More than Just Shark Tank Investors Can Partake in an Equity Raise!
For any business, the art of raising capital is an extremely important aspect task to stay afloat, at many different times of the business. One of the most common ways that you will see business do this is with an equity raise. What exactly does equity raise even mean? Equity raise, or equity financing, is […]
Understanding AFFO for REITs: The REIT Equivalent of Free Cash Flow
Estimating a valuation for a REIT is vastly different than a valuation for any other company because of the unique business model for REITs. That’s why investors need to use REIT-specific metrics such as FFO (Funds from Operations) and AFFO (adjusted Funds from Operations) to estimate Free Cash Flow and valuations. Creating a rough estimate […]
The 5 Types of Mergers and Acquisitions and Its Impact on Your Investments
Have you ever had a stock jump massively after there was a merger and acquisition announced? Or, maybe the opposite happened and the share price dropped significantly. Either of these can happen for many reasons, so I think it’s fitting for us to take a deep dive into the various types or mergers and acquisitions! […]
The Pros and Cons of Redeemable Preferred Stock
I recently wrote a post about the pros and cons of preferred equity, but did you know that there are actually is a type of preferred equity that the company can decide to pay you off for your shares? Let me tell you all about redeemable preferred stock! First off, if you’re unfamiliar with preferred […]
Residual Income Valuation Method – CFA Level 2
Valuing a company using the residual income method is an interesting technique not many retail investors are aware of which is covered in CFA Level 2. Value investors will enjoy the residual income method because of its starting point at book value before going on to add the present value of expected residual income. This […]
How to Estimate Future Free Cash Flow Growth for a Mature Cash Cow
Post updated: 9/07/2023 When it comes to projecting or estimating future free cash flow growth, there isn’t a strict science behind it. Some common methods involve ROE and retention ratio, for example. While using traditional methods to estimate future free cash flow growth can help for a ballpark projection, this can be inaccurate for many […]
IPO Basics: Explaining IPOs in Simple Terms, With Examples
Companies in the U.S. have generated more than $70 billion in IPOs thus far in 2020. All of which outdistances the total for 2019, is the busiest since 2014, and the second biggest haul since 2000. IPOs are all the rage on Wall Street, with anticipated IPOs from some of the bigger names in tech […]
How to: Excess Return Model for Valuing Financial Stocks
Valuing banks, insurance companies, and investment banks are among the more difficult challenges in valuing any business. Most investors opt for relative valuations that use multiples to compare value from one to company to another in large part. There is nothing inherently wrong with this strategy, but sometimes comparing multiples leads to overvaluation; if the […]
Corporate Bond Yield, Yield Curve, and its Impact in Fixed Income
“Both from the standpoint of stocks and bonds, an investor wants to go where the growth is.” Bill Gross Considered the undisputed master of bond investing, Bill Gross spent his entire investing career focusing on the bond asset class and used his main investment vehicle, PIMCO, to generate great wealth for himself and his shareholders […]
MLP Valuation – Taxes and Metrics for this High Yielding Investment
Master Limited Partnerships, also known as MLPs, are a great vehicle for income investors, similar to REITs, in that they distribute the majority of their earnings in the form of dividends. However, not many investors are familiar with these types of investments, let alone how to conduct an MLP valuation. Dividends and the search for […]
