MF Global Was a Dangerous-rated Stock

New Constructs rated MF Global (MF) a Dangerous stock long before it blew up.

Our footnote analysis revealed large amounts of off-balance sheet and asset write-offs that told us:

  1. the company’s leverage was worse than meets the eye
  2. management’s ability to create shareholder value is poor.

Our model showed the company to be even less profitable than its accounting results. In addition, the stock’s valuation was much higher than it should have been.

Even after the recent decline, the stock still gets our Dangerous rating. Click here for a copy of today’s report.

Note that the stock only looked worse in our rating system when the valuation was higher and implying even larger future cash flow growth.

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