[08/13/19 NEW] Kraft Heinz: How About Some More R&D

Summary Kraft Heinz keeps writing-off its old, tired brands. But where would the new products and brands come from? KH managers are famed for cost cutting. R&D should be the exception. Late last week, the Kraft Heinz (NASDAQ:KHC) Company served investors with another brands write-down: $1.22 billion. This, in the wake of a massive $15.4…

[07/30/19 NEW] Will Growth Stocks Continue to Perform and Value Stocks to Disappoint?

   If you wondered whether high valued growth stocks, including high tech and internet services providers, will continue to perform well, and low-valued stocks to disappoint, read the following article by me and colleagues (listed at article end) describing the results of our recent extensive research. Elephants Can’t Dance? Revisited Large firms seem better prepared…

[07/12/19] Apple Downgraded: Does It Matter?

Both Yahoo! Finance and the British Telegraph noted this week that for the first time in more than two decades (before the introduction of the iMac and iPod) five financial analysts rate Apple’s stock as a “sell.” All five downgrades to “sell” came this year, and they all relate to concerns about the iPhone line…

[06/04/19] Alternative Data to the Rescue of Financial Reports

In Brief The usefulness of financial reports to investors is fast diminishing. Alternative data are actively sought by investors and academics Research has shown that satellite-imaging, web searches, job announcements, among others, can assist in predicting companies’ sales.   The Sad State of Financial Information It’s no longer a secret that corporate financial reports lost…

[05/23/19] Djokovic, Nadal, and the CEO Pay Controversy

Novak Djokovic, Wimbledon’s 2018 winner, received £2.25 million prize, whereas Rafael Nadal, who lost to Djokovic in the semifinals, receive a paltry £562,000. What explains Djokovic’s almost four-times higher prize? Is Djokovic four-times more talented than Nadal? Was he playing four times harder? Does Djokovic draw four times more spectators, or TV audiences than Nadal…

[05/08/19] UBER: Pre-IPO Observations on Performance

Investors eagerly await Uber’s (UBER) impending IPO and with good reasons. It’s not every day you get an opportunity to invest in an industry – ride-sharing – founder and leader. Uber’s successes and travails are legendary and, soon, you’ll have an opportunity to share in its ownership. Now is the time for a sober, unemotional…

[04/06/19] Is the Market-to-Book Ratio Still Relevant? Yes, But …

I am asked frequently whether the widely-used market-to-book ratio (i.e., market value divided by balance sheet book value, or equity) is still relevant as an indicator of over- or undervalued shares, and a gauge of investors growth expectations. The short answer is: No. In a world dominated by intangible investments, whose measurement is seriously misspecified…

[03/27/19] Should You Buy Lyft Despite the Dual-Class Voting Shares?

Lyft, the ride-hailing startup, is going public in a few days, aiming to raise $2 billion at a valuation of $23 billion. Not bad for a seven-year-old startup. Uber, the industry giant, is still waiting by the sidelines, so that buying Lyft’s shares may be an opportunity for investors to get a foothold in the…

[02/27/19] When Will They Learn? Big Mergers Often Fail

On Friday, February 22, 2019, shares of food giant Kraft Heinz (KH) dropped 27%, amounting to a $14 billion shareholder loss. The main reason for the price calamity: a $15.4 billion write-down of Kraft’s major brands, like Oscar Mayer, Velveeta Cheese, Planters Nuts, and Maxwell House Coffee. An asset write-down means that due to operating…

[01/26/19] Here We Go Again: “Beware of Short-Term Investors”

A sure way to grab a headline and 15 minutes of fame (paraphrasing Andy Warhol’s immortal quip) is to blame investors and/or corporate managers of being myopic, that is―short-term oriented. Despite the fact that there is absolutely no evidence that neither investors nor managers are, in the main, short-term oriented, such claims are often made…