ROIC vs ROCE: When to Use One Over the Other [Pros & Cons]
Updated 8/25/2023 ROIC (Return on Invested Capital) and ROCE (Return on Capital Employed) are formulas describing how efficiently a company invests its capital. The difference between ROIC vs ROCE is subtle but powerful—basically, one (ROCE) is a shortcut of the other (ROIC). Before diving deeper, here’s the simple cliff notes: Return on Capital Employed Formula […]
Convertible Preference Shares – Great Alternative to Buying Bonds
Updated 8/7/2023 Preferred shares are the red-headed stepchild of the investment world; they are relatively unknown among most investors. But investors such as Warren Buffett use them to invest in companies such as Occidental, as recently as May 2019. Preferred shares come in many different flavors, and today’s article will uncover the magic of convertible […]
How Fractional Reserve Banking Works and How Banks Create Money With It
Updated 8/7/2023 The banking system, with all of its checks and balances, is confusing to many, including yours truly. However, depositing our money in our accounts and then banks using that money to lend to others is central to the banking system. The fractional reserve system allows banks to use our deposits to grow their […]
Cash Vs. Stock Acquisitions: What’s Driving The Bus?
Updated 7/24/2023 “If you aggregate all of our stock-only mergers (excluding those we did with two affiliated companies, Diversified Retailing and Blue Chip Stamps), you will find that our shareholders are slightly worse off than they would have been had I not done the transactions. Though it hurts me to say it, when I’ve issued […]
Simple Merger and Acquisition Terms for Beginners
Updated 7/6/2023 Learning M&A is a little like learning another language. Understanding the different terms associated with M & M&A will go a long way to understand why companies undertake this process and what they hope to gain for the company and shareholders. Having a common understanding of the most common terms used in general […]
Mergers and Acquisitions: Easy Basics for Beginners
Updated 7/6/2023 Global mergers and acquisitions (M&A) volumes hit a record high in 2021, overtaking 2020’s deals. According to Refinitiv data, the total volume of completed deals and those in the pipeline is $3.6 trillion in 2021, with three months to go, passing the $3.59 trillion of 2020. Mergers and acquisitions are on the upswing, […]
M&A As A Growth Strategy
Updated 7/6/2023 Merger and acquisition activity drives much more growth than investors realize, and many companies practice mergers and acquisitions or M&A as their main source of growth. Companies like Google, Microsoft, Facebook, and Constellation Software use M&A to sustain or continue their growth. Between June and April of 2021, there have been almost 1,000 […]
Financial Impact of Mergers and Acquisitions: Amazon’s Purchase of Whole Foods
Updated 8/7/2023 Companies expend more energy on mergers and acquisitions (M&A) than any other means of capital allocation. For many companies, such as Cisco and Intel, M&A is the most effective method for capital allocation and pursuing strategic goals. Even a company as powerful as Amazon pursued a merger and acquisition strategy to purchase Whole […]
Everything You Need to Know About M&A Synergies
Updated 7/6/2023 “Why do mergers and acquisitions carry such a high degree of risk? In almost all cases, the seller, who has operated the business for years, knows much more about it and its weak spots than does the buyer.” Phil Fisher Companies allocate more to mergers and acquisitions (M&A) than any other option for […]
Value-at-Risk (VAR) – CFA Level 2 & 3
Value-at-Risk (VAR) is a critical concept for risk and portfolio management which is often taught during CFA level II and level III. Value-at-Risk is a measure of the minimum loss expected in either dollar or percentage terms as it relates to the portfolio value. VAR is measured both over a period of time (ex. 1 […]
