Downside First
I find the losses the numbers don’t show: in the accounts, in the price, and in risk models that treat a loss like a gain.
Despite widespread claims of speculative excess, gold prices are supported by a durable macro regime characterised by geopolitical fragmentation, fiscal constraint, and elevated tail risk. In such an environment, historically high gold prices are not...
Closed position on 27 October, 2025, with a -8.1% return, and then re-opened the position on 17 December, 2025. Australian gold and copper producer, Greatland Resources Limited (ASX:GGP: A$8.30 per share) joins Apex Mining...
Closed position on 27 October, 2025, with a -8.2% return. As I noted in my thesis on Apex Mining Co., Inc. (PSE:APX), Gold mining has historically been a poor way to capture gold’s value...
Closed position on 27 October, 2025, with a 14.4% return, and then re-opened the position on 17 December, 2025. Gold mining has historically been a poor way to capture gold’s value, with overinvestment, low-quality...
Recently, I have found value in banks, specifically, JPMorgan Chase & Co. (JPM), and Lion Finance Group PLC (LON:BGEO), and now, with Danish regional bank, Ringkjøbing Landbobank A/S (CPH:RILBA, 1400 kr.), the subject of...
“Fish big enough to swallow a boat are not found in ditches.” Yang Zhu At a time of record-high U.S. equity preference, evidence of some diversification away from the U.S., and dollar weakness, Lion...
In a period of regime uncertainty, JPMorgan Chase & Co. (JPM: $288.19/share) is not only a paradigmatic bank, with a history of profitability stretching back decades,and a “fortress balance sheet”, it is also an...
(This investment thesis also appears on the buy-side investment platform, SumZero1.) The choking uncertainty around U.S. economic policies caused me to abandon Meta Platforms, Inc. (META: $592.49/share) with all the grace of a dog...
Position closed on 13 May 2025, at a loss of 1.4%. Orge Enerji Elektrik Taahhüt Anonim Sirketi (IST:ORGE, ₺108.20/share) is a compelling investment opportunity within the Turkish electrical contracting and renewable energy sectors. Orge...
Victory belongs to the most persevering. Napoléon Bonaparte Companhia de Saneamento Básico do Estado de São Paulo – SABESP (BVMF:SBSP3: R$109.01/share), Brazil’s largest water and sanitation utility, serving 28.1 million people with clean water...
Just before I had a chance to take a position on ProShares Ultra VIX Short-Term Futures ETF1 (UVXY) for the second time, President Donald Trump announced a 90-day pause on additional tariffs2, and the...
This thesis, which also appeared on SumZero1, became un-actionable within moments of my writing it up, as President Donald Trump announced a 90-day pause on additional tariffs, which meant markets would go up. However...
Daniel Bernoulli’s paper, “Exposition of a New Theory on the Measurement of Risk”1 is, perhaps, the greatest theory of risk ever told. First published in Latin2 in 1738 in the Papers of the Papers...
Initiatd on the 4th of April 2025, this position was closed on the 8th of April 2025, from a sense that the market had baked in the likelihood of China’s non-compliance with President Donald...
This investment thesis also appeared on the investment platform, SumZero1. The thesis was closed on 24 April 2025, with a pair return of 8.15%. There are decades when nothing happens; and there are weeks...
I recently published an investment thesis exclusive to the investment platform, Seeking Alpha, where I will be covering recent and forthcoming initial public offerings (IPOs). The article is on the Hong Kong-based civil engineering...
This investment thesis also appears on the SumZero platform1. Initiated on the 24th of March, I closed the position on 4 April 2024 with a total shareholder return (TSR) of -18.44%. The new tariff...
This investment thesis also appears on the SumZero platform.1 ANY Biztonsági Nyomda Nyrt.1 (BUD:ANY: 5,960 Ft/share) is a leader in the security printing industry in Hungary and a growing player in Central and Eastern...
This investment thesis also appears on the SumZero platform1. AS Merko Ehitus (TAL: MRK1T), the largest listed construction company and residential real estate developer in the Baltics, earns a Very Attractive rating based on...
