasonable ROE and ROIC

Recently working on a project to identify those singapore listed stocks, what are the stocks that are currently selling below P/B value, coupled with good fundamental F-score(Piotroski Scoring) (>=7) on the most recent year, with No Earning Manipulation flag detected using Baneish M-score and using Altman Z-flag, I included ROE and ROIC inside the calculation as well and filter out some SG stocks

The reasoning of the filter is that those low P/B stocks usually are selling below P/B because they are not earning a reasonable ROE that cover the cost of equity, but having a high fundamental score also means that they are fundamentally strong and using Baneish M-score, we will know that whether the company got manipulate the earning and the risk of bankcruptcy is also low through Altman Z-score.

If we are pretty sure the company is safe and yet it generate a reasonable ROE, there is hardly unlikely that the price of the stock will remain below price of book value for a long time period, it might means that it could have margin of safety investing in those companies.

I think Dukang Distillers stands out from the table as it has very 0.5 P/B ratio,with a P/E of 3 and with high ROE and ROIC recent year, definitely worth take a look as a value play, Tat Seng package stands out as well.

Stock Name	Price To Book Ratio	Price To Earning Ratio	F-Score Previous Year	F-Score Latest	M-Score	Z-score	O-score	ROE	ROIC
FABCHEM CHINA LTD	0.325996472	14.2591111	7	7	Not Earning Manipulator	Not likely to bankrupt	Not likely bankrupt	9.419729424	11.39632628
CHOSEN HOLDINGS LTD	0.528215629	24.58333348	7	7	Not Earning Manipulator	Not likely to bankrupt	Not likely bankrupt	5.102853607	5.802938958
DUKANG DISTILLERS HOLDINGS L	0.565013644	3.095186668	6	7	Not Earning Manipulator	Not likely to bankrupt	Not likely bankrupt	19.71058358	16.93335908
TAT SENG PACKAGING GROUP LTD	0.596810947	5.717255841	4	7	Not Earning Manipulator	Not likely to bankrupt	Not likely bankrupt	11.01004359	8.019543261
JASON MARINE GROUP LTD	0.658615185	27	8	8	Not Earning Manipulator	Not likely to bankrupt	Not likely bankrupt	5.778951967	5.909320194
TIONG WOON CORP HLDG LTD	0.661414964	7.960864822	3	8	Not Earning Manipulator	Not likely to bankrupt	Not likely bankrupt	7.728776751	5.885250384
NAM LEE PRESSED METAL IND	0.669726875	8.397760534	7	7	Not Earning Manipulator	Not likely to bankrupt	Not likely bankrupt	12.96220717	12.29955767
DUTECH HOLDINGS LTD	0.801207953	4.815190411	2	8	Not Earning Manipulator	Not likely to bankrupt	Not likely bankrupt	10.19625051	13.773904
NEW TOYO INTERNATIONAL HLDGS	0.821583411	8.190348906	8	7	Not Earning Manipulator	Not likely to bankrupt	Not likely bankrupt	9.962571451	8.922675953
CDW HOLDING LTD	0.843335871	4.756094224	7	8	Not Earning Manipulator	Not likely to bankrupt	Not likely bankrupt	14.23475979	12.59124281

Thought on Artificial Intelligence on Asset Allocation Decision

Recently thought on IBM's deployment on Watson for DBS and the cognitive programming led me lead to a thought that eventually computer will overtaking human being on doing asset allocation. Not sure IBM has already helping Wall Street in doing asset allocation based on real time information feedback

As a comparision, computer vs human in chess playing, as there are discrete steps involving millions of permutation, but in real life investing, there are enormous amount of data being present but human can choose the most important data to analyze and act accordingly, but computer is able to generate trade execution much faster than human being

What i can see from the trend is the profit margin using algo trading will diminished as more computer or algo is trying to grab the profits from the market, while the loser will be those retail player that bet on conventional trading methodology such as cut loss or chart pattern, but Watson coupled with cognitive programming will change this game forever as it is a machine that never tired, and never sleep and trying to find the best opportunities in the market.

But I believe there should be still a few more years to last for value investor, the reasoning is although Watson is intelligence, it won't be able to analyze things that is not presented to it yet, so investing in mid to long term kind of time frame will not be its strategy.

Perhaps the philosophy of value investing which is to invest long term prevent itself from falling into a battleground that it has no competitive advantages.