Value Investing 2.0 & The Technology Behind New Constructs
New Constructs was founded to build best valuation models in the business across thousands of securities. To build the best models, we had to create our own data collection technology.
Building The Best Model Portfolio: Executive Compensation Aligned With ROIC Webinar
In this webinar, CEO David Trainer, will discuss the importance of return on invested capital (ROIC), why linking executive compensation to ROIC is beneficial, and how New Constructs’ tools can be used to create the best Model Portfolio.
FinTech: Disruptive Tech To Parse SEC Filings & Build Valuation Models Webinar
In this webinar, CEO David Trainer, will discuss our propriety research system, what makes us better, and how we can help protect investors, directors, and auditors.
5 Ways Corporate Governance Affects Investors and Stock Valuations Webinar
In this webinar, David Trainer, a Wall Street veteran, will discuss corporate governance issues to be aware of, how they can affect an investors portfolio, and how they affect underlying stock prices.
The Power Of Quantifying Market Expectations
Sometimes, even the most well recognized experts make shockingly bad predictions. No one truly knows (legally) what the market is going to do next, and the risk involved in that uncertainty is what creates the potential for significant returns.
Free Cash Flow (FCF): Explanation & Examples
There are many ways to calculate free cash flow. Most approaches are short cuts to our more comprehensive approach to the calculation. The formula for FCF can be seen in Figure 1. For more on FCF, see within.
Economic Earnings: Explanation & Examples
To derive economic earnings, 30+ adjustments must be made to accounting earnings. These adjustments remove items hidden in the footnotes and MD&A of annual filings and close loopholes within GAAP accounting.
Weighted Average Cost of Capital (WACC): Explanation & Examples
WACC plays a key role in our economic earnings calculation. It is hard to be 100% certain about the exact cost of a company’s capital. Our guiding principle when calculating WACC is that it is better to be vaguely right than precisely wrong.
Return On Invested Capital (ROIC): Explanation & Examples
The formula (see Figure 1) for calculating ROIC is easy. The hard part is finding all the data, especially from the footnotes and MD&A, required to get NOPAT and Invested Capital right. When we calculate ROIC, we make numerous adjustments to close accounting loopholes and ensure apples-to-apples comparability across thousands of companies.
Net Operating Profit After-Tax (NOPAT): Explanation & Examples
We calculate NOPAT in two ways, from an operating and financing perspective. See Figure 1. Figure 1 shows the basic calculations. On page 2, we share the complete calculations for specific companies.
Invested Capital: Explanation & Examples
We calculate invested capital in two mathematically equivalent ways: financing and operating approach. Figure 1 shows the basic calculations. On page 2, we share the complete calculations for specific companies.
How To Protect Your Portfolio As Well As Your Colleagues Webinar
In this webinar, CEO David Trainer, a Wall Street veteran, will discuss strategies that worked in the last market crash and the one thing that always matters when everything else breaks down.
True Value Investing Still Works
Investors looking for value need to take a holistic approach that measures a company’s ability to deliver economic earnings to investors and quantifies the expectations for future cash flows embedded in its current stock price.
How Much Quality Is In The “High Quality” ETF?
With the significant drop in the market to start 2016, we can be sure that many investors are looking to shift their portfolios towards higher quality stocks. The challenge is how to define “high-quality” because it is not as straightforward as one might think.
Finding Safe Investments In A Dangerous Market Webinar
While trading fads come and go, good fundamental research is required to fulfill your fiduciary duties to your clients and yourself. Without it, realize it or not, you take significant risk that the numbers you use to make a decision are not correct.
The Problem With Using Accounting Book Value
In our recent article on the flaws in return on equity, we showed how it has no correlation with several different measures of valuation. However, there is one valuation metric, price-to-book (“P/B”), that, at first, appears to correlate strongly with ROE. A more rigorous look reveals the relationship between the two variables is not as…
4 Reasons ROE Is Not A Useful Metric For Investors
Recently, we ran through the various flaws in the price to earnings ratio and explained why investors need to be paying more attention to return on invested capital (ROIC). This week, we’re tackling another of the market’s favorite metrics, return on equity (ROE). Return on equity has a very simple formula: It’s tempting to think…
Why PE Ratios Are Not A Good Measure Of Value
We’ve pointed out the flaws in the price to earnings (PE) ratio many times before. Chief among these flaws is the fact that the accounting earnings used in the ratio are unreliable for many reasons:
David Trainer On How To Get The Truth About Valuation
In this extended podcast, CEO David Trainer, will discuss the challenges of investing, break down the process on how to make money in the market, and go into detail about some recent examples such as General Motors (GM).
David Trainer Explains the Right Way to Analyze an Acquisition
In this extended podcast, CEO David Trainer will discuss the right way to analyze the Time Warner Cable and Charter Communications deal and determine whether or not an acquisition creates value.