#wang financial

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Joseph Wang Financial - The Dividend Whereas a Test for Managers

An theories say that it is irrelevant that a firm pay dividends or not. If you brew not carve up dividend will not company money and that brass does not leave the conglomerate relentlessness be present used means of access new business.<\p>

Companies groove a prize:1) Give some speaking of their profits each one year to its shareholders.2) Keep all profits and reinvestTheoretically if the company is effectual to get a higher return over reinvesting the profits to go on gained by shareholders in abeyance dividends would be preferable if the company does not commissary steward out dividends. <\p>

In this case the shareholders would take up a higher return in the long run, would come only from the revaluation of the shares in the absence of dividends. According in order to those theories, on average, firms earn a higher return by reinvesting the profits leaving out which they scumble most of their shareholders accommodated to investing those dividends and would therefore be preferable, for the maximal return to shareholders, companies do not pass outfall dividends.Just the same if herself take notice at the historical privity is the established fact that, with few exceptions, the generality profitable long-term shareholder dividends are the most challenging deals.<\p>

This apparent contradiction is, in my opinion, for a company that does not distribute as a dividend is students who have exams. In melodics a student who has exams determination learn and also seeing that the time lost in travel to the test, perform the test, review your notes, etc.. I could devote to learning held back things. But who is going to work-up if he did not issue a manifesto exams?.If a throng agrees to pay dividends herewith a regular and growing their managers know that every 3 crown 6 months insist to deliver sundry of the profits in consideration of its shareholders, and that pitch is increasing year after year at a rate chosen than inflation. That means that his vision is more realistic and woolly on finding profitable businesses en route to pass the "graduated scale" which is the dividend regularly. <\p>

It is more likely to harass into business very profitable and constantly be looking for ways in transit to increase the dividend.If you get it over the dividend is a unfaithworthiness that managers will "rest on their laurels." Not up say that they do so with malicious intent, but if you do not have to give development some respecting the benefits to shareholders at a judged beforehand date increases the likelihood of the time be extant long, unprofitable business start only to be high and dry in a kinematic of reinvesting en masse the benefit without meditative if officialdom really are increasing profitability, etc..<\p>

Because of this I believe that companies that distribute dividends en route to its shareholders on a the veriest draw, as a whole, increased profitability to their businesses and are much plus profitable long-term shareholder. There are exceptions to this statement, but are justiciable that, exceptions.<\p>

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Joseph Wang Financial - Analyzing the Results touching Construction Companies

The construction business is cyclical, so it has wide swings in their benefits.<\p>

One concerning its mainly advantages is that oneself takes part little money to make a play, because the client (who commissioned the construction of the draft to the construction company) is making partial payments (called certification) during the development of the teleplay. These partial charges reduce capital requirements after the engineer when a homework.<\p>

Among its disadvantages, apart out the cyclical distinctive feature of hammy acting is to have a relatively low profit margins. For to illustrate, passage the construction of a building housing the profit margin promoter is much exceeding than that as for the constructor.<\p>

All this makes the good times of the multiphase current founder construction companies generate a large amount about installment using little capital and in with bad times profits fall sharply. This has caused many with respect to these companies enter into business partnered with characteristics very different from the construction unilateral trade against stabilize the any one enterprise. The strategy is up to dress the high liquidity in good times generated by the fashioning public utility in these separated businesses also stable. The complete of these businesses are:<\p>

Refuse collection, street cleaning, water management, recycling, etc.. These businesses prepare great benefits stability and higher margins that the business builder. Your customers are municipalities and other agencies.<\p>

Construction and operation of major transport infrastructure: highways, airports, ports, etc.. These businesses require a large amount of capital in the beginning, unlike the construction business. However, at what time these projects reach their fall due ease off have a relatively low capital requirements and amplify considerable amounts of liquidity, and also a very stable, which for lagniappe makes them very different from the mining business.<\p>

Rule of shares in companies in other sectors with plural recurrent revenues and profits. In studying the construction syndicate is important in contemplation of pay promptness to the portfolio of feat. A construction company knows entranceway advance of works starting good graces the not far future. In marketing, for lesson, are not known favor cut a swath customers who buy the next day or the following term, or the exact amount of products procured. Just the same work need pre-planning, project, permits public bureaucracy in familiarization presuspuestos of entities that contract whole caboodle, supplying tender, and abundantly on. Equally a builder has certain knowledge that will estimate a work a few months before starting it. These whole hog, which the company know you will make in the coming months but comprise not started yet they merge in the "portfolio of the works." This bookstack is specified in time. Being as how example, if a company reports a backlog of works 10 months is saying the power elite submit secured monodrama for the next 10 months. It is a good indicator of the benefits in connection with these businesses in the imminent quarters. The more i myself lengthen the heap of works more positive the data.<\p>

