財務管理個案分析 ( 益通)

 

These Three Clues Will Lead You to Your Next Big Winner

 Yesterday, I showed you two of the most important "clues" I use to uncover the world's greatest investment opportunities...

1. The amount of free cash flow a company generates, and

2. How it uses that cash to reward shareholders.

The third clue I look for when choosing a great investment is a great balance sheet.

The balance sheet is a financial statement that shows a company's assets and liabilities. Assets are what it owns, and liabilities are what it owes.

There are two kinds of great balance sheets we look for when finding a company that could potentially double or triple your money...

The first is a balance sheet with a massive amount of cash and relatively little or no debt. You can recognize a company like this in 30 seconds or less.

The best example is iPhone maker Apple (AAPL)...

Apple has more than $195.5 billion in cash and securities. And it has $112.1 billion in debt. That's a lot of debt, but it's nothing compared to the amount of cash Apple has. Apple could pay off all its debt and still have $83.4 billion in cash left over.

Imagine having 75% more cash than debt you have on your home, car, and credit cards.

You'd feel pretty secure with that much cash, wouldn't you?

Well, that's how Apple shareholders ought to feel right now. They can rest assured Apple will never have a financial problem with that much cash on hand.

Debt isn't always a dealbreaker, though – which brings me to the second type of great balance sheet I look for...

In short, sometimes a company has more debt than cash... But the business is so good that it earns enough to easily cover the debt payments.

Retail giant Walmart (WMT) is the best example of this...

It has $14.3 billion in cash... and $45.4 billion in debt. That's more than THREE TIMES more debt than cash.

That's a LOT of debt.

But remember, Walmart is a massive company... It does nearly $500 billion in annual sales. It has more than 11,600 locations around the world. It's bringing in a ton of cash every second of every day of the year.

The fact is, after Walmart pays all its expenses, taxes, and debt payments, it has enough earnings left over to equal more than eight times its debt payments.

How good is this?

Well, suppose you have $2,000 per month in debt payments.

Then suppose that after paying all those debt payments, plus all your other living expenses – income taxes and everything – you still have five and a half times $2,000 left over.

So, you'd basically have $11,000 a month left over after you paid all your expenses. That means you'd have an extra $132,000 per year you could spend any way you wanted.

You'd be pretty financially secure. And that's how Walmart shareholders should feel.

So, why do I care about this so much?

Well, in Extreme Value, we've closed out gains of 113% on tobacco giant Philip Morris International (PM)... 133% on chipmaker Intel (INTC)... 150% on beer titan Anheuser-Busch InBev (BUD)... 125% on Warren Buffett's Berkshire Hathaway (BRK-B)... and more than a dozen other double- and triple-digit gains.

And every single one of those companies had a great balance sheet.

I've lost count of how many e-mails I've received from Extreme Value subscribers who tell me they sleep better at night knowing each business we find is so financially strong.

So, to sum up this financial clue...

• Look for companies with great balance sheets.

• Some companies have a lot more cash than debt. That's a great balance sheet.

• Other companies have more debt than cash, but because they earn so much money, their debt payments are easily covered. This, too, makes for a great balance sheet.

聯準會貨幣政策目標與方針世紀大改：Jerome Powell 在傑克森洞年會演講全文導讀

 

聯準會主席Jerome Powell上週在傑克森洞年會上，發表了一項被認為107年來最重要的聯準會政策決定改變。在週四、週五連續兩天佔據了華爾街日報的A1/A2兩版。

在會議後，Fed官網同時跟著修改了聯準會長期目標與貨幣政策策略。

Jerome Powell不只是跨越紅線，把央行從銀行的銀行的角色調整成直接放款給中小企業外，這次還一舉變更了聯準會過去長期貨幣政策隱含決定的因子- 經濟學課本中菲利浦曲線的影響幾乎走入歷史

[聯準會政策目標與方針歷史背景] 

從1960/70開始，聯準會附帶著重大任務是充分就業跟穩定物價。而其中貨幣政策決定隱含著一個假設- 所謂的菲力浦曲線的指引。

這個學說說的是，過低的失業率可能會導致過高的通貨膨脹。失業跟通膨存在抵換關係。政策應該要鎖定最佳的自然失業率，盡可能不要Deviate最佳的自然失業率。

在這個學說下，如果聯準會太過促進就業，反而會因為過熱的景氣、過多的工資，導致超出預期的通貨膨脹。因此，保持適當的自然失業率是比較好的選擇。

而Jerome Powell這次的長期目標與貨幣政策策略，則是完全拋棄了這個說法。

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[與歷史數據不同的新世界] 

