It is a great compliment to say something ages like fine wine. It means that something has gotten better over the years. Over time, fine wine develops a more nuanced and complex flavor that is often thought of as higher quality. Similarly, a person who has “aged like fine wine” has gotten better over the [...]
Three months ago, in Clay Tokens, we covered the concept of excess cash… Specifically, we discussed how not all cash is created equal. As Benjamin Graham identified in The Interpretation of Financial Statements in 1937: “there is a tendency to hold more cash than the business needs.”
What does it mean to be “special”? Many folks typically think of things that imply being “better than” or “greater than” when it comes to something being “special.” Think special events, special promotions, or special athletes…
The primary focus of investors can be summarized by one word: returns. Namely, investors would love to know how much of a return they will make on the capital they invested in a given investment. Of course, this is all but impossible in practice. Instead, investors often must settle for looking back at the returns [...]
These three words are used to describe different financial concepts, from a belief that cash is more valuable than other investment tools to an emphasis on cash in analyzing businesses to the importance of cash flow for the overall health of a business.
In our most recent issue, we highlighted how M&A accounting violates the matching principle and misrepresents economic reality by consistently underreporting the profitability of an acquired company. This causes multiperiod distortionsin the acquiring firm’s income statement.
When I teach advanced accounting to up-and-coming future accountants, I have to tell the students to just memorize GAAP rules and do what the standards tell them to do.
Professor Baruch Lev is one of the foremost academic experts when it comes to analyzing the impact of deficiencies in corporate financial reporting.
Last month, we highlighted Warren Buffett and his distaste for GAAP and IFRS accounting standards. This month, we turn to another all-time great value investor the co-founder of legendary hedge fund Baupost Group, Seth Klarman—for his take on financial reporting deficiencies in general and the focus of this month’s report… inflation or more accurately, currency [...]
When Warren Buffett talks, his comments are worth listening to. And if you were not already aware, Buffett has said a great deal about problematic accounting standards.