The 52-Week Low Formula: Discipline, Principles and Logic to Drive Investing Success, + Website

by Luke L. Wiley

A new but timeless strategy and mindset that should greatly help investors lower downside risk while achieving market outperformance In The 52-Week Low A Contrarian Strategy that Lowers Risk, Beats the Market, and Overcomes Human Emotion, wealth manager Luke L. Wiley, CFP examines the principles behind selecting the outstanding companies and great investment opportunities that are being overlooked. Along the way, Wiley offers a melding of the strategies used by such investment giants as Warren Buffett, Howard Marks, Michael Porter, Seth Klarman, and Pat Dorsey. His proven formula helps investors get the upper hand by identifying solid companies that are poised for growth but have fallen out of the spotlight. The 52-Week Low Formula is a must-read for investors and financial advisors who want to break through conventional strategies and avoid common mistakes.

Genres: Finance, Nonfiction

272 pages, Kindle Edition

First published January 1, 2014

Reviews

[Traven Teng Teck Poh Poh · Rating 3 out of 5]

In short, this book is about Investing into Great Companies at near 52-week low.

The book can be summarised in a diagram which can be found in the book, about the 5 filters.

- Durable Competitive Advantage
- Required Min Free Cash Flow Yield
- Required Min Return on Invested Capital
- Required Min Free Cash Flow to Long Term Debt Ratio
- % Change from 52-week low
- down to just 25 highest quality stocks

Small warning- It's not as easy to apply for any retail investor at beginner level.
Worth a read but not worth to buy and keep.
...

Found the below from internet which can be useful.

The five filters of the 52 week formula:

Filter 1: Durable competitive advantage: It is not about buying any company at a 52 week low. It is about buying a company with a durable competitive advantage at the 52 week low.
Filter 2: Free cash flow yield ( Margin Of Safety): The free cash flow yield multiple over the 10 year year treasury bond is known as the margin of safety. The higher the free cash flow yield over the 10 year treasury bond, the higher the margin of safety.
Free cash flow= Operating cash flow -capital costs of maintaining current capacity
Enterprise value = Market cap+Debt-Cash
Free cash flow yield= Free cash flow/ Enterprise value

Filter 3: Return on Invested Capital: The return on invested capital should be greater than the cost of capital.
Filter 4: Long-term debt to free cash flow ratio: Long term debt to free cash flow should be less than 3 years.
Filter 5: 52 week low: The company should be trading close to its 52 week lows. Companies who have a trailing 12 month return of more than -25% are good candidates to invest in, if they fulfil other criteria.
7. Diversify by investing in 25 stocks.

[Cliff Chew · Rating 4 out of 5]

I like that this book doesn't give too much technical stuff, but still, gives enough for you to kick start your quantitative journey in stock market trading. I do have to say, I don't agree with everything the book says, but it definitely provides a good start to any beginner in stock trading.

[Stevewilliams27 · Rating 3 out of 5]

A concise package of a strategy you can find in further detail from margin of safety, greenwald's "value investing," and other similar such books. This, akin to greenblatt's magic formula, is a much easier read and better for the less experienced investor. However, in direct contrast to that, I didn't find there to be a clear path detailing how to calculate and execute on the filters. For me personally this was a solid time saver but it may leave some people unsure about how to find the necessary info.

[Mal Kelly · Rating 3 out of 5]

A common sense approach to the market. It's a get wealthy slowly plan that avoids losses.

[Yashodhan Khare · Rating 5 out of 5]

Good read

This is an excellent read for the studious investor. The importance of planning and strategy when it comes to investing is highlighted.

[Ryan Madden · Rating 3 out of 5]

This was actually a pretty informative book. He does a pretty good job of filtering for good companies with the first 3 filters, and then the 5th filter is to pick the ones closest to their 52 week low. Not such a terrible idea. And he does a pretty good job at making the first 3 filters understandable and they should filter in a lot of the best companies.

Where I wasn't fully on board was that he suggested selling them every six months (or every year). I just am not so sure I understand why you'd want to sell a stock if it's a good stock and you bought it at a good price.

Also, the fourth filter is debt, and while I like to look at debt and to buy companies with less debt, it always seems like being too rigid with a debt filter doesn't lead to over performance. So I wouldn't be as rigid as the author with debt.

In general a decent book, even if it looks like a total cash grab title.

[Maaz Ahmed · Rating 4 out of 5]

A good strategy for investing in the stock market which uses time-tested quantitative (and the author also mentions some qualitative) measures to identify good companies which are currently priced cheap.

A good value investing strategy, cleverly timing investments by identifying companies that are currently at their 52 week low due to market sentiment.

[Jose Parra · Rating 5 out of 5]

I like the simplicity, and jet compelling and thorough strategy that makes this book a must read. It needs though an update: the example of "Best Buy" as a good candidated in the 52-week look screener look to me more a value trap of a company losing competitive advantage.

[Jonas · Rating 4 out of 5]

A well-written book. I can definitely see this strategy outperforming the market.

[JG · Rating 4 out of 5]

If companies like P&G, MCD, DIS or JNJ sound familiar to you, that not so long ago were hated and unpopular to Wall Street, but everybody knew they were great companies and sooner or later would rebound from their lows (as they did), then this book will be of interest to you because it helps to identify companies with the highest probability of success due to their sound fundamentals that are trading near their lows while discarding the rest.

Identifying a company's Moat is no easy task and it's subjective most of the times, but one of the advantages of the methodology outlined in the book is that the process is redundant regarding the Moat, ie, every filter we use, each step we move forward means there is a high chance that a competitive advantage exists.

If you have seen great quality companies with little or no debt, falling near their 52 week lows and after a while bounce back and felt sorry for yourself because you knew all along that they were great companies and it was only a matter of time before the market put them where they belong, then this book will be useful to avoid the same mistake again and again.

quality
+
Margin of safety
+
little Debt
+
Good Return on Capital
+
Low Prices
=
Good Investments with Low Risk

[John Goodell · Rating 3 out of 5]

I first stumbled upon Luke Wiley's contrarian strategy in a stock screen on AAII and was taken by the very boldness of it. I've always been enticed by value investment ideas and this one, specifically because of Wiley's stringent filters, finds those stocks that are neglected and hated and have dropped significantly. Its worth looking into as the strategy has a lot of potential and works very well against the benchmark. I'm currently trying it out myself with just a few companies that pass the screen test, but am not yet going to implement it outright as the sole strategy for my entire portfolio.