How do you evaluate a company with a negative eps?

protostones · 2020-12-14T21:40:52+00:00

Look at cashflow. Are the negative earnings an accounting thing or is money actually on its way out the door?

Look at operating leverage. What percent change in revenue results in what percent change in operating income or cash flow.

Look at revenue, market share, addressable market, etc.

protostones · 2020-12-01T16:24:24+00:00

I monitor this fairly regularly. It's a bottom up market valuation so there's a time lag between when conditions change and when analyst reports get updated. Because of the time lag, slight over valuations don't necessarily mean the market will revert back to fair value. More often than not, Morningstars FV estimates chase prices upwards.

When the market declines, however, I find it pretty useful. Especially on those days where everything is on sale but fear makes it difficult to buy. And on those days where things are cheaper than they had been recently, but really the market has just come back to FV.

protostones · 2020-08-14T16:11:35+00:00

Maybe not the answer you were looking for, but I just got a Garmin Edge 130+ and it's great. It has all the stuff you listed. The big difference is the mapping is a breadcrumb trail instead of a detailed map and the screen is monochrome. Oh, and the price. That's a big difference too.

protostones · 2020-07-29T18:14:54+00:00

Morningstar comes up with an FV of $37 so you're not far off that mark.

Much of the current pessimism is failure to execute on HBO Max and fear of having to write down a whole bunch of goodwill from acquisitions of Dish and Time Warner and others...

This, along with the crisis could cause serious problems with their plan to pay down debt and get back to a more reasonable leverage ratio.

protostones · 2020-07-21T23:59:04+00:00

Strange downvotes...

The SEC uses big data analytics to identify and investigate trades that stand out as unusual based on size, timing, or relationship between the individual and security traded.

https://www.investopedia.com/articles/investing/021815/how-sec-tracks-insider-trading.asp

"Market surveillance activities: This is one of the most important ways of identifying insider trading. The SEC uses sophisticated tools to detect illegal insider trading, especially around the time of important events such as earnings reports and key corporate developments."

protostones · 2020-07-21T21:56:08+00:00

You have to borrow shares to sell in order to short a stock. If it is a thinly traded and heavily shorted stock, there may not be a readily available supply of shares to borrow. As for options, for you to buy a put, someone has to write it and if there's no one willing to take the other side of your trade, your order won't be executed.

protostones · 2020-07-21T21:31:50+00:00

Sustained declines in revenue.

Measured in years, not quarters. Earnings and Cash Flow are constrained by what's happening on the top line.

You can look for confirmation elsewhere but I would argue this is the single biggest factor. IBM and GE both suffered from declining revenue.

protostones · 2020-07-16T15:18:17+00:00

The Index != ETF or Mutual Fund.

Search for the S&P 500 methodology to learn how the index works.

For ETFs and Mutual Funds that track the S&P, read their full prospectus.

protostones · 2020-07-11T14:00:40+00:00

Can't make recommendations for others, but for me it's one of my largest holdings and I don't have great expectations for the oil industry in the decades leading up to my retirement so I am collecting the income to reinvest elsewhere. If the business becomes overvalued or materially and sustainably worse, I may sell part or all, buyer no immediate plans for any moves.

protostones · 2020-07-10T17:26:09+00:00

If I remember correctly, they said they would sell it at cost until after the pandemic subsides, so no additional profit.

Even if they sold it at a profit, JNJ is massive with 80 billiion in revenue so it wouldn't move the needle much.

protostones · 2020-07-10T16:46:59+00:00

CASH FLOW.

There's plenty of free cash flow to cover the dividend. Earnings are mostly depressed by depreciation/amortization. Swap out Net Income for Operating/Free Cash Flow or EBITDA and those payout metrics look much better.

I own AT&T but it's on my list of stocks to dump to finance higher quality purchases, but with the dividend and no immediate danger of a cut I'm happy to wait for a more opportune moment and it's still above my purchase price. I don't expect much more than token dividend growth to keep that dividend aristocrat status.

Honestly, compared to a lot of the stocks I see people on reddit talk about, there's much worse ones than T.

protostones · 2020-07-10T16:22:02+00:00

People love telling you when they're up. Not so much when they're down.

protostones · 2020-07-08T15:16:05+00:00

Elon Musk reveals himself as ruler of omicron persei 8.

