Posts by Andrew Stotz
How a ‘Good Company’ Can Still Mean a Bad Investment
My Worst Investment Ever: During my very early days as an equity investor, I invested in a high-quality coal miner that was the market’s darling at the time. It had survived the 2008 financial crisis unscathed and delivered stellar returns in a falling market.
Read MoreMedical House-Call Project Investment Had Everything but the Basics
My Worst Investment Ever: Two years ago, I invested a large sum of money into a private equity deal to take over a family-run home doctor service. The deal was with a group of respected players, and the new money was designed to expand the business model across the country.
Read MoreGlobal EPS grew faster than Sales in PTM
Chart of the Day: EPS growth has increased a bit in Developed markets, while it has fallen a bit in Emerging markets. Strong EPS driven by strong revenue growth and falling US taxes.
Read MoreVMC: Mistake #9: Not Properly Fading the Return on Invested Capital
The final mistake, #9, takes us into when analysts don’t properly fade the return on invested capital. Most analysts forecast that high-return companies will maintain high-level profits and low-return companies will retain their low-level ones.
Read MoreVMC: On the Rise of CFA Candidates in Asia
The CFA program has long been viewed as an essential qualification for anyone hoping to enter the lucrative world of investment banking. First conceived in 1942, the CFA program is now one of the US’s most successful exports. And in Asia, the credential is becoming ever more highly prized.
Read MoreVMC: Mistake #8: Choosing an Unreasonable Cost of Equity
A very common error that I’ve seen made by analysts is discounting the future cash flows of a business at an unreasonable cost of equity (COE)—which is why it’s valuation mistake #8. Analysts are notorious for trying to manipulate their COE to get the outcome in valuation that they want.
Read MoreVMC: 9 Steps to Prepping for the CFA Exams
Many financially savvy people across the world are psyching themselves up to register for the most significant exams of their career. The post-nominal designation of CFA requires candidates to overcome many a hard mile, but the challenge is worth the toil.
Read MoreHigher COGS in China Compared to the Rest of the World
Chart of the Day: We have combined the financial statements of China-listed non-financial companies into one for the past 23 years. Even though China’s gross profit margin is lower, the net profit margin is about the same as the global average. Implying that China has higher COGS but lower SG&A and other costs than firms globally.
Read MoreAsset Turnover Has Fallen Across the Globe
Chart of the Day: We have combined the financial statements of globally-listed non-financial companies into one for the past 23 years. The asset turnover ratio has averaged 78% and has fallen from a high of 92% to a low of 64% in 2016.
Read MoreGlobal Companies Make a 5% Net Profit Margin
Chart of the Day: We have combined the financial statements of globally-listed non-financial companies into one for the past 23 years. The average number of companies included in this study was 12,586 per year and as of 2017, it was 17,159. Global net profit margin has averaged 5.1%.
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