Like you said above there a 66,000 or whatever companies out there for us to invest in. We all have our own screens. Maybe i miss some opportunities but cant be across everything and need to cut out a lot quick
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Yep fair enough but you'll cut out all the good stuff, and get all the rubbish. Opposite of what you trying for.
If investing was a simple as running a screener... well damn.
What you should be focused on is the technicalities of IFRS 16 and how that is skewing debt and throwing off returns on capital and equity and all sorts.
A good business that creates value will trade for multiples of book value - the equity is worth way more than the cost to build it. The debt may look large against the book equity.
The bad businesses will have loads of equity that has been misallocated and not correctly depreciated and debt against this origami fortress will look ok.
I completely feel for all the investors who have been involved with this company long term, a lot of financial loss…
Simply buying in at the right time and enjoying the dividend return of a business that will plod along now it is simplified seems pretty fair too?
If that dividend is paid out of cash earnings after all expenses have properly been accounted for and there are no surprise expenses in future.
Currently they are just borrowing to pay the dividend.
Why pay a dividend if you spending many multiples of that dividend on CAPEX?
Often dividends are a total illusion.
If you start a pie shop and it's making you 20k a year but you're spending 100k a year on pie making machines it's very hard to say what you're actually earning.
You need to be able to forecast what the earnings on the 100k worth of pie machines will be in future.
You need to be able to get that 100k back at some point.
Otherwise the wife might not be happy with the 20k you brought home but the 100k that's gone.
Accounting says that you haven't spent 100k on pie machines as this is capitalised and in fact you only spent 10k on the pie machine as it will last 10 years blah blah... but the reality is that you have.
Look for businesses where everything is expensed even though it is an asset that lasts a long time.
Choysa tea spent money on a chimpanzee advert in 1996 and expensed it that year, but that investment made a sale in 2023 (to me). Bought out by Unilever which I own.
Look for investment through the income statement.