Liquidity (Q.i)

Liquidity (Q.i) = Adjusted Profits / Yearly trading value

Adjusted Profits is a proprietary profit number we calculate.

Yearly trading value is the total yearly traded value of the company, number shares traded multiplied by the share price over the past year.

It tells you how high a company’s yearly traded value per share is compared to its adjusted profits.


A high value is good

A high value thus means low turnover and thus a larger chance of the company’s shares being mis-priced.

It helps you find companies with large controlling shareholders or a stable base of shareholders where traded value is low and thus less analyst interest because they cannot make money in the trading of the company’s shares.

To find these companies set the slider to 0% to 20%.


A low value is bad

A low value means high traded value which means more analysts may follow the company giving you a lower chance that the company is mis-priced.

To find these companies set the slider 80% to 100%.


More information and back test

You can find more information (including back test information) here: This overlooked ratio, large funds and hedge funds can’t use, gives you higher returns