How New Constructs creates value for clients
- Superior Recommendations - Our stock picks consistently outperform. See our track record in our stock-picking accolades and Proof Is In Performance reports.
- More Accurate Research - Our patented Research Platform for reversing accounting distortions and discounted cash flow analysis leverages better data to deliver smarter research.
- Time Savings - We analyze tens of thousands of SEC filings so you don't have to. We are experts in finding and unearthing Hidden Gems and Red Flags that are often buried in the Notes to the Financial Statements.
- Transparency - We disclose all the adjustments and assumptions behind our analyses. Clients are free to exclude or modify all adjustments and assumptions.
- Objectivity - New Constructs is an independent research firm, not tied to Wall Street or investment banking services. Our models are driven by high-quality data not stories.
Access to our research is available by subscription or individual report purchase.
Frequently Asked Questions
We get our data from publicly available 10K financial statements that companies file with the SEC. We process new filings, updates, and corrections daily.
10K is the Securities and Exchange Commission's ("SEC") name for the Annual Report that all publicly traded companies are required to file with the SEC each year.
They have not always been as long as they are today. 15 - 20 years ago, 10K's were much shorter. However, as companies have become more focused on managing and manipulating their earnings, they have moved more information from the Financial Statements into the Notes. In our opinion, the Notes are more important than the Statements these days. Most Annual Reports are more than 100 pages, some more than 1000 pages with most pages dedicated to the Notes to the Financial Statements. We analyze the entire Annual Report/10K for every company we cover.
The Notes to the Financial Statements are the section of the Annual Report or 10K where the company's auditors are required to disclose all assumptions behind the information presented in the Financial Statements, which include the Income Statements, Balance Sheet and Statement of Cash Flows. In summary, the Notes to the Financial Statements are where the best financial data goes to hide.
Economic earnings are simply the true, underlying cash flows of a business that the equity owners should care about. The term economic earnings was first referenced in Adam Smith's 19th-century Wealth of Nations. He used the term to explain that investors need to focus on the true cash flows of a business in order to assess its value with any confidence. Even back then, it was clear that reported earnings are unreliable. For more detail on this topic, see our help section: "Problems with the Old Construct".
- Accounting rules were never designed for stock investors. They were designed for debt investors. As a result, there are many large loopholes in the accounting system that enable companies to manipulate their earnings.
- Competition from a company that is exploiting accounting rules to report higher profits often forces other companies to do the same. The market's obsessive focus on earnings reports endows these reports with unwarranted importance. As a result, companies feel pressured to report as high a number as possible, or, at a minimum, meet analyst estimates. If companies' competitors are showing more earnings growth because they are exploiting accounting rules, then other companies are pressured to exploit in the same way to keep pace.
If earnings are unreliable, then ratios dependent on them are too. See "The Truth about Price-to-Earnings and Multiples Analysis" and "The Disconnect Between Valuation Theory and Practice" in our Help section for more detail.
- Financial markets regulators are under-equipped
- Most investors do not care about economic earnings
Our research goes the extra miles and incorporates more financial data than traditional research, which often relies only on reported earnings found in press releases. That information is not only incomplete but also misleading. We do the hard work required to gain a complete and accurate understanding of corporate profitability.
Yes. See Disclosures for more info.
Yes, but with several limitations. No trading in the Most Attractive or Most Dangerous Stocks is allowed until 15 days after a report is published. See Disclosures for more info. In general, our employees do almost no trading in individual stocks. Most of our employees do not own any individual stocks.
Yes, in the form of the multiple free reports on our home page and in our Free Archive.
We have several subscription packages. Email us at subscriptions@newconstructs.com for more info.
We are a privately-held firm.