根據最新的數據，在過去十年當中，失業率持續下探，達到五十年來的新低。如圖二。這個失業率不只是全部的失業率一起降低 (5.5%-> 4.1%)，同時還降低的黑人與白人之間的失業率差距。Jerome Powell與柏南克都認為強健的就業市場，能夠帶給經濟體更重要的好處。

另外，圖三是這十年的通膨。依照菲利浦曲線的說法，這麼好的就業，應該要伴隨著通貨膨脹。但是在過去十年，雖然每年都預估2%的通貨膨脹，但卻從來沒有成功達成過。

在低失業的明顯好處下，沒有伴隨著可能的必要之惡通貨膨脹，至少從表面上看起來，政策應該持續專注在促進就業、降低失業率。而不該因為失業率太低，而緊縮貨幣控制可能的通貨膨脹。  

這是觸發這次聯準會政策大改的核心理由。

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Tidewater (TDW) 的背景知識

Offshore wind installation

https://www.youtube.com/watch?v=mDvS7tizetg

 

Charter Rates

Chartering is an activity within the shipping industry. In some cases a charterer may own cargo and employ a shipbroker to find a ship to deliver the cargo for a certain price, called freight rate

A voyage charter is the hiring of a vessel and crew for a voyage between a load port and a discharge port. The charterer pays the vessel owner on a per-ton or lump-sum basis. The owner pays the port costs (excluding stevedoring), fuel costs and crew costs.

(24 hr)  Day rate 

Transit rate is same as Day RateDay starts 0800. Earlier departure times may incur additional charges

$8,800 Rate includes crew of 5, fuel, and food for 10 scientists (2 watch system, 1 crew in wheel house 1 on deck + cook). More crew for labor intensive operations can be provided with 30 days notice for an additional cost

船舶閑置（lay-up）船舶閑置俗稱“灣水”，是指船東將船舶退出營運的一種做法

Bloom energy

 His company, publicly traded Bloom Energy, sells fuel cells—steel boxes that generate electricity using natural gas. The boxes, which it calls energy servers, emit a nearly pure stream of carbon dioxide, a major greenhouse gas, but they are supposed to make much less of it than traditional power plants and do so without generating lots of smog ingredients like nitrogen oxide and sulfur oxides.

Every time there is a disaster your power price is going to go up, because somebody has to pay for the damage, Bloom is capitalizing on the outages by wooing potential customers in fire-risk zones to protect against grid failure with Bloom-powered

Over its 19 years in business, Bloom has installed several thousand of its 15-ton boxes worldwide for big tech companies including Apple, AT&T and Paypal, which are willing to pay up to guarantee 24/7 power for data centers where the cost of downtime is nearly $9,000 per minute. A lot of its customers are in states with the highest power prices and big clean-energy subsidies, like New York, where Home Depot has installed them as backup generators “wherever they make economic sense

The natural gas, thanks to fracking, is already there,” Sridhar says. And yet, despite big promises, Sridhar’s boxes are highly unlikely to transform the grid in California, or anywhere else. The reasons are manifold 多樣化的, but boil down to this: Bloom’s technology is too dirty and too costly.

decade ago, Sridhar envisioned that by now his fuel cell technology would be in every home, costing $3,000 a pop. In reality, not a single home in America has its own Bloom box. Instead, his boxes are used mostly for industrial and commercial customers, costing approximately $1.2 million each. Without subsidies, they generate power at a cost of roughly 13.5 cents per kilowatt hour versus 10 cents per kwh for grid power nationally.

He later worked at the University of Arizona’s Space Technologies Lab, building an oxygen-generating machine for NASA’s missions to Mars. When the Mars Polar Lander crashed in 1999, his project was canceled. Undeterred, he worked to more or less reverse that technology, to turn methane and oxygen into carbon dioxide and electricity.