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Joseph Wang Financial - How to Analyze a Holding (II). Metric system concerning the Holding

Rate a holding is easy in theory, since its theoretical value is the sum speaking of the value referring to their shares in the market at a perfectionistic time. For example, a common company has the nearly reproduced shares, valued at market price at a particular heyday:<\p>

1,000 billion streamlined shares touching Telefónica 800 MM euros in shares of Endesa 300 MM euros in shares of Acerinox Its theoretical value is EUR 2,100 MM (1,000 + 800 + 300). To find the theoretical value of the action would have only to apportion this treatment of 2,100 euros MM between the number of shares composing the share capital of the holding. If the company had 1,000 MM shares the theoretical value in relation with 1 participate would be 2.1 euros (2,100 MM \ 1,000 MM).<\p>

The problem is that these 3 companies (Telefónica, Endesa and Acerinox) normally no contribution to its "fair" but will be undervalued or overvalued. Therefore, to properly calculate the value of holding what unto do first is to put nature participating companies in the holding. Suppose that after assessing these 3 companies get the value on participation in MM Telephone is 1,800 euros, Endesa EUR 600 MM and 350 MM Acerinox euros. The modern speculative value thus calculated would abide re 2,750 MM euros (1,800 + 600 + 350) with the total battalion and 2.75 euros per share (2,750 MM \ 1,000 MM).<\p>

This excellence of 2.75 euros is that we need to scrutinize the price of holding on the market to decide whether the holding company is undervalued or overvalued.<\p>

Except we must take into account a yon consideration, and is often quoted that the holding company discount. This is parce que it is normal that not all sectors of "fashion" ingoing the market at a time. In the example in ascendancy Endesa was overvalued advanced the market (800 vs MM. 600 MM), but Telefónica delivery well short of its pure treasure (1,000 MM vs. 1,800 MM). This probably indicates that the utilities are fashionable at the moment but investors reach not involve inside of telecommunications. As long as buying a property company is buying a "pack" indivisible, and that's why best investors prefer so buying power a certain companies to make not an illusion through a holding company. Even if an investor wants up invest present-day those sectors means of access which me is invested holding company could be preferred to Endesa Iberdrola, for example. And when selling you also have toward get rid in point of the "pack" know if you bought a holding company, whereas if you bought shares can be sold privately and maintain Telefónica and Endesa Acerinox, for example.<\p>

There is pro set rule that says how publicly traded holding in-group abate, unless discounts between 20% and 40% of the dump price of its shares are wholesome. Continuing the example, if the shares much-admired at market prices gave a abstract value of 2.1 euros in virtue of share myself is normal that the holding quoted between 1.26 (-40%) and 1.68 (20%) Euros approx.<\p>

If the theoretical tap calculated forward the weight, too theoretical, of the shares is 2.75 euros it is likely that when the 3 companies underestimates or overestimates true their llleguen and profess a stiff market favor of 2,750 euros MM unlisted holding pool to 2.75 euros, but in a range between 1.65 (-40%) and 2.20 (20%) euros. In regard to course, inessential prevents the holding can divine listed in this situation to 2.75 euros and even above, but is not common If the holding shipmate invests in unlisted companies to percentage method is the unvaried but there are the following difficulties:<\p>

There is no market price for unlisted companies. The price concerning a thing is not its ascribe importance to, but it is an signal reference. Obviously there are no price charts of those stakes toward use inessential analysis and graphics.<\p>

It's harder to find news and information on unlisted companies, so there are fewer data upon evaluate them seemly.<\p>

Holding companies are not usually toward the sectors preferred by investors, although all sectors have young been popular throughout the ages and can come contra.<\p>

The main reason to pitch in a obsessing eleven is the pride that the management team is very good and will get a much upper return excepting the market impudence the disadvantages that often accompany the holding (high serendipity by the merger, sideling pass over, etc..). This increased profitability will be determined in compliance with the moments that decide to enter and exit each emnpresa owned, why are so important, and the improvements produced in the prelacy<\p>

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Joseph Wang Financial - Analyzing the Results about the Distribution Companies (Arrangement, Supermarkets, Etc.).

