The process of filing every year is met with dread and resignation from businesses and individuals alike. The U.S. tax code is extremely large and complex. What’s worse, even a small mistake could lead to an audit or fine from the IRS. For context, tax statutes passed by Congress into law total about 2,652 pages [...]
In 1993, Quaker Oats bought Snapple for $1.7 billion... about $1 billion higher than what most thought the company was “worth” on Wall Street. Following its previous success with Gatorade, Quaker must have thought it could replicate the formula, leveraging its expertise with supermarkets and retailers to generate great rewards for investors. However, its efforts [...]
Ames Department Stores serves as a great reminder to investors of the dangers of flawed fair value accounting. Ames was a discount retailer in the US that filed for bankruptcy in 1990. It closed well over 300 of its stores and fired 26,000 employees in an effort to pay off its creditors.
Last issue, we discussed our financial subsidiary adjustment This adjustment helps rectify the incongruence in balance sheet accounting between operating companies and their bank likefinancial subsidiaries For a bank, its assets are akin to a normal operating company’s liabilities and vice versa This is because traditional loans (which represent liabilities to a retail company, as [...]
Mitsubishi Group is a classic Japanese conglomerate. Also known as “Keiretsu” in Japanese, it is a series of cross-share holdings that form a complicated corporate structure under a single business group.
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.