Book recommendations, Part infinity...

[libor.plus1]

I know this topic has been done a few times (at least on the old board), but does anyone have any recommendations for equity analysis books? Specifically, I'm looking for books that point out those small (sometimes not so small) but crucial things to look for whether in the business of a company, or behind the accounting numbers.

 

On a semi related note, I find Wabuffo's posts an interesting read cause he always seems to point out the minutiae that can make drastic differences in proposed numbers.

 

 

[netnet]

what level of detail or expertise did you desire?  Of course the bible of security analysis is Security Analysis, by Graham.  Everything after that is an addendum if not derivative. (At least that's my opinion.)

 

I like in no particular order: Quality of Earnings, Financial Shenanigans, and Fridson's book, Financial Statement Analysis.  (I am assuming that you already have a relatively thorough understanding of accounting.)  and if you can't make it through Security Analysis and the other books, then at least read Intelligent Investor and How to read a Financial Statementwhich you should read anyway!

 

Netnet

[CONeal]

One book in addition to the list above is "Fooling some of the people all of the time" by Einhorn.  The book is about Allied Capital (ALD) and how they are basically a fraud.  It goes into pretty extensive detail about how the numbers can be nothing but a lie.  The thing that was enjoyed most out of the book was in regards to how much detail Einhorn goes into reviewing a company (in this case a short sell).

[mpauls]

Weinstein, Arbitrage in Securities

[SharperDingaan]

 

The reality is that there is no check list to follow, but if your accounting is up to it - look at the forensic accounting texts. Focus on what the criminal is trying to do, why its required, & how that specific tweak helps him achieve his goal.

 

Then apply you findings to known frauds (ie: Enrons). Look at what is typically said when the flags first go up, what the typical trading looks like, & how long it takes to `discovery`. Come up with some progressive flags - & you have a taleb like trading position. Just keep in mind that the vast majority of firms are honest, & that most frauds are typically very country or culture specific.   

 

The seminal texts mentioned use GAAP BS and P&L accounting information, which will dissappear on 01/01/2011 (ie: under IFRS the BS, P&L, Statement of Cashflow, etc. will no longer be produced).

 

There will always be frauds, but there is no reason why you have to be burned by them

 

SD

 

 

 

[SharperDingaan]

 

You might want to look at some of the current bank Q2 results - equity as reported on the FS, & the MTM disclosure around other comprehensive income.

 

Learn how a bankrupt can be made to look solvent ;D

 

SD

 

 

 

[mpauls]

You might consider just going from start to finish through Wiley GAAP 2009 & Wiley IFRS 2009, trying to relate each section to something specific.  Enron might not be a bad starting point, plenty of examples.