Well, it’s official: Fairpoint has filed for bankruptcy. As Moyer’s Distressed Debt Investing states, the actual filing of a Chapter 11 is never a surprise. Although it may seem curious that its creditors reduced the size of their claim from 2.7 billion to 1 billion, the reality is that the creditors are going to become […]
I may be in the minority among the financial community and the public, but I do not assign any mystical economic or investing qualities to China or any of the companies in it. There was a similar hysteria in the 80s over Japan, and we all recall how that ended. I find it similarly unlikely […]
Warren Buffett once wrote that in financial analysis, having an IQ above 125 is wasted and that success in investing is largely a matter of temperament. This tells us two things, one, that the world’s greatest investor thinks that dispassionate adherence to investing principles is more important than fancy quantitative models, and two, that Warren […]
Damodaran on Valuation claims that unnecessary financial assets, such as stocks or bonds or other securities of other corporations, have no effect on a company’s valuation, since the risk-adjusted discounted cash flow they produce is equal to their present value, so there is no incremental benefit to owning them or decremental drawback from getting rid […]
Those of you who watch Jim Cramer, of whom Seth Klarman said that he is a symptom of everything that is wrong with the financial world nowadays, will recall that last week he expressed approval of the safety of Windstream’s dividend. He also mentioned Fairpoint Communications (FRP), after qualifying his remarks with the fact that […]
Some of you may recognize our old friend the yield hog from the Windstream article, but we should ask ourselves what a dividend signifies. For bonds, yields are typically all we get, but for stocks? True, a big dividend yield will amortize our margin balance if we choose to buy on margin, but as Seth […]
According to the news, the FDIC’s insurance fund is in danger of being totally drained. The article’s author speaks of several strategies that can be used to shore it up, which is borrowing money from banks, from the government, or by levying a special fee on banks. The article portrays all of these as risky […]
As you may recall, I commented on the dangers of being a yield hog, which is a constant temptation for those of us who seek investments that produce high and sustainable cash flows. Sustainable but not high is not good enough, and high but not sustainable is even worse, because when the cash flow runs […]
I suppose the ideal solution for me would be to align this blog with a subscription newsletter. Telling you what to buy would be free, but telling you when to sell would cost you. Since that strikes me as a little mercenary, I’m telling you all that I’m out of CMO. If you’ll recall, I […]
Benjamin Graham wrote in Security Analysis that a great deal of financial analysis involves recasting financial reports to get a full sense of a firm’s baseline ability to produce earnings. A lot of the process involves removing nonrecurring or irrelevant events from a single year’s results, as we did with LINE’s profits on its derivatives. […]