In 2012 Robert Novy-Marx wrote the paper The Other Side of Value:The Gross Profitability Premium. You could say that it is an attempt to test the hypothesis of Charles Munger and Warren Buffett that it’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price. The Gross … Continue reading The Profitability Factor
Tag: accounting
Black Diamond 3Q2011 Results
This caught my eye in the 3Q2011 10Q form of Black Diamond Inc: Here´s the explanation: This means that the earlier accounts give a wrong image of the gross margins of the newly combined companies. It kind of makes you wonder if they did this on purpose. As this was not an IPO but a … Continue reading Black Diamond 3Q2011 Results
Leucadia Management on Net Operating Loss (NOL) and Deferred Tax Assets
Leucadia National Corporation was a New York based holding company, founded by the acclaimed value investors Ian Cumming and Joseph Steinberg. After a merger with Jeffries Bank and the retirement of Cumming and Steinberg, the holding company was renamed into Jeffries Financial Group. Turnaround Investors To most Value Investors, Leucadia is a household name. As … Continue reading Leucadia Management on Net Operating Loss (NOL) and Deferred Tax Assets
Bruce Berkowitz on Accounting for Debt
From a transcript of Bruce Berkowitz AAII presentation from June 1, 2011: It’s not easy; it’s a painful process. You climb this wall of worry eventually over a multi-year period. You get sharp drops like we had today in the market-place. You have to deal with this crazy accounting that companies have now. The companies … Continue reading Bruce Berkowitz on Accounting for Debt
Changes in Lease Accounting
A lease is a contractual agreement between an owner of an asset and a counterparty that intends to utilize that asset in exchange for periodical payments. Examples of assets, often used in lease agreements are real estate, ships, aircraft and cars. Types of Leases There are two general types of leases: operating leases and financial … Continue reading Changes in Lease Accounting
Nugget: Biglari on taxes
An exerpt from the 2010 Annual Report of Biglari Holdings (link): "In the long run, all gains — realized and unrealized — are essential to the value of the company. But the timing of realizing gains or losses does not impact business value. Therefore, we do not realize gains or avoid realizing losses in order … Continue reading Nugget: Biglari on taxes
Martin Whitman on GAAP accounting
One investor that I closely follow is Martin Whitman of Third Avenue Funds. He is a classic Graham-ist with some very interesting opinions on investing. Here is a short quote on accounting: ER: You’ve been quoted as saying that it is still possible to find Ben Graham’s “net-nets”, is this still true? MW: Yes. However … Continue reading Martin Whitman on GAAP accounting
Marty Whitman´s four sources of wealth for the value investor
The following conjecture is an excerpt from a Barron´s interview with Martin Whitman of Third Avenue Funds. Mr. Whitman is a legendary value investor who has a very interseting approach to value investing. Whitman is very critical on GAAP and which he thinks is exessively geared towards flows as opposed to net asset values. Anyway, … Continue reading Marty Whitman´s four sources of wealth for the value investor