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China Tech and an IPO Nightmare
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China Tech and an IPO Nightmare

Investing insights you might have missed in July

Stephen Clapham (Steve) Author Smart Money Method
Aug 3
8
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China Tech and an IPO Nightmare
behindthebalancesheet.substack.com

Today’s post gives you a second chance to read some of my insights from July. This month you were sent:

1)    A top analyst’s “hidden value” idea and how I studied it further

2)    Why you shouldn’t take China’s big tech stocks at face value

3)    How you could have foreseen an auto IPO’s 95% drawdown

4)    A detailed look at Netflix’s Q2 results (and what they really mean)

As a paid subscriber, you have access to the bonus material for every article below, and for every post I’ve ever written. Thanks again for your support!

The articles below are all free. Become a paying sub and you’ll also get access to the bonus content and datasets for each post. All for less than the price of a pizza each month!

I’ve priced it so that one insight (or mistake avoided) will pay for at least 5 years of your subscription. If you’re a professional, you can probably multiply that by 10…

A “Hidden Value” Idea With 149% Potential Upside

In May, I watched a top analyst make a compelling case for a stock with up to 150% upside from the day I published my article.

This post shows you how I took their idea and put it through a number of tests to see if it was worth studying further.

Paying subs also got a model, more context on the idea and my overall conclusions on the pitch.

Behind the Balance Sheet
A “Hidden Value” Idea With 149% Potential Upside
This newsletter was not intended to be a stock-picking newsletter. First, I have been a sell-side analyst and I had no desire to repeat that, whether through a new research boutique, or by publishing a stock tips letter, and I feel that $150 (now $160) is too low a price point for that. Perhaps I should do, as I believe my friend Whitney Tilson is making several million dollars a year out of his newsletter business…
Read more
a month ago · 8 likes · 6 comments · Stephen Clapham (Steve) Author Smart Money Method

China Tech’s Dual Personality

The first question you ask about a stock is usually something like: “Which business is this company in?”

This is pretty straightforward for most companies. But as you’ll see in this post, it isn’t so cut and dry for China’s big tech stocks.

If you’ve ever thought of investing in these companies, you need to read this post and understand the issue.

Paying subs also get the 16 point checklist I use to audit tech company accounts for institutional clients.

Behind the Balance Sheet
China Tech’s Dual Personality
Back in 2020, an institutional client asked us to review five of the biggest Chinese tech stocks. The client wanted us to look at Alibaba, Tencent, JD.com, Meituan and Baidu, and give an assessment of the quality of their accounting…
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24 days ago · 10 likes · 2 comments · Stephen Clapham (Steve) Author Smart Money Method

Aston Martin’s Racy Accounting (Parts 1 & 2)

Aston Martin makes beautiful cars and are an iconic luxury brand. But as I’ve warned on several occasions, their accounting is packed with red flags.

This two part series shows you why I was so concerned and how you can find it.

If investors in Aston’s IPO knew how to spot this stuff, they might not have lost 95% since it went public. Next month, I will explain the killer clue in the prospectus which would have helped you avoid this car crash.

Behind the Balance Sheet
Doomed to crash?
Introduction Aston Martin is launching another rights issue, to raise £635m, bringing in Saudi Arabia’s sovereign wealth fund as a 1/6 shareholder via a placing; and the Saudis, Mercedes and Lawrence Stroll are investing a further £335m in the rights issue. The announcement was greeted with relief in the stockmarket. But this is just the latest in a long string of financial rescues for the long-time ailing car company which has gone bust almost as many times as its famous customer James Bond has come back from the verge of death…
Read more
17 days ago · 8 likes · Stephen Clapham (Steve) Author Smart Money Method

The first post looked at the R&D treatment while the second looked at the other intangibles. You really didn’t need to look much further. But we shall do next month, as there were more red flags than at a race track.

Behind the Balance Sheet
Aston Martin's £142 million hangover
In my previous look at Aston Martin, I covered the latest fundraising and looked at the treatment of capitalised R&D. This time I want to cover the other intangible assets. These are often overlooked by analysts, but I believe the treatment of such assets often gives a clue as to the psychology of the chief financial officer or finance director…
Read more
3 days ago · 2 likes · Stephen Clapham (Steve) Author Smart Money Method

What Netflix’s Q2 Results Really Mean

Netflix’s latest results shed more light on subscriber numbers and the company’s much-hyped password sharing and ad-supported options.

Of course, the results came served with a suitable dollop of company spin. This post goes beyond that and takes a detailed look at the numbers, starting with the balance sheet. As you’ll see, it raised a lot of questions.

Paying subs also got my overall thoughts on Netflix’s stock at the moment (not investment advice).

Behind the Balance Sheet
What Netflix's Q2 Results Really Show
So Netflix reported results and subscriber numbers beat their conservative projections after their difficult Q1 report. Surprise! The company made much in the release of the adverse impact of a stronger dollar on their results which depressed revenue growth by four percentage points, from 13% on a constant currency basis to a reported 9%. It’s helpful when companies explain this. (Spoiler: when it’s in their favour, disclosure is less frequent…
Read more
10 days ago · 5 likes · Stephen Clapham (Steve) Author Smart Money Method

What’s Coming Next

The stock market usually takes a break in August, as everyone goes on holiday. I’m not sure things will be so quiet this year, but I hope you manage to switch off if you’re heading away.

In the coming weeks, you can expect more posts on using a company’s accounts to figure out what’s really going on. In the short term, these will be mixed with some lighter content for holiday reading and learning.

July’s “slightly different” post where I analysed a live stock idea got a good reaction, so there are more in the pipeline. In the meantime, you could always take my new 3 day stock idea challenge and generate some new ones for yourself (Paying subscribers will get this free in the next email).

As ever, please reply and let me know your thoughts on the posts and anything you’d like to see covered!

Don’t forget that paying subs get extra content and useful datasets with every post. If you’d like to upgrade your membership, you can join for just $16 per month below.

Paying subscribers can expect more free offers and discounts in the coming months.

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China Tech and an IPO Nightmare
behindthebalancesheet.substack.com
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