Posted by Sky Soo > 2020-02-09 12:45 | Report Abuse

I am interested in ways of identification of quality businesses to invest for long term in your eBook. Please send to me. Thank you.

Posted by kcchongnz > 2020-02-09 22:41 | Report Abuse

Posted by Sky Soo > Feb 9, 2020 12:45 PM | Report Abuse
I am interested in ways of identification of quality businesses to invest for long term in your eBook. Please send to me. Thank you.

Email me at ckc15training2@gmail.com

Posted by GoldPlus > 2020-02-09 23:12 | Report Abuse

Hi Kcchongnz, do you have hardcover book? I didn’t found it at Popular book store.

Posted by kcchongnz > 2020-02-09 23:37 | Report Abuse

You can make an order through me. Please email me at ckc15training2@gmail.com

Posted by supersaiyan3 > 2020-02-10 04:38 | Report Abuse

Warren also talks about "improving economics" and "deteriorating economics".

Favco has deteriorating economics before and now the tide has certainly changed.

Posted by Nonare > 2020-02-12 17:39 | Report Abuse

The equity component is quite unreliable, isn't it?

Example 1:
Maxis has total assets of 19.8bn and total equity of 7.1bn. But most of its "assets" is from 10.7bn of "spectrum rights", parked under Intangibles, which was capitalized and not amortized. If you knocked this out, the total assets drop to 3.6bn and the equity goes negative.

For comparison, Digi which also owns spectrum only capitalize 0.6bn. Digi revenue 6.5bn vs Maxis 9bn so size cannot account for such a big discrepancy in "assets". Also how can asset be capitalized in perpetuity especially for something like spectrum rights which is a national property and which is subject to bidding and reassignment to successful bidders.

This just highlights how unreliable the equity number is.

What is Maxis real equity? 3.6bn or negative?

(All numbers based on 2018 annual reports.)

Example 2:
BAT has ROE > 100% every year. Is this a quality company? IF you bought it in 2014 when the ROE was 172%, over the next 4 years, you would have witnessed the income dropped from 1.2bn to 0.6bn. And we are not talking about valuation here. This discussion holds even if there no stock market to trade.

My point is the equity number, being the single residual number in the accounting equation, is a summation of all the accounting shenanigans that management undertakes from spuriously capitalizing cost (without amortization to escape hit to P&L), hiding stuff in goodwill, share buybacks, etc.

All accounting shenanigans will always hit one line item. The equity.

Posted by stockraider > 2020-02-12 17:56 | Report Abuse

POINT TO PONDER LOH ???

1.THIS HYPOTHESIS SAYS THAT HIGH ROE MEANS HIGH RETURN ON CAPITAL THUS GOOD QUALITY BUSINESS LOH...!!

2.THIS HYPOTHESIS SAYS THAT LOW ROE MEANS LOW RETURN ON CAPITAL THUS POOR QUALITY BUSINESS LOH....!!

GENERAL THE ABOVE IS CORRECT OBSERVATION & RAIDER AGREEABLE MAH...!!
BUT THERE ARE EXCEPTION LOH....!!

A. IT IS NOT APPLICABLE TO TURNAROUND STOCK THAT STEALTHLY WILL SHOW HUGE EARNINGS TURNAROUND UNSEEN FROM THE REAR MIRROR LOH...!!
ONLY THOSE LOOKING AT THE BUSINESS DYNAMICS WILL HAVE A FEEL THE SHARP RECOVERY COMING LOH...!!

B. WHEN THE IS ELEMENT OF ADJUSTMENT OF VALUE EQUALIZATION THRU PE HANDICAPS REBALANCING LOH...!!
HIGH ROE COMPANY USUALLY TRADE AT HIGH PE DUE TO PERCEIVE QUALITY
LOW ROE COMPANY USUALLY TRADE AT LOW PE DUE TO PERCEIVE QUALITY .

THUS U CAN BUY INSAS AT PE 8X AND WHEREAS U PAY PE 50X FOR QL LOH..!!

THIS DOES NOT MEAN HIGH ROE COMPANY IS A SURE WINNER AGST LOW ROE COMPANY, IT ALSO DEPEND ON THE EQUALIZATION OF PE ADJUSTMENT MAH..!!

IN ORDER WORDS ARE U OVERPAYING FOR YOUR STOCK LEH ??

OR ARE U BUYING AT HUGE MARGIN OF SAFETY AGST ITS VALUE LEH ??

Posted by kcchongnz > 2020-02-13 00:05 | Report Abuse

Posted by Nonare > Feb 12, 2020 5:39 PM | Report Abuse
The equity component is quite unreliable, isn't it?

As Maxis depends on its spectrum right for its earnings and cash flows, and it is its major asset, why would you want to "knock" it off from its assets, though it is "intangible"?

In BAT's case, the future R in its ROE is structurally and adversely affected by black market and statute, and hence its future earnings expectation. This thing does happened and there certainly will have some exceptions due to various reasons.

However, we can't conclude that the use of ROE is of no use by just two examples, or may be a few more. We have to look at as much data as possible. For example, rank the ROEs of many companies, and see if those in the upper half or quartile had produce excess return.

I believe if you do that, you can make better and more accurate conclusion.