Thirty-five million individual investors jumped into the stock market for the first time during the late 1990s without asking questions about the stocks they were buying. When the bubble burst and the large number of accounting scandals began to grow, most investors didn’t know where to turn or whom to trust. Now it has become more important than ever for investors to take matters into their own hands.
Financial Fine Print: Uncovering a Company’s True Value lets individual investors in on the secrets that seasoned professional investors use when they evaluate a potential investment. Buried deep in a company’s quarterly (10-Q) and annual (10-K) reports are the real clues to a company’s financial health: the footnotes. At many large companies, these footnotes can run for more than 30 pages and for some corporations have doubled in the past five years, making them simply too important for investors to ignore.
Financial Fine Print spells out exactly what investors need to look for within the footnotes of a company’s reports in order to make better, more informed decisions. By using numerous examples of actual footnotes that have appeared in SEC documents, the book teaches investors in easy-to-understand language ways to spot – and avoid – future Enrons and Worldcoms (and Tycos and Adelphias and HealthSouths). For any investor who has spent the past three years watching their investments shrink and has begun to think about getting back into the market, this book provides the critical tools that investors need to know to avoid getting burned once again.
"Financial Fine Print", in my opinion, provides insufficient analytically challenging insights for those who work in the financial service industry, mainly as an Analysts or Portfolio Managers. However, for those who new to the financial statement / analysis process, the book is a decent primer to understand the importance of financial reports (i.e. footnotes). The biggest disappointment about the book was that it was over-hyped. The book not only read like it was hastily assembled but felt like a 30-page pamphlet of footnote tidbits stretched to 173 pages.
Firstly, I completely disagree with the subtitle of the book: "Uncovering a Company's True Value" as it is misleading. Gaining information from Ms. Leder's book will not result in uncovering a company's **true** value. The book will allow the novice or untrained Analysts / PMs to focus on areas that may shed more light on the company's financial operating results, financial condition, and/or cash flow generating abilities. However, such cursory coverage of said materials is insufficient to arrive at a company's **true** value.
Secondly, the writer fails to fully understand the analytics related to a majority of the subject matters. Allow me to use Chapter 8 that addresses off-balance obligations. On page 133, the writer describes a "Synthetic Lease" but fails to explain or differentiate the lease from any other FASB #13 operating lease. Second, on page 130, the writer tries to educate the reader on the importance of off-balance liabilities with the following remark: "... is to imagine how your bank account balance would improve if you didn't have to account for the monthly mortgage payment." However, her example is faulty and dangerously misleading.
Lastly, the writer tries to add credibility to her work by randomly inserting quotes from a limited number of "experts," that tends to get recycled through-out the book. While some of the people mentioned in the book are highly respected in the industry (i.e. Pat McConnell and David Zion), it was disappointing to find out Ms. Leder did not interview some of the leading researchers from the accounting academia. In fairness, Ms. Leder did provide some accounting research, albeit woefully inadequate for a book of this scope.
As an active long-term investor who reads a lot, I was always frustrated by all those experts who kept telling me to read the footnotes, without giving me any clues as to what I was supposed to be looking for. This book, which I zipped through in a weekend -- gives me exactly what I need to know to avoid potential problems: options, pensions, and my personal favorite, recurring special charges -- using examples from actual SEC filings. With Leder's help, I now feel comfortable skimming these hefty documents. Also good: her website, [...] where she provides daily updates of things -- both good and bad -- that she finds buried in SEC documents. It's become part of my daily routine!
In the aftermath of the corporate accounting scandals, it's hard to know what companies to trust enough to put your money behind them. Financial Fine Print has helped me research companies much more thoroughly. By showing me step-by-step methods to dissect the footnotes in the corporations' financial statements and annual reports, I've learned where all of the unflattering yet legally accountable information is usually hidden in order to make better decisions. I heartily recommend this book for any savvy investor who is unwilling to invest in a company without having personally researched it first.
Product Details :
- Hardcover: 256 pages
- Publisher: Wiley; 1 edition (July 25, 2003)
- Language: English
- ISBN-10: 0471433470
- ISBN-13: 978-0471433477
- Product Dimensions: 0.8 x 6.1 x 9.4 inches
More Details about Financial Fine Print: Uncovering a Company's True Value, 1st Edition
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