[06/15/18 NEW] The Endangered U.S. Public Company

There were 7,509 U.S. public firms in 1997, but 20 years later, in 2016, the number of stock exchange traded companies shrunk to 3,618; a 52% decline! Even more surprising, this disappearance act of public companies is unique to the U.S. In fact, the number of listed firms outside the U.S. increased practically every year….

[05/18/18] Customer Franchise―The Most Valuable Asset : Here Is How to Value It

“Subscribers Are the New, New Thing in Business” declared The Economist (April 11, 2018). The magazine says that “Subscription models are seen by many investors and executives as the holy grail, because they promise a recurring stream of revenue…. The attractions of subscription businesses are obvious. Firms can predict the future better and build deeper…

[04/15/18] The Unbearable Lightness of Earnings

Today’s Wall Street Journal (4/12/2018) published an article that caught my attention: “Next Up: The Forgotten Earnings Season.” The article opens: “Only once before have U.S. earnings expectations risen so far, or so fast, as they have this year. Yet, investors couldn’t care less as shares are down. The result is that Wall Street’s favorite…

[03/08/18] Why Financial Statements Don’t Work for Digital Companies

I am not the only one claiming that financial reports lost their relevance to investors. Read a Harvard Business Review article written by three highly respected academics.   Why Financial Statements Don’t Work for Digital Companies by Vijay Govindarajan, Shivaram Rajgopal & Anup Srivastava On February 13, 2018, the New York Times reported that Uber is…

[03/02/18] What Economic Recovery? Half Of U.S. Companies Are Losing Money

We are inundated with great economic news: The stock market is at all-time high (despite wide fluctuations), unemployment is the lowest in two decades, consumer confidence is the highest in many years, and corporate profits are surging from quarter to quarter. A real economic recovery to be sure. So, you will be shocked to see…

[02/13/18] Not the End of Accounting? And Time to Revisit Value Stocks?

I write today about two topics: Australian research claiming that financial information didn’t lose its relevance (in contrast with my The End of Accounting), and a possible shift in investors’ focus toward value stocks. Both important issues. Not the end of accounting? I am flooded by tweets about the recent research by Australian academics reporting…

[01/19/18] How to Analyze Winners and Losers In An Emerging Industry.

Investing In The Car Batteries Space Summary It’s very difficult for investors to differentiate among the various players in the batteries industry and assess their long-term potential. The winners in the fast-evolving batteries space will be those with superior technology, potentially disrupting other competitors. The growth of players in this industry crucially depends on new…

[12/20/17] Intangible assets are changing investment

WHEN you work as an equity analyst at an investment bank, your task is clear. It is to comb all the statements made by corporate executives, to scour the industry trends and arrive at an accurate forecast of the company’s profits. Achieve this and your clients will be happy and your bonus cheque will have…

[12/14/17] Corporate Financial Reporting : Facts or Fiction?

Everyone knows that accounting is boring, but at least it’s factual, people think. In a world of fake news and irresponsible social media, it’s good to have an information system which is fact-based. Well, I have news for you: corporate financial information is as far from factual as it gets. It’s a well-kept secret, but…

[11/29/17] Are U.S. Executives Myopic (Short-Term Oriented)? I don’t Think So

88% of executives and directors feel most pressured to demonstrate strong financial performance within two years or less. 65% of executives and directors say short-term pressure has increased over the past 5 years. 55% of executives and directors at companies without a strong long-term culture say their company would delay a new project to hit…