What’s Behind Apple’s Recent Selloff?


New Constructs CEO David Trainer appeared on CNBC’s Closing Bell this afternoon to talk about the future potential of Apple.

Continue Reading →

Ranked: Our Top 10 ETFs


The following is a list of our top 10 ETFs that have over $100 million in assets under management (AUM), and that are not leveraged.

Continue Reading →

Making a Balance Sheet Useful


We’ve compiled a “Top 11” list of the companies (who have already filed for 2014) with the largest adjustments to their balance sheets across the 11 adjustments we make.

Continue Reading →

Do Microsoft Bulls Have A Convincing Case?


MSFT currently earns our Neutral rating, but if new CEO Satya Nadella can halt the company’s declining return on invested capital (ROIC), the stock’s valuation is cheap enough to make it intriguing.

Continue Reading →

Amazon’s New Smartphone Spells Trouble for Apple (AAPL)


A high quality smartphone from Amazon that undercuts higher-priced competitors could mean more serious trouble for Apple’s iPhone and the company’s declining profit margins.

Continue Reading →

Netflix (NFLX): Even More Dangerous


Continue Reading →

Apple’s Declining Advantage is Undeniable


Apple cannot have pricing power and market share at the same time. No one can for an extended period of time. The problem with AAPL is that it is priced for the company to achieve market share penetration and growth at high prices. The reality is that the quality of Apple products versus competitors is declining. Prices will have to come down just to maintain market share.

Continue Reading →

CNBC Interview: Confirming AAPL Thesis – Apple Is Still Rotten

Here’s my latest CNBC interview on my Apple (AAPL) thesis, originally articulated in Danger Zone 5/13/2013: Apple Inc. (AAPL).

Continue Reading →

Apple Stays Rotten


The “value” in Apple is an illusion. Astute investors need to look at Apple through the lens of what is a reasonable ROIC in the future.

Continue Reading →

Danger Zone 9/16/13: E*Trade Babies


Online trading firms aim to exploit the gullibility of many retail investors by encouraging the myth that they can outperform professional money managers armed with vastly greater resources, experience and expertise. The E*Trade babies are the most glaring symbol of this myth. The symbol also reinforces the notion that investing is an easy task that takes no special effort or aptitude to succeed.

Continue Reading →

Excess Cash – Valuation Adjustment

excess cash

For most companies, we estimate the required amount of cash for normal business operations to be around 5% of sales. However, many companies hold cash or other liquid investments above and beyond this amount. We refer to this extra amount as excess cash. This surplus cash can be used for any number of purposes, including acquisitions, research and development, and cushioning the company against economic downturns. Excess cash is immediately available for distribution to shareholders, so we add a company’s excess cash to our calculation of shareholder value.

Continue Reading →

Excess Cash – Invested Capital Adjustment


Most companies hold some cash—or cash equivalents in the form of investments—above this required amount. Companies hold excess cash in order to cushion against economic downturns, prepare for acquisitions, or any number of other reasons. Sometimes, past profits pile up on balance sheets and are a form of excess cash. Excess cash is not needed for the operations of a company. It is removed from our calculation of invested capital.

Continue Reading →

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.

Continue Reading →

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

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

Continue Reading →

Danger Zone 6/3/2013: Perma-Bears and Bubble Alarmists

I am optimistic about the U.S. economy and I don’t believe we are in bubble. Too many investors and economists are looking at the economy the wrong way.

Continue Reading →

“Index” Label Myths


The word “index” in an ETF label does not always mean that investors are getting the specific exposure they seek. Diligence on ETF holdings is necessary despite what the providers might have you believe. Below I dispel the following myths concerning index ETFs.

Continue Reading →

The Truth Behind AAPL’s Numbers


This article provides some empirical evidence behind my putting Apple (AAPL) in the Danger Zone last week because its return on invested capital (ROIC) is outrageously high. That fact underscores why valuing this company or any other with the expectation that such a high ROIC was sustainable would be a mistake.

Continue Reading →

Danger Zone 5/20/2013: Amazon.com (AMZN)


The belief that Internet retail is or will be more profitable than traditional retail is untrue. Amazon is in a competitive, low margin business that cannot justify the profit growth implied in its valuation.

Continue Reading →

Buy Accenture (ACN): Profiting Off Others’ Innovations


No matter what time range I review, Accenture’s history attests to the quality of its management and business model.

Continue Reading →

CNBC Live Interview: Why AAPL Is Worth $240

My interview on CNBC this morning discussing my analysis of Apple Inc. (AAPL) can be seen here.

Continue Reading →

Page 1 of 3