June 17, 20134Comments

Change in Total Reserves – NOPAT Adjustment

Reported earnings don’t tell the whole story of a company’s profits. They are based on accounting rules designed for debt investors, not equity investors, and are manipulated by companies to manage earnings. Only economic earnings provide a complete and unadulterated measure of profitability.

by David Trainer, Founder & CEO

March 14, 20121Comments

Bank Of America (BAC): Very Dangerous Rating — for Ask Matt Readers

Bank Of America (BAC) gets our Very Dangerous rating because it has misleading earnings and a very expensive valuation. Here is my free report on BAC.

by David Trainer, Founder & CEO

March 5, 20122Comments

Sell BAC: Management Is Running Out of Gimmicks

Year to date, Bank Of America (BAC) stock is up nearly 45% compared to the S&P at +about 8%. BAC stock has bounced back nicely after dropping precipitously at the end of last year. I would call the 45% bounce a “dead cat” bounce because I expect the stock to fall right back to $5/share, where it bottomed last Thanksgiving, or lower.

by David Trainer, Founder & CEO

March 1, 20124Comments

Raising Fees Is A Desperate Measure: Sell BAC

Recent news that Bank Of America (BAC) is considering jacking up its fees on basic checking accounts suggests the company is bad shape. As I wrote yesterday, I believe BAC stock is headed back to its lows and today’s news confirms my view that the expectations basked into the stock’s valuation are writing checks that the company cannot cash.

by David Trainer, Founder & CEO

May 17, 20112Comments

Sell Citigroup Before The Earnings Bubble Pops

Citigroup is running out of accounting tricks and the stock will continue its slide as investors recognize the company is not as profitable as it wants investors to believe. Our analysis of the financial footnotes of more than 50,000 annual reports means we know more about which companies have the naughtiest and the nicest accounting. And Citigroup is definitely on the naughty list.

by David Trainer, Founder & CEO

April 4, 20110Comments

Take Gains on Discover Financial (DFS) To the Bank

Since we made DFS the Stock Pick of the Week on Feb 15, 2011, the stock is up about 14% while the S&P500 is up about 0.3%. The stock was super-cheap when we made the call, and that is no longer the case. After making the February and March lists, DFS is no longer one of our Most Attractive Stocks in April.

by David Trainer, Founder & CEO

March 8, 20110Comments

Bleeding Reserves To Artificially Boost EPS: Sell Principal Financial Group, Inc. (PFG)

Principal Financial Group, Inc. (PFG) reported accounting earnings in 2010 that are misleading compared to the true economic earnings of the business. PFG’s 2010 reported earnings are artificially boosted by a reduced loan loss expense, which is funded by a draw down of the company’s loss reserves.

by David Trainer, Founder & CEO