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David Trainer, Founder & CEO

David Trainer, Found & CEO of New Constructs

June 28, 20131Comments

Employee Stock Option Costs and Goodwill Amortization – NOPAT Adjustment

NOPAT Adjustments for ESOs and Goodwill Amortization. Converting GAAP data into economic earnings should be part of every investor’s diligence process. Performing detailed analysis of footnotes and the MD&A is part of fulfilling fiduciary responsibilities.

by David Trainer, Founder & CEO

June 25, 20131Comments

McDonald’s Is Still on the Value Menu

The stock market is giving MCD no credit for the company’s proven track record of value creation and strong growth potential. Instead, the market predicts MCD’s profits will permanently drop. I think it is pretty clear the market’s expectations are too low for MCD. Investors should take advantage.

by David Trainer, Founder & CEO

June 25, 20134Comments

Non-Operating Tax Adjustment – NOPAT Adjustment

Without removing the tax impact of non-operating items, one still gets distorted picture of a company’s operating profitability.

by David Trainer, Founder & CEO

June 24, 20132Comments

Growth Appreciation Period (GAP)

The Growth Appreciation Period is the number of years that a business is expected to earn an ROIC greater than WACC on new investments.

by David Trainer, Founder & CEO

June 24, 20130Comments

Free Cash Flow (FCF) and Free Cash Flow Yield

Free cash flow ("FCF") equals NOPAT minus change in Invested Capital.

by David Trainer, Founder & CEO

June 24, 20137Comments

Implied Interest For Operating Leases – NOPAT Adjustment

NOPAT Adjustment for Implied Interest For Operating Leases. Converting GAAP data into economic earnings should be part of every investor’s diligence process. Performing detailed analysis of footnotes and the MD&A is part of fulfilling fiduciary responsibilities.

by David Trainer, Founder & CEO

June 24, 20130Comments

Danger Zone 6/24/13: REITs

Even with this recent price drop, the current valuations of REITs look disconnected from their fundamentals.

by David Trainer, Founder & CEO

June 21, 20134Comments

Income and Loss from Discontinued Operations – NOPAT Adjustment

We remove all income and losses from discontinued operations in calculating operating profit because this income/loss will not recur in the future, and we are looking for the true profitability of the continuing and core operations of a company.

by David Trainer, Founder & CEO

June 20, 20130Comments

How To Avoid the Worst Style Mutual Funds

Picking from the multitude of style mutual funds is a daunting task. In any given style there may be as many as 979 different mutual funds, and there are at least 6100 mutual funds across all styles.

by David Trainer, Founder & CEO

June 17, 20134Comments

Change in Total Reserves – NOPAT Adjustment

Reported earnings don’t tell the whole story of a company’s profits. They are based on accounting rules designed for debt investors, not equity investors, and are manipulated by companies to manage earnings. Only economic earnings provide a complete and unadulterated measure of profitability.

by David Trainer, Founder & CEO

June 17, 20131Comments

Danger Zone 6/17/13: Citigroup (C)

As the market bulls continue to look to rising interest rates as a sign of future strength for Citi, they ignore the fundamentals of the market and of Citi’s weak profit history.

by David Trainer, Founder & CEO

June 17, 20130Comments

Non-Operating Income Hidden in Operating Earnings – NOPAT Adjustment

Non-operating items in operating income are unusual gains that don’t appear on the income statement because they are bundled in other line items. Without careful footnotes research, investors would never know that these non-recurring income items distort GAAP numbers by artificially raising operating earnings.

by David Trainer, Founder & CEO

June 14, 20131Comments

How to Find the Best Style Mutual Funds

There are at least 980 different large cap blend mutual funds and at least 6100 mutual funds across all styles. Do investors need that many choices? How different can these thousands of mutual funds be?

by David Trainer, Founder & CEO

June 12, 20130Comments

June’s Most DANGEROUS Stocks Available to the Public

New Constructs released June’s Most Dangerous Stocks report to the public today.

by David Trainer, Founder & CEO

June 12, 20130Comments

June’s Most Attractive Stocks Available to the Public Today

New Constructs released May’s Most Attractive Stocks report to the public today.

by David Trainer, Founder & CEO

June 12, 20132Comments

Adjusting NOPAT for Non-Operating Expenses Hidden in Operating Earnings

Non-operating expenses are unusual charges that don’t appear on the income statement because they are bundled in other line items. Without careful footnotes research, investors would never know that these non-recurring expenses distort GAAP numbers by lowering operating earnings.

by David Trainer, Founder & CEO

June 11, 20130Comments

Danger Zone 6/10/13: “Passive” Investors

Passive investors are in the Danger Zone for not recognizing that they are actually active investors.

by David Trainer, Founder & CEO

June 11, 20130Comments

More Upside From Western Digital (WDC)

WDC is more profitable than ever and remains significantly undervalued. The no-growth value of this business is over $100/share.

by David Trainer, Founder & CEO

June 10, 20130Comments

How To Avoid the Worst Sector Mutual Funds

Picking from the multitude of sector mutual funds is a daunting task. In any given sector there may be as many as 229 different mutual funds, and there are at least 631 mutual funds across all sectors.

by David Trainer, Founder & CEO

June 10, 20134Comments

Asset Write-Downs Hidden In Operating Earnings – NOPAT Adjustment

Asset write-downs are unusual charges that don’t appear on the income statement because they are bundled in other line items. Without careful footnotes research, investors would never know that these non-recurring items distort operating earnings by overstating core-operating costs.

by David Trainer, Founder & CEO

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