What is Net Interest Margin and How Do I Calculate It?
“In the end, banking is a very good business unless you do dumb things.” – Warren Buffett Investing in banks remains the same as investing in other businesses. We need to understand the fundamentals and how they make money. Part of that understanding is the net interest margin or NIM. Part of how every bank […]
The Importance of Non-Interest Income in the Banking Industry
“In the end, banking is a very good business unless you do dumb things. You get your money extraordinarily cheap, and you don’t have to do dumb things.” – Warren Buffett Warren Buffett, one of our greatest investors, understands and invests in banks. Part of our challenge in investing in banks orbits around understanding their […]
Publicly Traded Logistics Companies Report: Winter 2022 Results
Public financial data collected by investment newsletter provider Sather Research, LLC showed that 6 Publicly Traded Logistics Companies Grew Total Revenues Over 6% YOY in the October – December Quarter, According to Latest Earnings Releases. Of the publicly traded home builders who released earnings results in January/February, the following 6 companies grew revenues 6%+ YOY: Old Dominion Freight Line, Saia Inc, […]
How to Calculate Net Interest Income with Examples
“In the end, banking is a very good business unless you do dumb things. You get your money extraordinarily cheap, and you don’t have to do dumb things. But periodically, banks do it, and they do it as a flock, like international loans in the 80s. You don’t have to be a rocket scientist when […]
Publicly Traded Home Builders Report: Winter 2022 Results
Public financial data collected by investment newsletter provider Sather Research, LLC showed that 6 Publicly Traded Home Builders Grew Total Revenues Over 19% YOY in the October – December Quarter, According to Latest Earnings Releases. Of the publicly traded home builders who released earnings results in January/February, the following 6 companies grew revenues 19% YOY: D.R. Horton, PulteGroup, Taylor Morrison Home, […]
Dollar-Based Net Retention Ratio in SaaS Companies
In the SaaS (software-as-a-service) world, we have many ways to measure the impact of customers churning or leaving the platform. In a recurring revenue model, we can use a dollar-based net revenue retention rate (DBNR), also known as net retention rate, to help us out. These ratios are SaaS’s most commonly cited metrics to measure […]
The Rise, Fall, and Rise Again of Warren Buffett’s GEICO Investment
Warren Buffett’s GEICO investment was pivotal for two of the greatest investors of all-time. The history of GEICO’s stock is fascinating, with many ups and downs. This post will discuss the rise, fall, and rise again of GEICO’s stock. It will talk about how Warren Buffett’s mentor, Benjamin Graham, bought GEICO and saw it become […]
Should I Invest in Companies with Good Gross Margins?
To make money, you need to spend money. Companies have to operate on the same principle and successful businesses find a way to generate revenues with fewer costs, creating profits. One way we, as investors, measure profitability is the gross margin. Gross margins can help us determine how well a company manages its costs. We […]
The Circuit City Bankruptcy: Hubris and Aggressive Overextension
With hindsight, the Circuit City bankruptcy looked like a similar story to Blockbuster’s. It was innovation, new concepts and businesses, defeating the old. However, there were clear red flags before this sudden collapse. We can see them by looking deeper at the accounting and financial statements of Circuit City. Circuit City collapsed very, very quickly. […]
Applying the Lessons of Enron’s Mark-to-Market Accounting Scandal Today
It may be surprising, but companies today are still using the same mark-to-market accounting that led to Enron’s fraud and bankruptcy in 2001. Mark-to-market accounting is a special way to record assets on a balance sheet. I will try to explain the basics as simply as possible. While it’s hard for any investor to predict […]
