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Improving Auditing – It’s Certainly Time

Readers don’t need to be reminded that many of the most damaging events for investors in public companies in recent years have arisen because of the failures of auditors to identify misleading accounts, if not downright fraud in some cases. The Kingman review of the FRC and the views of the Competition and Markets Authority (CMA) suggest that there is a widely recognised problem in the quality of work done by auditors and the regulation of the profession. I have mentioned previously ...

Market Bouncing Up or Down – Sophos, Greggs, Apple and Fundsmith

After a dire market performance before Xmas, we seem to be back to the good times in the last 3 days. Is it time to get back into the market for those who moved into cash as the market fell down and down and down in the autumn? Rather early to generalise I suggest although I have been picking up some shares recently. One which I purchased a small holding in was Softcat (SCT). Yesterday it issued a trading update simply saying ...

The Signs Were There – Corporate Disasters and How to Avoid Them

This is a review of the recently published book entitled “The Signs Were There” by Tim Steer. It’s worth reading by any investor who invests directly in stock market shares, but particularly by those new to the game. Experienced investors will know about many of the causes of companies collapsing, and how accounts can deceive, from their own past experiences. But it’s best to learn what to look for in other ways. The book covers many UK examples of corporate disasters - ...

The trouble with net debt…

Net debt is a vital metric for investors and lenders. What ultimately kills companies is when they are unable to pay their debts when due. Hence, measuring the ratio of net debt to profits (and cashflow) is crucial to judging a company's ability to pay and whether it is likely to find itself in trouble, potentially leading to a permanent loss of capital for investors. Therefore it is very troubling that there have been several instances in recent years where reported net ...

IC Share Tips, National Grid, Brexit and the Audit Market

This week’s Investors Chronicle edition (dated 28/12/2018) provides lots of food for thought. One of the most educational is their review of the share tips they published as “tips of the week” in 2018. Unlike some investment publications, who simply forget about their past tips that go nowhere, while lauding their hits, the IC is open about their performance. They issued 173 “BUY” tips and 24 “SELL” tips in the year. That is quite some achievement by itself as I rarely have ...