Key Management Ratios, C. Walsh Wednesday, August 8, 2007
Posted by ei-forum in Book Reviews.add a comment
As Mr. Walsh states, the common language of business is finance. Therefore, the most important ratios are those that are financially based.
Generally speaking, most finance books and literature on understanding ratios is quite daunting. If you are not already familiar with the subject, it is very difficult to start to understand and try and gain a more fundamental understanding – not only the financial terminology but – of how the ratio relate to the business in ‘real world’ terms.
Walsh sets out to remove the obscurity and make this subject accessible to all by using a lot of examples, diagrams and constantly summarizing and placing the information into the greater business context. He keeps this very simple by only talking about the KEY ratios; he purposely ignores concepts/ratios that are not vital to the business. He focuses on around 20 in depth: why they are important, hot to calculate them, standards/benchmarks and finally, their interrelationships.
What we really like is that he is always relating things back to the business, not simply being academic for the sake of it. Initially, this book has been written to help managers understand their businesses and how to drive them forwards. However, since we believe that the Enterprising Investor should always approach investing as taking part ownership in a business, this is an excellent book to guide you through this process.
Enjoy!
Investing Mass Psychology Tuesday, August 7, 2007
Posted by ei-forum in Investing.add a comment
Our readers will know our views on the financial community and the unfortunate way that most fund managers and investment advisors tackle stock selection from our rants .
We recently came across some interesting passages written by John Maynard Keynes that further highlight our trend of thought. In ‘The General Theory of Employment, Interest and Money’ he writes:
…It might have been supposed that competition between expert professionals, possessing judgment and knowledge beyond that of the average private investor, would correct the vagaries of the ignorant individual left to himself. It happens, however, that the energies and skill of the professional investor and speculator are mainly occupied otherwise. For most of these persons are, in fact, largely concerned, not with making superior long-term forecasts of the probable yield of an investment over its whole life, but with foreseeing changes in the conventional basis of valuation a short time ahead of the general public. They are concerned, not with what an investment is really worth to a man who buys it “for keeps”, but with hat the market will value it at, under the influence of mass psychology, three months or a year hence…
And then he goes on to conclude:
… We have reached the third degree where we devote our intelligence to anticipating what average opinion expects the average opinion to be….
Unfortunately, the 1973 edition of his book is even more relevant today than it was back in his times.
SAFT Q2 Results & Raises Q3 Dividend Monday, August 6, 2007
Posted by ei-forum in US Traded Stocks.add a comment
SAFT keeps on delivering and raises dividend. Our outlook remains the same: press release.
Market Expert: Stock Selection! Monday, August 6, 2007
Posted by ei-forum in Investing Humor.add a comment
Next Monday, we will look at client selection …
Thought of the Day Friday, August 3, 2007
Posted by ei-forum in Miscellaneous.add a comment
The markets keep on experiencing violent swings and unfortunately, this is not a new phenomenon and it is not the last time it will happen. How is it possible that a stock can be down 15% during a session on absolutely no news? Well, this is largely due to the psychology surrounding the markets and investor fears.
We would like to stress that the Enterprising Investor should always remember that there are real companies, operated by real people and selling real products behind those ticker symbols … unless something has happened to the company (rationally speaking) it is not possible that the business is worth, say, 15% less after a couple of hours in the trading day.
Keeping with the above, please find hereafter a selection of quotes to help guide us in these turbulent times:
- Peter Lynch: “I think you have to learn that there’s a company behind every stock, and that there’s only one real reason why stock go up. Companies go from doing poorly to doing well or small companies grow to large companies.”
- Benjamin Graham: “A serious investor is not likely to believe that the day-to-day or even month-to-month fluctuations of the stock market make him richer or poorer.”
- Warren Buffett: “Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.”
- John Maynard Keynes: “Markets can remain irrational longer than you can remain solvent.”
For more, please visit our words of wisdom page: link.
