April 19, 20160Comments

The Best and Worst of the Financials Sector 2Q16

The Financials sector ranks sixth out of the ten sectors as detailed in our 2Q16 Sector Ratings for ETFs and Mutual Funds report. It gets our Neutral rating

by Kyle Guske II, Senior Investment Analyst, MBA

April 19, 20160Comments

The Best and Worst of the Energy Sector 2Q16

The Energy sector ranks last out of the ten sectors as detailed in our 2Q16 Sector Ratings for ETFs and Mutual Funds report. It gets our Very Dangerous rating

by Kyle Guske II, Senior Investment Analyst, MBA

April 19, 20160Comments

The Best and Worst of the Consumer Staples Sector 2Q16

The Consumer Staples sector ranks third out of the ten sectors as detailed in our 2Q16 Sector Ratings for ETFs and Mutual Funds report. It gets our Neutral rating.

by Kyle Guske II, Senior Investment Analyst, MBA

April 19, 20160Comments

The Best and Worst of the Consumer Discretionary Sector 2Q16

The Consumer Discretionary sector ranks fifth out of the ten sectors as detailed in our 2Q16 Sector Ratings for ETFs and Mutual Funds report. It gets our Neutral rating.

by Kyle Guske II, Senior Investment Analyst, MBA

April 18, 20160Comments

Danger Zone: Cornerstone OnDemand (CSOD)

Companies with long histories of profit losses often attempt to sell investors on their plans to “reach scale.” But, what happens when a company reaches scale and profits remain elusive? Profitless since going public, Cornerstone OnDemand (CSOD) lands in the Danger Zone this week.

by Kyle Guske II, Senior Investment Analyst, MBA

April 15, 20160Comments

New Stocks on Most Attractive and Most Dangerous Lists: April 2016

Our Most Attractive Stocks (+1.1%) underperformed the S&P 500 (+3.3%) last month. Our Most Dangerous Stocks (+3.3%) rose slightly less than the S&P 500 (+3.3%) last month and outperformed as a short portfolio.

by Kyle Guske II, Senior Investment Analyst, MBA

April 15, 20160Comments

5 Ways Corporate Governance Affects Investors and Stock Valuations Webinar

In this webinar, David Trainer, a Wall Street veteran, will discuss corporate governance issues to be aware of, how they can affect an investors portfolio, and how they affect underlying stock prices.

by Kyle Guske II, Senior Investment Analyst, MBA

April 14, 20160Comments

David Trainer Covers Why Blackbaud Is In The Danger Zone

CEO David Trainer sat down with Chuck Jaffe of Money Life and MarketWatch.com to talk about our Danger Zone pick this past week: Danger Zone: Blackbaud Inc. (BLKB)

by Kyle Guske II, Senior Investment Analyst, MBA

April 13, 20161Comments

Misaligned Incentives That Led To Valeant Disaster Go Unaddressed

We think that investing in VRX is not a good bet until Valeant’s leadership fully addresses the serious corporate governance flaws that are the source of the problems at the company.

by Kyle Guske II, Senior Investment Analyst, MBA

April 13, 20160Comments

The Power Of Expectations Investing

Sometimes, even the most well recognized experts make shockingly bad predictions. No one truly knows (legally) what the market is going to do next, and the risk involved in that uncertainty is what creates the potential for significant returns.

by Sam McBride

April 12, 20160Comments

Free Cash Flow (FCF): Explanation & Examples

There are many ways to calculate free cash flow. Most approaches are short cuts to our more comprehensive approach to the calculation. The formula for FCF can be seen in Figure 1. For more on FCF, see within.

by Kyle Guske II, Senior Investment Analyst, MBA

April 12, 20160Comments

Economic Earnings: Explanation & Examples

To derive economic earnings, 30+ adjustments must be made to accounting earnings. These adjustments remove items hidden in the footnotes and MD&A of annual filings and close loopholes within GAAP accounting.

by Kyle Guske II, Senior Investment Analyst, MBA

April 12, 20160Comments

Weighted Average Cost of Capital (WACC): Explanation & Examples

WACC plays a key role in our economic earnings calculation. It is hard to be 100% certain about the exact cost of a company’s capital. Our guiding principle when calculating WACC is that it is better to be vaguely right than precisely wrong.

by Kyle Guske II, Senior Investment Analyst, MBA

April 12, 20160Comments

Return On Invested Capital (ROIC): Explanation & Examples

The formula (see Figure 1) for calculating ROIC is easy. The hard part is finding all the data, especially from the footnotes and MD&A, required to get NOPAT and Invested Capital right. When we calculate ROIC, we make numerous adjustments to close accounting loopholes and ensure apples-to-apples comparability across thousands of companies.

by Kyle Guske II, Senior Investment Analyst, MBA

April 12, 20163Comments

Net Operating Profit After-Tax (NOPAT): Explanation & Examples

We calculate NOPAT in two ways, from an operating and financing perspective. See Figure 1. Figure 1 shows the basic calculations. On page 2, we share the complete calculations for specific companies.

by Kyle Guske II, Senior Investment Analyst, MBA

April 12, 20162Comments

Invested Capital: Explanation & Examples

We calculate invested capital in two mathematically equivalent ways: financing and operating approach. Figure 1 shows the basic calculations. On page 2, we share the complete calculations for specific companies.

by Kyle Guske II, Senior Investment Analyst, MBA

April 11, 20160Comments

Danger Zone: Blackbaud Inc. (BLKB)

Our call on Valeant (VRX) showed how dangerous it is to trust non-GAAP earnings because they cannot be used to cover true cash costs. For these reasons and more, Blackbaud Inc. (BLKB) lands in the Danger Zone this week.

by Kyle Guske II, Senior Investment Analyst, MBA

April 8, 20160Comments

New Constructs Strategies Outperform In 1Q16

Especially when it came to long strategies through 1Q16, we delivered stock picks that, by and large, outperformed their benchmarks and major indexes for our subscribers.

by Kyle Guske II, Senior Investment Analyst, MBA

April 7, 20160Comments

David Trainer Discusses Why Compensation Committees Are In The Danger Zone

CEO David Trainer sat down with Chuck Jaffe of Money Life and MarketWatch.com to talk about our Danger Zone pick this past week: Danger Zone: Compensation Committees.

by Kyle Guske II, Senior Investment Analyst, MBA

April 6, 20160Comments

How General Electric Can Prevent A $125 Billion Decline In Market Value

Based on the linear equation within, the stock is worth ~$18/share if we assume that GE can maintain its current ROIC of 3% and not accelerate growth. That downside translates into a loss of $125 billion in market cap or $13 per share (43%) for investors.

by Sam McBride

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