2015 Crude Oil output

Key words: Oil supply and demand, US oil production, Russia and OPEC oil output, 2016 Brent oil price The United States current export restrictions were adopted during the 1970s, a period of extreme price controls. By 1981 the price controls on crude oil had been eliminated, but export restrictions persisted. On December 18, 2015, The…

FED hiked interest rates

Key words: FED rates The Federal Reserve hiked interest rates for the first time in nearly a decade on Wednesday 16, 2015. The outcome of FOMC meeting is an increase in the target range of the federal-funds rate by 25 basis points, to between 0.25% and 0.5%. Rates in the US have been at near-zero…

Residual income model

Key words: DCF, Dividend discount model, ROI, ROA Different valuation models are used to estimate true intrinsic value of a company. Absolute valuation models are based on fundamentals approach. This is DCF method, dividend discount model, asset based model and residual income model. Valuation methods based on relative models are a lot easier and quicker….

The Amaranth Collapse

Key words: Natural gas, Calendar spreads, Fall of Amaranth Advisors, Summer and winter natural gas future prices Amaranth Advisors was a multi-strategy hedge fund with positions across asset classes. It was founded in 2000 by Nick Maounis with headquarter in Greenwich. Energy was a growing colossus in Amaranth. As of June 30th of 2006, the…

Stockholders’ Equity

Key words: Retained earnings, Earned capital, Contributed capital, Common and preferred stocks, Treasury stock, Capital surplus The owner’s claims to the business are called stockholder’s equity (also known as shareholders’ equity) and reported in the Equity section of the balance sheet. Stockholder’s equity is simply net assets that consists of invested capital and retained earnings….

What is Value? Enterprise!

Key words: Firm value, Enterprise value, Market capitalization, Equity value, Intrinsic value, Book value Financial statements contain a lot of financial items like Net Income, Debt, Common Stocks, etc. Everyone agrees on definition of certain items but the treatment of others can be different. In general, the value of an asset is the price that…

True intrinsic value

Key words: Fundamental analysis, Balance Sheet approach, Price/Book ratio, NCAV, DCF,Payback Method, PEG, PEGY, P/E, P/S, Graham’s Intrinsic Value Benjamin Graham, often referred to as the dean of Wall Street, said: “In the short term the market is a voting machine, in the long term it is a weighing machine” What is a weighing machine?…

Smart?

Life can only be understood backwards but it must be lived forwards CFA candidates without confusing themselves become CFA Charterholders It’s better to remain silent and have people think that you’re a fool, than to open your mouth and remove the doubt. Bet on the jockey, not on the horse If you fail to plan,…

Rise and fall of VA Linux

Key words: LNUX, 697% in a single trading day, Red Hat IPO, Dot-com boom era, VA Software, SourceForge, Geeknet On December 9, 1999, a software company VA Linux (LNUX) went public. The IPO was priced at $30, after an original range of just $11 to $13. The stock opened at $299 and peaked at $320….