Investors spend enormous amount of
time analysing companies, industries, trends and simply try to understand how
the business works. That is of course very much needed and at least basic
understanding is absolutely essential for correct asset valuation. However, in
the very end of the valuation process one deeply subjective variable may enter
into the calculation. And it may change everything.
Once companies have provided financial guidance: Are analysts’ forecasts
able to add any extra value? If so, how often and by how much?
A study by AKRO
investiční společnost, comparing the accuracy of analyst forecasts and
management forecasts, shows that so called ‘post event’ analyst forecasts, i.e.
those made post recent results/management guidance, are in general more
accurate than management forecasts. Both the frequency and magnitude of the
greater accuracy prove significant, a somewhat reassuring conclusion for
research analysts.
If analysts are
able to provide insights with regard to tangible measures of value, it seems
logical to assume analysts are also able to provide insights with regard to
less tangible measures of value, e.g. management quality, industry outlook. At
a time when the ‘active’ asset management industry is getting a bad press, and
many research departments are being downsized[i],
the results should give pause for thought.
Jeremy Monk, AKRO investiční
společnost, a.s.
The Mysterious
Case of the Czech Pre-War Bonds and the ‘Secret’ 1984/1986 Agreements
Scripophily isn’t
without its own controversies. The recent
discovery of the original signed 1984 and 1986 agreements between the
Bondholders Protective Council and the Czechoslovak State, in the archives at Stanford
University Libraries, calls into question the transparency and integrity of the
Czech State; both past and present.
Employer and Position: Investor & Portfolio Manager, Meridon Funds
Professional Credo: “Walking forward is a series of cleverly prevented falls.”
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