The Dark Side of Financial Statement Analysis

10.22.2016

At the luncheon program, you'll discover...

  • How traditional financial statements do not reflect economic reality – companies that look expensive are often not, and vice versa:
    • The earnings multiple at Ayala Corp (PSE:AC) is closer to 13x, not 25x as Reuters' “as-reported” info reports
    • The P/E of Globe Telecom (PSE: GLO) is, in fact, 29x, not 21x as Morningstar’s traditional database shows
  • How the inconsistencies in GAAP and IFRS accounting rules make for terribly unreliable measures of profitability:
    • Globe Telecom's as-reported Return On Assets of 7.5% (as taken from the Yahoo Finance database) is, in reality, half that at a low 3.5% ROA
    • International Container’s (PSE:ICT) ROA is, in actuality, 18% or higher, while the Wall Street Journal’s as-reported database incorrectly states ROA as near zero

This luncheon session interactively runs through today’s news, in real-time, and shows just how misleading as-reported company performance and valuation measures can be.

The problem is serious enough that it leads to poor investment decisions, wasted time and resources, lost investment opportunities… or worse, investment losses.

©Copyright 2016 Valens Research & Filipino Investing Community. All rights reserved

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About the Presenter
ICELAND
Skogafoss Waterfall
USA
Sedona
JAPAN
Mount Myōkō
CANADA
Whistler
KOREA
Seoul

The Gross Distortions Lurking in the Financial Statements and How To Greatly Improve Equity and Credit Research
with Joel Litman, Chief Investment Strategist at Valens Research and Professor at Hult International Business School

Unless the “apples to oranges” accounting problems are uncovered and repaired, one cannot rely on financial statement analysis as seen and reported. 

Professor Joel Litman of Hult International Business School is also Chief Investment Strategist at Valens Research, a global research and investment consulting boutique. Litman is also one of the most prolific speakers in demand at CFA events for Chartered Financial Analysts worldwide in the last several years including CFA Societies in Singapore, Hong Kong, Germany, France, the UK, and the USA.

 

Save as much as P595 on registration fees by signing up below for the October 22 program. 

Seats are limited so please tell your friends, colleagues, and family coming with you to save their seats as well using this web page. Groups of 3 or more persons will qualify for an additional 15% discount.

We hate SPAM and promise to keep your contact information safe.

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Venue
ICELAND
Skogafoss Waterfall
USA
Sedona
JAPAN
Mount Myōkō
CANADA
Whistler
KOREA
Seoul

Caylum Trading Institute Training Room

Unit 2302-B, East Tower,

Philippine Stock Exchange Center

Exchange Road, Ortigas, Pasig City

Litman has appeared on CNBC, has been quoted in Barron’s and Institutional Investor, and published in Harvard Business Review. He co-authored the highly-acclaimed book, DRIVEN: Business Strategy, Human Actions, and the Creation of Wealth. Litman has taught or guest-lectured at Harvard Business School, Wharton, and LBS as well as for CalPERs, Fidelity, Credit Suisse, among others, and CFA and CPA/CA Societies around the world.

Schedule for October 22, 2016
11:00 AM Registration for Luncheon Program
11:30 AM Luncheon Program
1:00 PM Registration for Intensive Workshop
1:30 PM Intensive Workshop
4:00 PM End

 

In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentises:

  • GAAP and IFRS have failed to provide rules for reliable financial statement reporting
  • Stock analyst recommendations are not grounded in disciplined financial analysis
  • Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
  • Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available

We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.

  • Corporate credit ratings remain years behind the fundamental underpinnings of company performance
  • Stock analysts continue to make recommendations with deeply inherent biases
  • Research firms have failed to break down the walls between credit, equity, and macroeconomic research
  • The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming

The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.

“...insights are needed to connect core principles of wealth creation to both reported financial performance and firm valuations in the stock market. They've put it all together for you...”

Bartley J. Madden, Author of the book, "CFROI Valuation: A Total System Approach to Valuing the Firm"

“...what we as educators and thought leaders should embed in our curricula and teachings in business schools throughout our education programs...”

Arthur Kraft, Ph.D., Chairman of the Board of Directors of The Association to Advance Collegiate Schools of Business

What Others Are Saying...

…allows the investor to judge the ability of companies to create lasting value and should be part of any investor's stock selection process...”

Alfred Jackson, Former Head of Global Equity Research at Credit Suisse First Boston and Number-One-Ranked Stock Analyst

summarizes a breakthrough study that will change the way business will be done. It offers a simple and comprehensive framework for taking on today’s complex business world...”

Hitendra Patel, Ph.D., CEO of the IXL Center, Former Senior Leader of the Innovation Practice of the Monitor Group, and Author

...provides a framework for placing any business discipline in the perspective of overall business strategy...

Belverd E. Needles, Jr., PhD. CPA, Ernst & Young Distinguished Professor of Accountancy, DePaul University, Past President of IAAER

provides the finance leader with a good idea on the key elements of a strategy for your business and personal career aspirations... very practical...”

Kirk Ho, Former Senior Regional Finance Director, Crocs, Inc.

At the detailed, line-by-line, hands-on workshop following the lunch program, you'll unravel insights such as...

  • With depreciation expenses at high levels or even multiples of net income, why small distortions in depreciation can make earnings move up or down significantly, with no economic reality
  • While leasing assets might be the right decision for the company, why the inconsistency in leasing capitalization policies makes almost every lessee’s books incomparable from peer to peer -- and even distorts the company’s own trend analysis against itself year-to-year
  • Why the expensing and inconsistent policies over research and development expensing wreaks havoc on the comparability of earnings, assets, and even the statement of cash flows
  • How changing levels of inflation and currency valuations can cause “phantom profits” where GAAP and IFRS earnings grow faster than the cash flow earnings of the firm

This detailed workshop immediately follows (and requires attendance of) the lunch program. In past programs, many financial practitioners and future analysts have requested a more detailed workshop to review major accounting issues and specifically how to fix them. This workshop is meant to address these requests.

All attendees of the workshop will get access to www.Valens-Research.com, a global database of more than 4,000 companies (including Philippine companies), with advanced equities and corporate credit ratings analysis clear of the most severe accounting distortions, as discussed in the program.

NOTE: This program focuses on adjustments relevant to Consumer Staples, Consumer Discretionary, Energy, Healthcare, Industrials, Materials, Technology, Media, and Telecom.
(Because of the detailed nature of this program, it covers adjustments relevant to non-financial companies. Banks, insurance, and REITs are only tangentially discussed. )

The content of this program has been one of the most renowned across CFA Societies around the world. It has received very high marks from recent, similar programs in New York, London, Singapore, Hong Kong and Manila.

After the overwhelming reception last September 3,  our doors are once again open to Philippine investors and investing professionals.

Seat Rates

 

Luncheon Program + Intensive Workshop (Walk-in Payment) P3,490
Luncheon Program Only (Walk-in Payment) P2,045
Luncheon Program + Intensive Workshop (Paid in Advance) P2,895
Luncheon Program Only (Paid in Advance) P1,745

 

CFA Charterholders will get a 10% rebate at the event venue

Lunch service by Lily & Rose, famous for organic, homemade-with-love, gourmet dining 

Main Course

Tuscan Lemon Chicken w/ Roasted Vegetables 
Rosemary Brown Rice

Dessert

Panna Cotta

Afternoon Snack

Tuna on Wheat w/ Alfalfa Sprouts


 

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