New Constructs
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Buy The Travelers Co (TRV) – Very Attractive Rating

HIDDEN GEMS: 1. About $29 million in non-operating expenses (after-tax) cause reported earnings to be understated. 2. Our dis¬counted cash flow analy¬sis shows that TRV’s cur¬rent val¬u¬a¬tion (stock price of $55.49) implies that the company’s profits will decline by 30% and never grow again. 3. The company grew its economic earn¬ings by $827mm during its last fiscal year.
by David Trainer, Founder & CEO
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Red Flag Report: Alternative Fuel Mixture Credit (AFMC) Windfall

The second report in our Red Flag series focuses on a little-known earnings Windfall in the Paper and Products Industry. This report is another example of the deep analysis New Constructs performs on all 3000+ companies under coverage. Our expertise is in navigating poor and confusing disclosure in the Financial Footnotes to find the truth about corporate profitability and valuation.
by David Trainer, Founder & CEO
New Constructs
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Stock Pick of the Week: Sell/Short Capital One Financial (COF)

The Risk/Reward of invest­ing in Capital One’s stock looks Very Dan­ger­ous to me. There is lots of down­side risk given the Mis­lead­ing Earn­ings and there is lit­tle upside reward given the already-rich expec­ta­tions embed­ded in the stock price. RED FLAGS: 1. Mis­lead­ing Earn­ings: COF reported a $399mm increase in GAAP earn­ings while our model shows eco­nomic earn­ings declined by $1,783mm. 2. The company’s ROIC is in the Bot­tom Quin­tile of all the com­pa­nies we cover. 3. Stock price of $40.69 implies COF must grow its NOPAT at 15% com­pounded annu­ally for 15 years.
by David Trainer, Founder & CEO
New Constructs
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Finance 101

Finance is the process for making accounting data useful. Per Accounting 101: accounting data by itself is not useful. Think of accounting data as the words used in the language of Finance. Just as with any language, words can be arranged to convey almost any meaning.
by David Trainer, Founder & CEO