300 hours of study boils down to 6 hours of Exam. Good luck to those making the pilgrimage out to Olympic Park in Sydney tomorrow, especially those joining me for Level 2!
Exam tips from someone who passed Level 1 (after the second time)
1. Read the question!
2. Read the question!
3. Watch your time
4. Read the question!
5. Coffee is key at the half time break. I found my mind turning to mush after the first exam so needed the coffee to help get me back into the swing.
6. Stay positive.
7. And lastly, read the question! (Seriously, the answer usually depends on the assumptions in the question....IFRS vs GAAP, Whether the investments are held for trading/until maurity etc. The first exam effort, I had a lot of problems with this as I made the wrong assumptions constantly)
All the Best!
Friday, May 31, 2013
Tuesday, May 28, 2013
David Jones Vs Myer - The Grudge match (Relatively Speaking)
So who is winning the battle of the Retail Giants? So far, both are losing, But Myer is losing less (looks like there are more Jennifer Hawkins fans in the investment community than Megan Gale/Miranda Kerr appreciators)
97% consensus in the Peer Reviewed Literature that humans are causing climate change? I'm skeptical (of the science)
From the actual research (John Cook et al 2013 Environ. Res. Lett. 8 024024)
I don't know how you can say that this is a 97% consensus? I would say its a 32.6% consensus of the Climate Peer Reviewed Literature that humans are responsible (in at least some way) for Global Warming.
For mine, this survey says more about the Research dollar. That of the politically inclined or politically financed climate research; 97.1% of that is pro AGW vs 2.9% going to anti-AGW. So much for all that money being spent by Oil Companies and Big Coal in funding think tanks and the like....not getting a great return on their investment.
Wednesday, May 22, 2013
Will the decrease in Aussie dollar lift equities? Not necesarily
Check out this graph! (daily stats from Jan4 2010 to May21 2013 - yahoo.com/finance for ASX200, rba.gov.au for Exchange rates)
Which kind of makes sense when you think about it. The Australian Dollar/US Dollar exchange rate is usually a reflection of the interest rate, economy and growth of Australia, compared to the US, two things that also factor into valuation of stocks. Also, foreign dollar inflows into the Australian sharemarket will also lift the Exchange rate, and increase the value of the ASX200 due to increased buying activity. The correlation co-efficient is pretty strong (0.69).
So if anything, a reduction in the aussie might indicate a correction about to occur on the ASX. Watch this space!
Which kind of makes sense when you think about it. The Australian Dollar/US Dollar exchange rate is usually a reflection of the interest rate, economy and growth of Australia, compared to the US, two things that also factor into valuation of stocks. Also, foreign dollar inflows into the Australian sharemarket will also lift the Exchange rate, and increase the value of the ASX200 due to increased buying activity. The correlation co-efficient is pretty strong (0.69).
So if anything, a reduction in the aussie might indicate a correction about to occur on the ASX. Watch this space!
Tuesday, May 21, 2013
Oakton Cash Flow - Where did the money come from?
Been running the ruler over Oakon, an IT services company based in Victoria. Share price has been pretty flat over the last two years. Wondering why that is when most other IT Services companies have been going great guns.
Looking over the 2012 Annual report I noticed that the cash balance had improved dramatically over the year, yet profits were down and no new debt/equity had been accessed (in fact there seemed to be capital reduction with debt extinguished and a share buy back implemented) So I did some digging.
It seems the big increase occurred as a result of a massive reduction in Receivables, specifically an entry called "Other debtors and Security Deposits". This entry had $17 million in it in 2011, but in 2012, it went down to $3.7 million, a reduction of $14 million in a year. When this 14 million is likely to have gone straight into cash (and cash balance increased by $8.3 million overall) surely it is a pretty significant disclosure. Yet no mention in the Annual report.
It's also not sustainable as there is only $3.7 million left in this particular kitty. In fact, if you remove this cash injection, Oakton would appear to be losing cash year on year from its operations, investments and financing.
Another red flag for me is the fact that directors long term incentives are based on Absolute Diluted Earnings per share, rather than a relative measure. The conspiracy theorist within would be saying that this is why they are actioning their buyback, rather than the inability to use shareholders funds to add value, especially when the cash position isn't quite as good as it appears to be.
