Amazon (AMZN: $356/share) filed its annual Form 10-K last week. Our analysts have picked through the financial footnotes and fine print. 2013 results reinforce my bearish thesis from May of 2013 that AMZN’s valuation implies a more unrealistic level of growth and profitability than investors realize.
ll too often we find significant data hidden in the footnotes that changes the valuation model for a company. Our more complete models help investors identify the stocks that are significantly undervalued.
Our proprietary technology and patented systems allow us to find these red flags so that clients can avoid blowups or even get aggressive and short the stocks to make even more money.
The potential utility of XBRL as a tool for regulators to fight fraud and investors to better analyze companies makes its numerous flaws that much more of a shame. I can only hope that the SEC realizes the value of XBRL and makes a commitment to ensuring the accuracy and validity of XBRL data.
Reported assets don’t tell the whole story of the capital invested in a business. Accounting rules provide numerous loopholes that companies can exploit to hide balance sheet issues and obscure the true amount of capital invested in a business.
Everyone wants diligence. Few will ever turn it down. The problem is that diligence is expensive. New Constructs makes diligence cost-effective.