This investment thesis also appears on the SumZero platform1. Nigeria’s largest palm oil producer, Presco plc (NGX:PRESCO) earns an attractive rating according to my stock rating methodology, driven less by price than the power...
This investment thesis first appeared on SumZero1 on 27 December 2024, when the position was initiated. It was closed on the 4th of April 2025, with a total shareholder return (TSR) of -4.91%. Steel...
In his paper, “The Nature of the Firm”1, Ronald Coase proposed that firms exist because there are transaction costs to organising economic activity through the price mechanism such that when they exceed the benefits...
Initiated on the 15th of October 2024, this position was closed on the 4th of April 2025 with a total shareholder return (TSR) of -31.3%, a victim of market mayhem. Nucor Corporation (NUE: $152/share)...
Initiated on the 9th of October 2024, CMC, a victim of market mayhem and concerns about near-term profitability, the position was closed on 4 April 2025, with a total shareholder return (TSR) of -21.24%...
I published an update on this investment thesis on 23 December 2024 on SumZero1. Opened on the 4th of September 2024, the position was closed on the 31st of March 2025, with a total shareholder...
Amidst a global stock sell-off, Meta Platforms' Q2 earnings proved an excellent redoubt, reminding investors of the firm’s remarkable growth and profitability. If Mark Zuckerberg’s present dalliance with generative AI turns out to be a more expensive...
Using a model I built to forecast 10-year S&P 500 total returns leads to an awful number: 1.16%, the average total returns that are likely, if the predictive value of the model holds, over the 2024-2033 decade, a return lower than that available by...
Superficially, a valuation methodology exists to help an investor estimate, within a reasonable range, how much something is worth. Investing, however, is not merely an intellectual exercise. The fundamental problem that an investor faces...
An investment is a choice to foregore present consumption in favour of future consumption, in exchange for which the investor is given a return which can simply be referred to as “interest”. The interest...
Free cash flow (FCF) is the cash that is available to all investors, whether debt holders or shareholders, after taxes have been paid. This is the after-tax cash flow that would be earned if...
Annual reports are not merely long, and complex, with often abstruse language that seems calculated to befuddle the reader, they are also structured in ways that unintentionally disguise operating performance. To start with, financial...
Annual reports are not merely long, and complex, with often abstruse language that seems calculated to befuddle the reader, they are also structured in ways that unintentionally disguise operating performance. To start with, financial...
Unconsolidated subsidiaries, also referred to as investments in associates, investments in affiliated companies, and equity investments, are businesses wherein a firm has a significant stake that falls short of control, which equates to a...
Firms use a portion of their cash and cash equivalents and investments as operating cash for the running of the business, and any cash beyond this amount is excess cash and a non-operating asset...
The logic of discontinued operations is that they are not a component of core operations and therefore, not only do their earnings not belong in a calculation of net operating profit after tax (NOPAT)...
Deferred compensation is that portion of employee compensation that has been set aside for future payment. Firms create plans to manage the assets that will be used to settle these liabilities. Consequently, deferred compensation...
Deferred tax accounts arise because of differences in how firms and the government account for taxes. For example, whereas the government uses accelerated depreciation to calculate taxes owed, firms employ straight-line depreciation. The taxes...
As I discussed in “Overfunded Pension Plan Assets, an Invested Capital Adjustment”, under SFAS 158, companies are obliged to report the net funded status of their pensions, which is the difference between the fair...
The adjusted total debt of a firm is the sum of the fair value of all its short and long-term obligations, on-balance sheet and off-balance sheet. For example, in 2023, the combination of Meta...
When a company has majority control of a subsidiary but does not own 100 percent, the entire subsidiary must be consolidated on the parent company’s balance sheet. The funding other investors provide for this...
Preferred stock is a form of hybrid financing that has the qualities of both equity and debt. In terms of claims on assets and cash flows, preferred stock is senior to ordinary shares, but...
Deferred compensation is that portion of employee compensation that has been set aside for future payment. Firms create plans to manage the assets that will be used to settle these liabilities. Consequently, deferred compensation...