Note: Not a recommendation to invest/not invest in Oakton. Please talk to financial advisor.
Looking over the 2012 Annual report I noticed that the cash balance had improved dramatically over the year, yet profits were down and no new debt/equity had been accessed (in fact there seemed to be capital reduction with debt extinguished and a share buy back implemented) So I did some digging.
It seems the big increase occurred as a result of a massive reduction in Receivables, specifically an entry called "Other debtors and Security Deposits". This entry had $17 million in it in 2011, but in 2012, it went down to $3.7 million, a reduction of $14 million in a year. When this 14 million is likely to have gone straight into cash (and cash balance increased by $8.3 million overall) surely it is a pretty significant disclosure. Yet no mention in the Annual report.
It's also not sustainable as there is only $3.7 million left in this particular kitty. In fact, if you remove this cash injection, Oakton would appear to be losing cash year on year from its operations, investments and financing.
Another red flag for me is the fact that directors long term incentives are based on Absolute Diluted Earnings per share, rather than a relative measure. The conspiracy theorist within would be saying that this is why they are actioning their buyback, rather than the inability to use shareholders funds to add value, especially when the cash position isn't quite as good as it appears to be.
Note: Not a recommendation to invest/not invest in Oakton. Please talk to financial advisor.
Monday, May 20, 2013
Yahoo does it again...overpays for "Cool"
It seems that Marissa Mayer has again decided to waste investors funds
1.1 billion for Tumblr??? To pay that amount of money for a company that earned a grand total of $13 million in REVENUE last year (That's not EBITDA, but REVENUE) is a bit much.
Lets look at the figures. Based on that revenue figure, and assuming a EBITDA ratio the same as LinkedIN of 14% (a generous assumption to say the least) that would be EDITDA of $1.8 million
So a valuation of 1.1 Billion would be an EBITDA multiple of 604! Consider LinkedIN again, which is trading at EDITBA multiple of 140 of current EBITDA (which a lot of people also say is overvalued)
If we use that muliple and add a 50% growth premium on the EBITDA multiple for a new company (another generous assumption), lets see what Tumblr should be valued at if the multiple was 210. Based on that, the valuation of Tumblr should be $382 million...a more reasonable figure for a growth company.
But maybe I'm wrong. Maybe Marissa sees something that alludes me. But I can't see Yahoo getting a lot of return on this investment.
Note: Not a recommendation to invest/not invest with Yahoo. See Financial advisor etc.
1.1 billion for Tumblr??? To pay that amount of money for a company that earned a grand total of $13 million in REVENUE last year (That's not EBITDA, but REVENUE) is a bit much.
Lets look at the figures. Based on that revenue figure, and assuming a EBITDA ratio the same as LinkedIN of 14% (a generous assumption to say the least) that would be EDITDA of $1.8 million
So a valuation of 1.1 Billion would be an EBITDA multiple of 604! Consider LinkedIN again, which is trading at EDITBA multiple of 140 of current EBITDA (which a lot of people also say is overvalued)
If we use that muliple and add a 50% growth premium on the EBITDA multiple for a new company (another generous assumption), lets see what Tumblr should be valued at if the multiple was 210. Based on that, the valuation of Tumblr should be $382 million...a more reasonable figure for a growth company.
But maybe I'm wrong. Maybe Marissa sees something that alludes me. But I can't see Yahoo getting a lot of return on this investment.
Note: Not a recommendation to invest/not invest with Yahoo. See Financial advisor etc.
Thursday, May 2, 2013
Blowing Bubbles - The big 4 Australian Banks
Lots of talk about banking bubbles at the moment. So I figured I would check out the normalised RSI of the banks vs the ASX200. Other than CBA (outperforming the ASX200 by almost 50%) I don't think so. Poor old NAB is still bringing up the rear (underperfoming by almost 40%). But ANZ (only 4% outperforming) and WBC (20% over) still look fair value to me.
Usual disclaimer of not advice to invest/not invest. See Financial Advisor etc.
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