Fundamental Analysis

  • 30 Dec
    Why Big Pharma Isn’t A Good Investment Right Now

    Why Big Pharma Isn’t A Good Investment Right Now

    • The pharmaceutical industry is facing regulatory headwinds amidst positive global trends.
    • Fundamentals show that all the positives are already priced in leaving more downside room than upside potential.

    Introduction

    The pharmaceutical sector has been one of the worst performers in 2016. It’s down 11.22% year-to-date while the S&P 500 is up 13.37%.

    From a longer-term perspective, the pharma sector has largely outperformed the S&P 500. From the low point in the 2009 financial crisis, the iShares U.S. Pharmaceuticals ETF (IHE) has gained 291% while the S&P 500 has gained 233%.

    Today, we’ll analyze sector trends, risks, and the fundamentals of potential pharmaceutical investments to see if the recent pullback is an investment opportunity. More →

  • 17 Nov
    What Buying Olive Oil In Italy Can Teach You About Value & Price

    What Buying Olive Oil In Italy Can Teach You About Value & Price

    • Everybody knows the price of a stock, but few know the actual value.
    • There are a few things that can help you when buying undervalued assets.
    • To determine if you’re investing in a good undervalued investment, consider the company’s probability of bankruptcy.

    Introduction

    This summer, I was in Italy and buying some olive oil. As we use mostly olive oil in our kitchen, I bought 10 liters of this special oil, enough to last for a few months. More →

  • 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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