Banks’ reported returns on tangible common equity are a con game
JPMorgan Chase reported strong results in the fourth quarter as we earned $11.0 billion in net income…and an ROTCE of 20%
return on equity
Negative free cash flow can be desirable
Despite this problem, we consider the owner earnings figure, not the GAAP figure, to be the relevant item for valuation purposes
Profound errors in interpreting and using ROE and ROC
I find it better to analyze a company’s cash flows, maintenance capex, growth capex and free cash flow in real dollar terms and measure them against the true value of the capital management has use of
The emergence of a new model of capitalism
The first step for investors is to come to a new understanding of reported earnings and the book value of equity.
Stock valuation in an age of intangible assets
About forty years ago Buffett experienced a Damascene conversion
The fading usefulness of book value
Book Value – Ain’t what it used to be – With the rise of company investment in intangibles, book value is losing its relevance.
Something over 80% of the market capitalization of the S&P 500 is made up of intangibles. Only a fraction of that appears on balance sheets.
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