We try to keep the guru screen rules constant, in order to maintain the validity of the performance tracking. However, there have been a couple of key changes to the Guru Screens since inception as follows:
- Bill Miller Contrarian Value - Initially, this screen was extremely strict, requiring a Price to Free Cash Flow < 3x. However, as there were no qualifying candidates for a long period, we changed this to a relative P/FCF rank namely, P/FCF Rank above 80%, i.e. the Price to Free Cash Flow must be in the top 20% cheapest in the market. This was done after the June 2014 rebalancing date.
- Peter Lynch Growth Screen - The criteria that this screen initially used were too strict, and the number of qualifying stocks was too small. We initially required a PEG (5yr growth) below 1. We changed this to a PEG below 1. Furthermore, the model initially screened for companies with a P/E ratio below 10. We changed this to a P/E ratio that was below the market average.