Those initial machines were hand-assembled, Sridhar recalls, in a hobby shop at Moffett Federal Airfield in Santa Clara County, rather than on today’s automated assembly line. A former Bloom executive claims that those early boxes had to be monitored 24/7, and that internal modules stacked with hundreds of 4-by-4-inch fuel cell wafers needed to be swapped out a couple times a year, at $225,000 a pop. Another complication of these Rube Goldberg devices was the filtration systems—metal canisters filled with pebbles of solid catalysts that separate sulfur compounds and other contaminants from the methane gas 甲皖. According to the same executive, the first time technicians went to empty the canisters, they simply sucked out the used catalyst with a Shop-Vac and ended up spreading a rotten-egg smell across the neighborhood. Bloom called the executive’s account “hearsay

IAS 21 The Effects of Changes in Foreign Exchange Rates

The following procedures apply when an entity accounts for transactions in a foreign currency. A foreign currency transaction is recorded, on initial recognition in the functional currency, by applying to the foreign currency amount the spot exchange rate at the date of the transaction. At the end of each reporting period:

• foreign currency monetary items are translated into the functional currency using the closing rate;
• non-monetary items that are measured in terms of historical cost in a foreign currency continue to be translated using the exchange rate that prevailed at the date of the transaction; and
• non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates that prevailed at the date when the fair value was measured.

The resulting exchange differences are recognised in profit or loss when they arise except for some exchange differences that form part of a reporting entity’s net investment in a foreign operation.  The latter are recognised initially in other comprehensive income and reclassified to profit or loss on disposal of the net investment.

For translation into the functional currency or into a presentation currency, the following procedures apply, except in limited circumstances:

• assets and liabilities are translated at the exchange rate at the end of the period;
• income and expenses are translated at exchange rates at the dates of the transactions; and
• resulting exchange differences are recognised in other comprehensive income and reclassified to profit or loss on disposal of the related foreign operation.

Exchange differences arising when monetary items are settled or when monetary items are translated at rates different from those at which they were translated when initially recognised or in previous financial statements are reported in profit or loss in the period, with one exception. [IAS 21.28] The exception is that exchange differences arising on monetary items that form part of the reporting entity's net investment in a foreign operation are recognised, in the consolidated financial statements that include the foreign operation, in other comprehensive income; they will be recognised in profit or loss on disposal of the net investment. [IAS 21.32]hh

Exchange differences arising when monetary items are settled or when monetary items are translated at rates different from those at which they were translated when initially recognised or in previous financial statements are reported in profit or loss in the period, with one exception. [IAS 21.28] The exception is that exchange differences arising on monetary items that form part of the reporting entity's net investment in a foreign operation are recognised, in the consolidated financial statements that include the foreign operation, in other comprehensive income; they will be recognised in profit or loss on disposal of the net investment. [IAS 21.32]

Exchange differences arising when monetary items are settled or when monetary items are translated at rates different from those at which they were translated when initially recognised or in previous financial statements are reported in profit or loss in the period, with one exception. [IAS 21.28] The exception is that exchange differences arising on monetary items that form part of the reporting entity's net investment in a foreign operation are recognised, in the consolidated financial statements that include the foreign operation, in other comprehensive income; they will be recognised in profit or loss on disposal of the net investment. [IAS 21.32]

Competition Demystified Chapter 2

 

Page 20  

Differentiation may keep your product from being a generic commodity item, but it does not eliminate the intense competition and low profitability that characterize a commodity business. Although nature of the competition may change, the damage to profit persists because the problem is not lack of differentiation, but the absence of barriers to entry. Understanding the significance of barriers to entry and how they operate is the key to developing effective strategy.

But with a wider variety of luxury cars available, the sales and market shares of Cadillac and Lincoln began to decline. Meanwhile, the fixed costs of their differentiation strategy—product development, advertising, maintaining dealer and service networks—did not contract. As a result,  the fixed cost for each auto went up, and the overall profit margin per car dropped. Cadillac and Lincoln found themselves selling fewer cars with lower profit margins. Their profitability shrank even though their products were thoroughly differentiated.

If no forces interfere with the process of entry by competitors, profitability will be driven to levels at which efficient firms earn no more than a “normal” return on their invested capital. It is barriers to entry, not differentiation by itself, that creates strategic opportunities.

Efficiency matters

In copper, steel, or bulk textiles, it is clear that if a company cannot produce at a cost at or below the price established in the market, it will fail and ultimately disappear. Since the market price of a commodity is determined in the long run by the cost levels of the most efficient producers, competitors who cannot match this level of efficiency will not survive. But essentially the same conditions also apply in markets with differentiated products.