The Penman-Nissim model of profitability analysis

  Stephen Penman is a George O. May Professor of Financial Accounting at Columbia Business School. He is the author and co-author of acclaimed financial valuation textbooks, such as Financial Statement Analysis and Security Valuation as well as books aimed at a more general audience, such as Accounting for Growth.  The Penman-Nissim Profitability Framework In 1999, Doron … Continue reading The Penman-Nissim model of profitability analysis

Nugget: Eddy Lampert on Same store sales (SSS)

From the 2005 Letter to shareholders: If we take a simple example of a single store, then a comparison of SSS from year to year is fairly straightforward. If a store does $1 million in sales at a 10% operating margin this year, generating $100,000 in operating profit, and does $1.1 million in sales next … Continue reading Nugget: Eddy Lampert on Same store sales (SSS)

Nugget: O. Mason Hawkins on Madison Square Garden

From the 2011Q4 letter to shareholders of the Southeastern Asset Management´s Longleaf Funds: Madison Square Garden: Based in New York, Madison Square Garden (MSG) owns one of the most valuable regional sports networks at a time when live sports content is increasingly important to traditional distributors. In addition, the company owns two of the best … Continue reading Nugget: O. Mason Hawkins on Madison Square Garden

Amit Wadhwaney on Insurance Companies during Crises

Amit Wadhwaney is a former key portfolio manager of Third Avenue Funds, who currently operates his on value-oriented hedge fund under the name Moerus Capital.  At Third Avenue, Amit Wadhwaney led the upstart of the international business at Third Avenue and was the founding manager of the Third Avenue Global Value Fund, LP, the Third … Continue reading Amit Wadhwaney on Insurance Companies during Crises

Fundamental Finance vs Value Investing

Most investors equate Fundamental Finance with Value Investing. Although all value investors are fundamentalists, not all practitioners of fundamental finance can be defined as value investors. Both approaches focus on Security Analysis and the discovery of Intrinsic Value but Fundamental Finance branches into areas such as control situations, distressed and credit investing, as well as … Continue reading Fundamental Finance vs Value Investing

Nugget: Valuation of Unfunded Pension Liabilities

Two companies that I have been following recently - Sears Holding and Post NL - have substantial unfunded pension liabilities. Here are a number of articles covering the subject: "The Value of Control: Implications for Control Premia, Minority Discounts and Voting Share Differentials" by Aswath Damodaran of Stern School of Business, June 2005 "An investment … Continue reading Nugget: Valuation of Unfunded Pension Liabilities

Investing in the Unknown and Unknowable by Richard Zeckhauser

The following excerpt comes from the essay "Investing in the Unknown and Unknowable" by Richard Zeckhauser, an American economist who has built his academic career around the study of risk management, decision sciences, investment, and policy-making under uncertainty. An Alternative View on Risk "From David Ricardo making a fortune buying British government bonds on the … Continue reading Investing in the Unknown and Unknowable by Richard Zeckhauser

Nugget: Banco Santander on Corporate Sponsorship

From the 2010 Annual Review: "Corporate sponsorships continue to be the best platform for enhancing the renown of the brand and consolidating the Bank’s positioning at the international level. The five-year alliance with the Formula 1 Ferrari team has been a complete success. The return on the advertising in the first year covered the investment … Continue reading Nugget: Banco Santander on Corporate Sponsorship