Fundamental Analysis

  • 23 Sep
    A Gesture of Goodwill?

    A Gesture of Goodwill?

    • There is a difference between accounting and economic goodwill.
    • Facebook’s $18 billion goodwill acquisition of WhatsApp looks a lot like AOL Time Warner’s goodwill of $128 billion.
    • Economic goodwill not on balance sheets is what to look for. Unfortunately, you won’t see it anywhere.

    Introduction

    Accounting is an essential part of analyzing a company as different accounting regulations and principles bring about totally different analysis results.

    In today’s article, I’m going to give you a small piece of insight on how I do research, how it differs from the usual screening processes that most use, and why it is important. I won’t elaborate on all the possible inconsistencies instance-by-instance as that analysis is better left to books on accounting. Instead, we will discuss one small line item on the balance sheet, goodwill, and how it can severely skew one’s perception of a company. More →

  • 11 Sep
    Sunday Edition: Identifying Undervalued Stocks

    Sunday Edition: Identifying Undervalued Stocks

    The $64 million dollar question asked by every investor is, “when is the right time to make an investment and actually buy shares in the said company?”

    One of the big advantages of value investing is the fact that the question of when you should invest, while never being irrelevant, is only a secondary concern. 

    The focus is on first determining whether a stock is available at a discount compared to how much the business is worth; if a discount exists, the value investor has an immediate advantage over the rest of the market (which has yet to recognize the stock should be priced higher than it is) and should take a position as quickly as possible. More →

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