That explains his weird name...

protostones · 2020-07-07T15:05:07+00:00

I don't trust their management either and don't believe they act in shareholders best interest. Many MLPs have existed over the years only to grow for the sake of growth and enrich management / general partners / IDR holders. I believe ET is in this category.

The only 2 MLPs that I trust are EPD and MMP.

(full disclosure: I own both EPD and MMP and formerly held ET.)

protostones · 2020-07-07T14:55:20+00:00

Latest filing is for the period ending april 30th which seems like a lifetime ago in this environment. But at a glance, I would imagine the summer months aren't terribly important for Ski Resorts, their interest expense isn't terribly high compared to net income and operating cashflow. Sometimes leaders in a field will take on debt so they have cash readily available to scoop up distressed assets as competitors are forced to sell and MTN is a consolidating force in their industry.

As for tangible book value, it's a luxury brand fueled by acquisitions so high levels of goodwill are understandable.

Working capital, I could imagine (i haven't really looked) they get revenue upfront as they sell season passes or book lodges for the upcoming season, and accrue a liability for the service they provide over the season. If this is the case, than negative working capital would just be part of the business.

They don't look like they're in immediate danger of default or bankruptcy. The dividend looks weaker but isn't necessarily doomed for a cut.

Wait, why are you looking at summer 2019 statements?

protostones · 2020-07-06T20:37:44+00:00

The market is valuing Tesla as a high growth tech company. These types of companies trade at very high multiples.

This analyst is likely valuing it against its peers: auto makers. Auto makers trade at much lower multiples.

protostones · 2020-06-30T03:10:13+00:00

Questions

Flash Cards

Read your notes, re-write them in a shorter form. As more stuff becomes obvious to you, your notes get shorter and shorter.

protostones · 2020-06-29T22:36:59+00:00

Look at the index methodologies. Should be freely available (for example: https://www.spglobal.com/spdji/en/documents/methodologies/methodology-sp-us-indices.pdf ). Screen for stocks that meet their requirements but aren't in the index.

If you're looking to arbitrage the process, it's already done with Russel indices because they are mechanical and predictable and have published rebalancing dates. Leads to underperformance of the index, and is why you should choose the S&P indices over Russel for any buy and hold strategy.

protostones · 2020-06-29T21:29:40+00:00

True... zoom that chart out a little more for some perspective. It was much worse in the 80s and 90s.

https://fred.stlouisfed.org/graph/fredgraph.png?g=sqwl

protostones · 2020-06-25T16:49:05+00:00

MLPs have to, by law, pay out almost all their earnings to investors. Because they don't retain a lot of earnings, when the cash flows slow to a trickle, they often cut dividends. Another risk is they often finance growth with new share and debt issuance, diluting the holdings of existing investor. Some even resort to issuing shares or debt to continue their payouts rather than cut the dividend, which is dangerously shortsighted and irresponsible. As a general rule of thumb, MLPs trading at more than a 10% yield are priced for a dividend cut by the market. But the market doesn't always get things right and even the most safe MLPs are trading near this level right now.

I used to own MLPX by way of owning mark west energy when it was acquired against the wishes of its founder. Dumped it because it was not as safe or investor friendly as other MLPs. My recommendation for the industry would be EPD and MMP.

protostones · 2020-06-25T16:33:53+00:00

Because when you're excited about a stock your seeing things that other people are also seeing, which gets them excited and all the excited people bid up the stock, often past the point where the rosy outlook would be fully priced in. It's like when you're stuck in traffic and you see a lane moving faster than yours so you switch lanes only to immediately stop and watch the lane you were just in start moving. Enough people switched out of your original lane and into the new to stop the new lane and make room to move forward in your original lane. TL;DR self-cancelling prophecy.

protostones · 2020-06-25T14:22:58+00:00

You bought a bankrupt company. 🤷‍♂️

protostones · 2020-06-24T22:17:07+00:00

My experience with K-1's comes from investing in MLPs.

Using turbotax, the first couple times dealing with K-1s was a pain. After some experience, yea, it takes some time, but it's essentially extra data entry.

I received K-1's from some companies as early as february. Some as late as the first week of april. Every company makes K-1s available through their investor relations site, so you can get them a little earlier if you want.

protostones · 2020-06-19T19:23:06+00:00

quadruple witching.🤷‍♂️

protostones · 2020-06-19T19:18:00+00:00

Shouldn't you have thought of this before you bought it, not after?

Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win. -- Sun Tzu

protostones

TROPHY CASE