“Don’t you know that in Florida they can’t take away your primary residence, even if you go to jail for fraud? Start digging through the company’s financial filings immediately.”
Well, you learn something new every day. Gary thank you very much for the article, it is a pleasure as always. I've done some digging and it seems the CFO got away with a 5y ban and a 100k fine. Have you ever meet him after the fact?
Great article, in my experience it's very rare for a weak cash generator to become a strong one. The best companies tend to gush cash and prioritise the cash flow statement over the income statement.
Really a great post. Attention to detail and FCF being a great financial health check point is clearly demonstrated through your real life example. Looking forward for more such Posta.
what a great read. the psychology here is fascinating to me... the flashy investor dinners, the stories without substance, the cfo's suspiciously convenient florida home purchase. these are exactly the kinds of red flags our pattern seeking brains are wired to detect, if only we quiet the noise long enough to notice them. a wonderful reminder that sometimes the most valuable investing skill isn't finding winners, but recognising when something just doesn't feel right.Retry
Wonderful read. I am starting to consider all the investments I made and all the footnotes I didn’t read… Hopefully I’m always looking at FCF and checking how accruals are used because the CFA told us to do so!
I don’t always check if reports were audited either, it lay be worth it.
Thank you for this well-written article, which probably resonates with more people than you realized when you wrote it. When I was an analyst, I came across funny business quite a handful of times, including at Worldcom and Enron, but the senior portfolio managers often discredited my work, saying I simply did not understand the businesses well enough, and did not take action until the wheels started falling off. Kudos to your team for listening to your recommendations both up and down. That is even more rare than discovering a fraud.
You say don’t go by what mgmt says they’ll do look at what they have done. I’m old enough to remember getting annual reports in magazine form and I’d get on mailing lists for lots of cos. when I was interested in investing in one I looked back 2-3 years in those reports to see how often mgmt did what they said they were going to do, just as you suggest.
Thanks Garry for such a valuable story! Congrats on exisiting position on time. Part about stock rebound 10X and having flexible mind is great one.
I guess another red flag, related to stocking up inventory, could be much lower inventory turnover ratio because of rise of inventory and lower rise of COGS.
Not enough people know how to read a cash flow statement...it’s like for years, everyone was saying AQN was the solid buy based on industry trend and dividend growth...but if you read their cash flow statement...it’s all very iffy...and boom....it went from $18 to now about $6....🤦🏻♂️🤦🏻♂️🤦🏻♂️
“Don’t you know that in Florida they can’t take away your primary residence, even if you go to jail for fraud? Start digging through the company’s financial filings immediately.”
Well, you learn something new every day. Gary thank you very much for the article, it is a pleasure as always. I've done some digging and it seems the CFO got away with a 5y ban and a 100k fine. Have you ever meet him after the fact?
Thank you Petar. No, I never really looked back, I was just so relieved to have avoided a major early-career disaster.
Great article, in my experience it's very rare for a weak cash generator to become a strong one. The best companies tend to gush cash and prioritise the cash flow statement over the income statement.
Really a great post. Attention to detail and FCF being a great financial health check point is clearly demonstrated through your real life example. Looking forward for more such Posta.
Thank you, I appreciate the kind words
You made a tabula rasa sound so simple. Excellent column!
The old cobalt should have been written down to market value, which raises serious questions about the quality of the external audit.
what a great read. the psychology here is fascinating to me... the flashy investor dinners, the stories without substance, the cfo's suspiciously convenient florida home purchase. these are exactly the kinds of red flags our pattern seeking brains are wired to detect, if only we quiet the noise long enough to notice them. a wonderful reminder that sometimes the most valuable investing skill isn't finding winners, but recognising when something just doesn't feel right.Retry
Wonderful read. I am starting to consider all the investments I made and all the footnotes I didn’t read… Hopefully I’m always looking at FCF and checking how accruals are used because the CFA told us to do so!
I don’t always check if reports were audited either, it lay be worth it.
Great article, glad I came across this. Thank you for being so generous with your wisdom & past experiences Gary.
This is a good one. I really enjoyed trying it. I’m always interested in these financial shenanigans. Thank you Gary!
Milan
Great write up. Thanks for sharing Gary.
Great read!
Thank you for this well-written article, which probably resonates with more people than you realized when you wrote it. When I was an analyst, I came across funny business quite a handful of times, including at Worldcom and Enron, but the senior portfolio managers often discredited my work, saying I simply did not understand the businesses well enough, and did not take action until the wheels started falling off. Kudos to your team for listening to your recommendations both up and down. That is even more rare than discovering a fraud.
You say don’t go by what mgmt says they’ll do look at what they have done. I’m old enough to remember getting annual reports in magazine form and I’d get on mailing lists for lots of cos. when I was interested in investing in one I looked back 2-3 years in those reports to see how often mgmt did what they said they were going to do, just as you suggest.
Thanks Garry for such a valuable story! Congrats on exisiting position on time. Part about stock rebound 10X and having flexible mind is great one.
I guess another red flag, related to stocking up inventory, could be much lower inventory turnover ratio because of rise of inventory and lower rise of COGS.
Enjoyed the story very much, looking forward to hear more about your Investing adventures...Happy new year Gary!!
Not enough people know how to read a cash flow statement...it’s like for years, everyone was saying AQN was the solid buy based on industry trend and dividend growth...but if you read their cash flow statement...it’s all very iffy...and boom....it went from $18 to now about $6....🤦🏻♂️🤦🏻♂️🤦🏻♂️