Effective 2005, the IASB required employee stock options (ESO) to be expensed in the income statement, with the FASB following a year later. Until then, firms could treat ESO compensation as if it was...
Unconsolidated subsidiaries, also referred to as investments in associates, investments in affiliated companies, and equity investments, are businesses wherein a firm has a significant stake that falls short of control, which equates to a...
When a company is bought, its purchase price, debts and other long-term liabilities are fully absorbed by the acquirer’s balance sheet. However, only the income it earns for its acquirer is added to the...
The Financial Accounting Standards Board (FASB) eliminated goodwill amortisation from 2002 and the International Accounting Standards Board (IASB) followed in 2005. Before that, goodwill, the capitalised value of the excess of purchase price over...
Firms use a portion of their cash and cash equivalents and investments as operating cash for the running of the business, and any cash beyond this amount is excess cash and a non-operating asset...
This Statement improves financial reporting by requiring an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its...
Deferred tax accounts arise because of differences in how firms and the government account for taxes. For example, whereas the government uses accelerated depreciation to calculate taxes owed, firms employ straight-line depreciation. The taxes...
Asset write-downs occur when the fair value of an asset, what it would fetch on the market, falls below its carrying value, the cost of an asset less accumulated depreciation or amortisation, forcing the...
Accumulated other comprehensive income (OCI) is a sea into which various unrecognized gains and losses are poured. In the United States, largely consists of currency adjustments, unrealized gains and losses on available for sale...
Under both IFRS and US GAAP1, assets and liabilities held for sale are reported separately on the balance sheet and their income and loss from them, or the result of their sale, are reported...
Companies create reserves in anticipation of probable future costs or losses whose amounts can be reasonably estimated, as happens with inventory reserves and loan-loss provisions, or, in order to ensure comparability across accounting methods...
Taxes incorporate operating, non-operating and financing items. One wants to assess the core operations of a business, free of any financing effects, in order to estimate net operating profits after tax (NOPAT), and so...
These are the result of currency revaluations or devaluations and do not appear on the face of the income statement. These currency fluctuations force firms to assume non-recurring charges or gains. An example is...
Reported net non-operating charges and gains are those non-operating items reported on the face of the income statement. According to the paper, “Core Earnings: New Data and Evidence”1 by Ethan Rouen, Eric So, and...
The Financial Accounting Standards Board (FASB) eliminated goodwill amortisation from 2002 and the International Accounting Standards Board (IASB) followed in 2005. Before that, goodwill, the capitalised value of the excess of purchase price over...
Under both IFRS and US GAAP1, assets and liabilities held for sale are reported separately on the balance sheet and their income and loss from them, or the result of their sale, are reported...
While operational excellence should be the lodestar guiding managers, there is a great temptation to use reserves to manage earnings. In order to ward off the effects of earnings management, ensure comparability across business...
Firms, in order to attract and retain talent, offer one of two kinds of retirement plans for their workers, the defined benefit plan, and defined contribution plan. A defined benefit plan, as the name...
Non-operating income is the complement of non-operating expenses, and are special items and one-time earnings that are not reported on the face of the income statement, and are instead hidden in other line items...
Non-operating expenses, such as asset write-downs, which I discussed in a separate post, are special items and one-time charges that are not reported on the face of the income statement, and are instead hidden...
Asset write-downs are nothing short of shareholder destruction. If wealth, as I contend, tends toward destruction in the long run, an investor has two choices: not to invest, or, to do something that shifts...
The reader should read this post in conjunction with a Google spreadsheet1 I have created on Meta Platforms’ operating, variable, and not-yet commenced leases. If wealth, as I contend, tends toward destruction in the...
What follows is a framework for understanding digital firms, a framework that emerged as I edited an article on Meta Platforms, an article to be posted next week Tuesday. There are three main elements...
Risk is inextricably bound up with wealth destruction, and yet, risk measures are agnostic, treating risk as if investors are indifferent to gains and losses. This tortured contradiction is recognised by investors and managers...