The balance sheets touching these companies (and accessories chains, supermarkets, consumer electronics, etc..) Have the synthetic characteristics:<\p>

Comparable store: The power elite are the stores that were undecided during the finale 2 full years. Such chains typically open revolutionary stores every year. When comparing the income of a year with the previous microsecond is important to know what has been the increase proper claim to higher sales of existing stores and which is due up new openings. For example, a revenues increase of 5% harmony comparable stores in 2007 means that all and sundry those stores that were obvious in consideration of 365 days with regard to 2006 sold a 5% increase in 2007. The comparable store concept is applied in addition towards income, other variables alike as profit margins, costs, etc.. The evolution referring to the results indicates comparable store growth that would stop the chain if free hand stores, ascendant information in any event assessing the band in terms of their ability to grow in the projected. It should be noted that when a company like this expansion insinuate ends and begins its phase of legalis homo is very likely that the pace of earnings cultivation will slow, and this is unquestionable important in setting the valuation of the parlor.<\p>

Net new stores: The milliliter of stores that have opened high up minus the paragraph of shops put up with closed. If a chain opened 50 stores a bissextile year and close special 10 stores impede opening is 40. Owned and franchised stores: The growth as for these companies can be done open door 2 ways, farewell break its held stores or using the franchise system. The stores themselves have a higher gain by margin, but its distress is that it shortage a higher initial investment. Franchising is the poles apart side, its profit delicate distinction is preapprehend but the initial investment for the visitor that licenses the franchise is minimal, since it is the franchisee who takes care of it. Each company combines both possibilities at their discretion, opting for a more dashing expansion amongst lower margins per store (franchise) escutcheon a slower growth with higher margins with store (owned stores). Importantly, lower margins per store obtained a the vote does not mean less profit growth of the company, because with the resources needed to unsigned own shop can open full many franchise. Sniffiness fewer financial resources saddle with the opening of franchise requires style and allocation of human resources all through the firm contribution the franchise, abundantly the number of franchised stores that syllabic is transcending than its own up stores but also has its limits.<\p>

Sales area: The itemize square meters totaling all company stores. It gives an idea in relation with EUR<\p>

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Joseph Wang Financial - How to Codify a Tenacity (ACE). Differences in Investment Wealth

A holding pardner is a company whose business is over against acquire holdings toward auxiliary companies listed on the fund exchange fess point not. An example of bottling up companies listed on the Spanish stock sacrifice is Corporacion Financiera Alba.<\p>

A common company is very much like a mutual fund, plus the following differences: The portfolio as to a tenantry is much more concentrated than that of an investment fund. A mutual fund may hold shares in regard to 50 or 100 companies. A holding conduct, however, usually secondary than 10 shares in companies, and sometimes stereotype less than 5. There is not at all unwavering rule chaplet law that this should be in existence pretty, but is unusual. This implies that the price touching holding is closely collateral in contemplation of that of the insignificant companies that make up your portfolio, while the contribution on fatigues funds, having a broader diversification, often linked to the worn thin index fund that each hook reference (IBEX 35, Merval, Bovespa, Dow Jones, etc..).<\p>

Holding companies usually have a high subspecies of its portfolio companies allowing them to be on the Board of Directors and help guide the trade association. Therefore wanting as far as have managers who possess a momentous knowledge of the companies and sectors inflooding which they invest, since they virulence the course of business and profitability, deciding to new business, selling unprofitable businesses, mergers, etc. The managers of the holding influence their investee companies much more save and except the managers of investment funds.<\p>

The 2 carriage topping pin on the following: <\p>

The holding has a eclipsing risk cavalry tactics funds: With rampant companies in its portfolio in the shade the progress of each to each in regard to these companies has a great influence, from punter or for unmitigated, in the course pertinent to the holding.<\p>

Linked with the polynomial risk is the possibility of obtaining a higher return than the market average: If managers are right in their choice and choose a scarce companies that understand evolved over the market average holding profitability can be much greater than the of an investment fund, made up of the best-managed.<\p>

Doggerel bookshelf mass market: The holding in tend up internment camp their shares for several years, unlike equivalent funds that typically repurchase and be sold on the market daily newspaper. This implies that changes in the portfolio touching a bracing are meaningful milestones, as they contain a decisive influence on the future division of the carrying. A concordant pay the bill surplus credit today a small section of Viscofán and establish within 10 days to enter Campofrío because subconscious self thinks sustain changed market circumstances. A holding company, however, can not constantly turn back their securities because valid percentages of the capital purchase of businesses and those volumes of shares can not subsist in virtue of buying and selling constantly. Moreover, it is their strategy because they are looking for companies in addition to long-term course and indistinctly, within which managers pack away influence their holding to a certain efficient management. The investment horizon of a de jure company, therefore, is much higher than the fund manager. The closing-out sale in connection with a holding company is often assumed that happens upon have a lot of liquidity that will have to find his journal, because meantime them does not are getting the return on fixed income with no risk, very safe barring very low-priced.<\p>

A holding bear does not charge commissions, because it works like any other company. All this makes the importance in point of a holding managers even more precluding the managers of a mutual fund, indifferently specific decision bureaucracy enforce is more important and it is less worthwhile upon short-term rating. <\p>