OPWV Upgrade Friday, August 3, 2007
Posted by ei-forum in US Traded Stocks.add a comment
Link to Briefing.com: here.
OPWV 4th Quarter Results – Links Thursday, August 2, 2007
Posted by ei-forum in US Traded Stocks.add a comment
Some interesting reading.
- Revenue Increases Sequentially; Book-to-Bill at 1:1
- Link to article: here.
- Still a takeover target:
- Link to article: here.
- Openwave Strengthens Product and Sales Executive Leadership
- Link to article: here.
Investing in troubled times Thursday, August 2, 2007
Posted by ei-forum in Investing, US Traded Stocks.add a comment
The Enterprising Investor is always on the lookout for value and always ready to be greedy when others are fearful. Despite the fact that we feel that the current correction is far from being over, we encourage investors to make a shortlist of stocks which they would have loved to buy but just didn’t manage to do so at reasonable prices.
Once you have made this list, track these stocks and identify what price you would be comfortable paying for a share in the business: as a long-term investor, you main concern should be to buy shares at prices which you are comfortable with and not to time the bottom of the market. As Emerson said: “The great man is he who in the midst of the crowds keeps with perfect sweetness the independence of solitude.”
For example:
- you may have been following Goldman Sachs (GS) and kicking yourself for not having bought some shares. This is a great company with extremely solid fundamentals and a money making machine with an impeccable track record and pedigree. Do you feel the correction that Mr. Market has applied to the whole financial sector is justified for Goldman who is now trading at a multiple of under 10?
- or had you been following USG Corporation (USG) only to see it spike after news of the big position Warren Buffett had taken in the company? Despite the fact that Berkshire reduced the stake, did you know that they were buying shares all the way down to 46 USD… they might still be buying….
The bottom line is, don’t panic, keep your thinking hats on and keep on doing your homework!
Heliad Equity Partners Wednesday, August 1, 2007
Posted by ei-forum in EU Traded Stocks.2 comments
With all the recent negative press surrounding the Private Equity sector, some readers may be surprised to see us writing about an interesting opportunity in this sector. Furthermore, this is also our first post about a European traded stock!
Heliad Equity Partners (HPB.DE) is an investment concern that focuses on companies in predominantly German-speaking countries. It invests in companies that are undergoing a strong growth phase or that are in a special situation. Its goal is to generate an above-average risk/return ratio for its shareholders. With Heliad Equity Partners, investors can participate strongly in the growth prospects of traditional German SMEs as well as rising German technology companies. Moreover, they just announced their biggest investment to date in SHB ( which with its subsidiary) is the German market leader for savings plans based on closed funds. The company focuses on the real estate investment class, which is a very strategic investment due to the fact that experts agree that the German real-estate market has lagged other European countries and is due to spike.
It is always difficult to look at ratios for this kind of company but here is a quick overview of some interesting numbers:
- P/E Ratio: 3.85
- P/Book: 0.86
- BookValue: 1.29
- ROA: 18.68%
- ROE: 20.92%
- Net Margin: 65.18%
- Operating Margin: 65.18%
We feel that the shares have been unjustly punished due to the recent campaign against the Private Equity sector and also due to recent market conditions. Despite the fact that some deals will suffer, we think that the more established firms have already factored recent events into their deals and will still be able to drive the business forwards. Furthermore, investors shouldn’t forget the effect that past deals will have on future earnings.
Heliad shares closed yesterday at 1.05 Euro and the latest Net Asset Value per Share is of 1,36 Euro. We are sure that when 2nd Quarter earnings are reported on August 31st, investors will see continued strength in this company.
This is a company with a strong track record that keeps improving every day. We strongly encourage you to do some research and find out for yourselves … a great place to start is by reading through the annual reports in chronological order to really see the step changes that this company keeps on making.
Here is a link to all analyst reports and research issued on the company: Link. Most recent reports have a Buy rating with a 1,90 Euro target price.
For a closer look at the company, please visit www.heliad.de.
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