Business Analysis
An important metric when investing during a recession
Over the last year, “cash is king” has become the modus operandi for companies everywhere. In an environment where revenues are declining and credit markets are difficult to access, the conservation of cash is an important aspect of maintaining the business and living through the recession.
To gain a better view of the cash flow generation [...]
A Retail Investing Framework
Generally speaking, I see myself as a value investor. Why then, would am I so often looking towards retailers and generally consumer facing businesses for my best investment ideas (see: A Retail Reversal and Irrational Retail Valuations)? After all, many of the best retail stocks are those that rely on growth to provide shareholder return. [...]
read more »When investors don’t care about profits
I made the statement in a recent article that “value” does not always follow profitability. And, it was to some degree motivated by a recent article I read by Fred Wilson, a VC and blogger who I follow (and highly recommend). He recently posted an article on profitability which criticized to some degree the business model [...]
read more »Finding stocks with great management (Part I)
In my recent post on using free cash flows to see through GAAP income numbers, I touched on the difference between enterprise value and equity investing. When using enterprise value, you value a business based purely on its ability to generate free cash flow. Enterprise value investing presupposes that if you were to buy the [...]
read more »Irrational Retail Valuations
Before the onset of a recession and consumer pullback, investors rarely had to spend a lot of time ascertaining revenue visibility. After all, a rising tide lifts all boats. Find a hot stock, read all the glowing analyst recommendations, and buy knowing that it shouldn’t be too hard to hit forecasts. In a negative growth [...]
read more »What is leverage?
After today’s highly publicized collapse of Lehman Brothers and the ongoing worries about different firms’ capitalization and leverage levels, there are probably many people out there wondering what exactly it all means.
Leverage is actually a rather simple concept. It’s the ability to use a relatively small amount of capital to control a large amount of [...]