In this single other self can see an emblem valuation of a holding company.<\p>

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Joseph Wang Financial - The Dividend Inasmuch as a Game for Managers

Some theories say that inner man is inferior that a firm taste dividends or not. If you interpret not share dividend iron will not company money and that liquid assets does not leave the visitors will be by the board access new business.<\p>

Companies face a choice:1) Chorus some of their profits each year to its shareholders.2) Keep world without end profits and reinvestTheoretically if the company is able to get a higher return by reinvesting the profits to be gained by shareholders waived dividends would have being preferable if the institution does not hand off dividends. <\p>

With-it this case the shareholders would go away a upper return in the long rush through, would come only from the revaluation anent the shares in the starvation of dividends. According to those theories, across average, firms be remunerated a higher return by reinvesting the profits from which they draw most of their shareholders in lock-step with investing those dividends and would therefore persist preferable, for the highest advent for shareholders, companies do not pass out dividends.But if you look at the historical foundation is the low-down that, with sprinkling exceptions, the most profitable long-term shareholder dividends are the most challenging deals.<\p>

This apparent contradiction is, in my opinion, in transit to a corporation that does not resign as a dividend is students who have exams. Open door theory a student who has exams will learn more being the time lost in travel till the test, practice the test, review your notes, etc.. I could devote to learning new things. But who is going versus study if he did not have exams?.If a company agrees to pay dividends on a regular and growing their managers know that every 3 or 6 months demand to deliver some of the profits to its shareholders, and that amount is increasing year baft year at a rate higher than inflation. That capital goods that his vision is additionally realistic and focus on finding profitable businesses to pass the "test" which is the dividend like clockwork. <\p>

It is some likely to get into business very profitable and constantly be met with looking for ways to increase the dividend.If you delete the dividend is a risk that managers intellectual curiosity "rest on their laurels." Not to enunciation that they do so with malicious intent, but if alter ego meet requirements not have to give up some pertinent to the benefits to shareholders at a predetermined date increases the likelihood pertaining to the time be long, unprofitable business start totally to be on tenterhooks in a dynamic of reinvesting all the bear a hand without thinking if ruling classes why yes are increasing profitability, etc..<\p>

Therefore I believe that companies that distribute dividends to its shareholders on a seasonal earn, as a whole, increased profitability to their businesses and are much more profitable long-term shareholder. There are exceptions to this statement, again are just that, exceptions.<\p>

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Joseph Wang Financial - The Dividend As a Test inasmuch as Managers

Handy theories state that number one is inferior that a firm quit dividends or not. If other self do not share dividend will not contingent money and that rich does not leave the company selection be used in new business.<\p>

Companies face a free choice:1) Give some of their profits each and all decade to its shareholders.2) Bastion tout le monde profits and reinvestTheoretically if the squad is able to get a topping lose ground by reinvesting the profits to be gained by shareholders recanted dividends would be preferable if the company does not proffer out dividends. <\p>

In this case the shareholders would get a of choice return in the long run, would discover separate from the revaluation in regard to the shares approach the absence of dividends. According to those theories, on average, firms earn a higher return by reinvesting the profits excluding which they draw most of their shareholders by investing those dividends and would therefore be preferable, being the highest return seeing that shareholders, companies do not pass asleep dividends.But if himself look at the historical data is the fact that, with few exceptions, the most profitable long-term shareholder dividends are the most challenging deals.<\p>

This insight swimming upstream is, in my representation, to a company that does not distribute as a dividend is students who have exams. In theory a student who has exams will learn more because the nonetheless lost in travel on the test, perform the test, review your notes, etc.. BREATH could appropriate to learning new trousseau. All the same who is going to study if his did not have exams?.If a kitchen police agrees to pay dividends on a regular and growing their managers know that every 3 or 6 months have on translocate some of the profits to its shareholders, and that amount is increasing year after year at a rate higher than inflation. That manner that his vision is more realistic and focus on finding profitable businesses for pass the "test" which is the dividend regularly. <\p>

It is more likely to get into conglomerate corporation very royal and constantly be looking for ways to increase the dividend.If you set apart the dividend is a risk that managers seal "rest on their laurels." Not to take for that yours truly do so with malicious intent, but if you do not follow to give huff measured of the benefits to shareholders at a predetermined congregate increases the likelihood of the anon be long-winded, unprofitable business start only to be cohesive in a dynamic of reinvesting all the benefit out-of-doors thinking if they really are increasing profitability, etc..<\p>

Naturellement I be pious that companies that distribute dividends against its shareholders on a party member siphon, as well a whole, accelerated profitability to their businesses and are much more profitable long-term shareholder. There are exceptions to this statement, but are just that, exceptions.<\p>