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 Understanding Those Corporate Reports |
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大亨
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加入时间: 2004/03/21
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作者：大亨 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
Understanding Those Corporate Reports
Author Tom Taulli offers tips for getting investment guidance from financial statements, which are becoming increasingly complex
Since the accounting scandals, corporate reports aren't necessarily cleaner -- but they're longer. So says Tom Taulli -- analyst, educator, and author of investment books, including the recently published Edgar Online Guide to Decoding Financial Statements. As a precaution, he adds, companies are disclosing more rather than less, and this could make it harder for investors to understand the numbers.
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Taulli suggests that in studying a company, investors should look for revenue growth and gross profit margins, as well as whether or not revenues come from high- or low-margin goods and services. He also urges investors to have a selling discipline.
These were among the points Taulli made in an investing chat presented Apr. 8 by BusinessWeek Online on America Online, in replying to questions from the audience and from Jack Dierdorff and Karyn McCormack of BW Online. Following are edited excerpts from this chat. A complete transcript is available from BusinessWeek Online on AOL at keyword: BW Talk.
Q: What should investors be looking at as companies report results: revenue growth, margins, or what?
A: I look at everything, and I'd like to see revenue growth -- not necessarily huge revenue growth, because in many cases it's very difficult to sustain this...but I do like to see companies that are top in their industry group. These tend to continue to be good companies.
The second thing I look at is gross profit margin. The higher the better -- there's more room to play with for the company.... And when looking at the financial statements, I want to see, if possible, the complexion of the revenues. Is the growth coming more from high-margin goods or services, or lower-margin, which could put pressure on the company down the line?
Q: Your new book is The Edgar Online Guide to Decoding Financial Statements. When you look at current numbers, what sectors or stocks do they lead you to?
A: I tend to have a bias toward technology. The primary reason is that it's an area I follow quite a bit, and as a day-to-day activity I spend most of my time with technology. In investing, you should use whatever knowledge and expertise that you have, and I think I know a good deal about the area.
I go into areas outside my expertise for defensive purposes.... I like some of the new subscription models in software applications.... I do put some of my money in blue-chip stocks, such as health-care or consumer-type stocks, but I like to balance that out by speculating in the growth areas, and that's usually in the tech area.
Q: What are some of the reasons you would sell a holding?
A: In terms of sell discipline, I look at many factors. Recently, I bought a stock called mama.com (MAMA ). I do like to dabble in some day trading and thought the chart looked very strong. I bought some shares at $10.50, it quickly went to $17 in a week's time, and then one morning a couple of days ago, the Securities & Exchange Commission had an informal investigation into irregular trading of the stock.
Any investigation for me is enough to sell the stock. Actually, it has gone up still and continues to do well, but anytime I see an investigation, I bail out sight unseen.
The other thing I look for is the auditor's report -- that's the third-party accounting firm that puts in their opinion on the books in the company's 10K. There's an interesting case with Trump Hotel/Casino Resort (DJT ). The company's auditors issued what's known as a "going concern." That sounds harmless, but what it means is that the auditors believe there's a chance the company could go bankrupt. That's not good news.
If I see a "going concern," I immediately sell. In the case of Trump, I'd definitely say "you're fired" to this kind of stock.... A selling discipline is extremely important for investors. I see a lof of investors who do very well picking stocks, but when the red flags go up, they don't heed them and end up selling after their positions go negative.
Q: In your decoding of financial statements, do the newest reports look cleaner because of the recent scandals?
A: The reports aren't necessarily cleaner. They're longer, because companies would rather disclose more than less. There's no penalty for disclosing too much. Companies are therefore disclosing more, and the filings are getting thicker. The ironic consequence of that is that investors may find it even more difficult to read and decipher these documents. In my book, I do have tips and techniques on getting to the bottom of the matter and sifting through the useless materials that account for most of these statements.
I do think that statements are more reliable nowadays, though, since penalities are so much stricter for the CEO and/or CFO if the statements are found to be misleading. Another thing that's important to note is that auditors...have more obligation to report everything to the companies that they're auditing, so they're liable to catch a lot more small problems before they become big problems that could end up harming investors.
Q: Are you seeing quality IPOs in the coming months?
A: Yes, I am. I would be hesitant to buy IPOs in the aftermarket, though, since valuations tend to be too high for taking the risk. I think it's possible for individual investors to get IPOs at the original price, especially if you deal with some of the brokerages that have allocations with these shares. That's something to look into, but always read the prospectuses.
I'm looking at a few attractive IPOs -- one is called Salesforce.com. It uses the subscription software model. I've actually used the product, and it has been very profitable for the company. Their technology is top-notch. It should be a good IPO and a good long-term prospect.
That's not to say all these companies are high-quality or profitable. There was a recent filing from a company called Seven -- they're a software developer in wireless. While they have good technology and very big customers, the company is still losing $12 million on an annual basis -- but only has $6 million in revenues. It's kind of the reverse of what I'd like to see in a company going public. It's almost a throwback to the dot-com stage.
This does appear to be a rare example, but be careful of what you invest in. Read the prospectus that you get from your stockbroker. I do have a section on reading prospectuses in my book and what kinds of things to look for when you're evaluating these investments.
Q: On IPOs, what do you think of Google?
A: There are many fans of the company -- I'm one of them. But don't fall in love with them. At the end of the day, they're an investment. Use the product, love the product, but when it comes time to invest, weigh the options.... I think it will be a volatile offering. I think a lot of retail investors and day traders will be involved, and it will be a wild ride. I do think it will be very highly valued as well.
作者：大亨 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
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 Understanding Those Corporate Reports -- 大亨 - (7157 Byte) 2004-4-14 周三, 01:54 (1399 reads)
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