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Showing posts from September, 2019

THE CONCEPT OF SHAREHOLDER VALUE

A company is successful only when the value for stakeholders is created.
Revenues and profits are not the only manner in which shareholder value is created. Maximization of shareholder value is a function of sound financial decision making.


The management team of a corporation should keenly create, measure and maximize shareholder value to meet the stakeholder expectations and maximize the growth of the company. 
The stakeholders in a corporation are also its employees, customers, suppliers, and communities it serves; therefore, altering the age-old perspective that companies exist only to maximize shareholder returns. The new shareholders in a company are now the stakeholders.
However, shareholder value  increases the Present Value of Business by a process called Shareholder Value Enhancement or Shareholder Value Augmentation (SVAg).
In other words, Shareholder Value Augmented (SVAg) addresses the change in value over the Forecast Period. Value Augmentation can happen only if the Investme…

Investing in undervalued companies- The Fundamentals

The best tutorial for "value investing " is perhaps most appropriately explained by my favorite cousin Vinny in a 1991 movie, Other People’s Money
Danny DeVito ( Cousin Vinny forever) explains the timeless concept of value investing & intrinsic value in less than 3 minutes.



In this clip, Garfield's computer, who he calls Carmen names New England Wire & Cable the fairest of all stocks.  

Garfield, Coles, and Jorgenson discuss the value of a company, New England Wire & Cable Company.  $30 million of equipment, $10 million in land, $60 million from ‘boring but profitable companies’ in non-Wire and Cable divisions and $25 million in working capital.
Garfield rounds the total down to $100 million (attributed $25 million shaved off due to Carmen's PMS)  and divides by 4 million shares of common stock to obtain a value of $25 per share. However, 3 weeks ago the share was trading at $10. This means that NEWC’s stock is selling at a bargain price relative to their f…

The Kashmiri Articles of Trust died a long time ago

My most childhood memories of Kashmir are of a beautiful azure sky, snow-capped Himalayas, climbing trees in fruit orchards, lush green valleys, sweet water springs, and Popular tree-lined avenues.

Kashmir was about walking down Chinar ( maple) laden roads in fall, dragging my feet to carry as many as possible in my stride. It was about making snowmen when we got buried feet deep in powder for months with no electricity, heating our frozen hands over a warm wood Bukhari ( a wood-burning stove) and mouth-watering Kashmiri food. It was also about a strange unexplained fear of the unknown. The surface was warm. We lived in deeply divided undercurrents. The divide was deep, yet the fissures were shielded in the sweet coat of “Kashmiriyat”. Kashmiriyat is the name given to the cultural values of Kashmir. When the subcontinent was divided by the British on the basis of religion, Jammu and Kashmir decided to be an independent country. The social consciousness of the common Kashmiri is to pre…