Category: Technique

How the stock market actually works

Today’s article is the first in a new series called ‘From ideas to investments’ which takes an in-depth look at how to generate investment ideas from fundamental data and develop those ideas into profitable investments. We’ll be looking at the benefits and pitfalls of stock screening and subsequent steps in developing a unique style incorporating […]

A new issue that is already a winner

Looking through the prisms of profitability, debt, cash flow, strategy and valuation, Strix may be an exception to the rule that new issues make bad investments. Finance professor Elroy Dimson and his colleagues made a startling find when they studied the long term returns of UK Initial Public Offerings between 1980 and 2014. The longer […]

AGMs – If in doubt, ask

Most companies will answer questions from shareholders and potential shareholders. At Annual General Meetings shareholders have a right to ask questions and get answers. A large proportion of listed companies report full-year results in late winter and spring because their financial year-ends coincide with the end of the calendar year in December. As surely as […]

Should investors avoid low margin companies?

Highly profitable companies can make outstanding long-term investments. Arguably, the best way to measure a company’s profitability is to compare its profits with the amount of money invested to make them. This is known as the return on investment or return on capital employed (ROCE). One person’s definition of a highly profitable business will differ […]

Putting performance in perspective

To get a grip on where a company is going you have to understand where it has come from. Fortunately, that doesn’t mean reading every annual report. Usually, it’s not enough to read the latest annual report. To understand a firm’s business model and strategy, how it makes money, how it plans to make more, […]

Checking out a company’s cash conversion

A couple of weeks ago I wrote about the issues investors faced in working out a company’s true profits. In many cases, the ways in which companies calculate their so-called adjusted profits are becoming increasingly absurd. Investors are frequently asked to ignore certain real costs so that profits are as big as possible. The harsh […]

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