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David Trainer
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David is CEO of New Constructs (www.newconstructs.com), an independent research that specializes in unearthing key insights from the Financial Footnotes of Annual Reports. Having analyzed over 50,000 annual reports and their Financial Footnotes, New Constructs research regularly produces Hidden... More
My company:
New Constructs
My blog:
The Diligence Institute
My book:
The Valuation Handbook
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  • Proof Is In Performance Through 3Q13

    There are many ways to define the quality and merit of equity research. One mea­sure stands tallest: per­for­mance of stock rec­om­men­da­tions. And by that mea­sure, New Con­structs' research is of very high quality. See our lat­est Proof Is In Per­for­mance Thru 3Q13 Report for more details.

    As you can see in the post on our stock-picking acco­lades, we have plenty of inde­pen­dent, 3rd-party val­i­da­tion of our stock-picking suc­cess. So, you don't just have to take our word for it.

    Our suc­cess comes from being able to iden­tify groups of stocks that are most likely to be re-priced as the mar­ket, over time, rec­ti­fies mis­per­cep­tions of eco­nomic value cre­ated by investors employ­ing less ana­lyt­i­cal rigor than we. We derive our advan­tage from the in-depth analy­sis of finan­cial state­ments, espe­cially the notes to the finan­cial state­ments, which we apply to the analy­sis of the under­ly­ing eco­nomic value of 3000 firms. We believe our exact­ing approach to research gives us advan­tage in the selec­tion of indi­vid­ual secu­ri­ties for our long and short portfolios.

    In the third quarter of 2013, our Small-Cap Long strategy (12.4%) beat the Russell 2000 by 3.2% and our combined Large and Small-Cap Long strategy (8.1%) beat the combined S&P 500 and Russell 2000 in 3Q13 by 1.1%. So far in 2013 our Small-Cap Long strategy (31.6%) has beat the Russell 2000 by 8.5% and out combined Large and Small-Cap Long strategy (23.9%) has beat the combined S&P 500 and Russell 2000 by 4.4%.

    The cumulative returns of our rec­om­men­da­tions since Jan­u­ary 2005:

    Long/Short Strat­egies:

    • Most Attractive/Dangerous (Large and Small stocks): 54.3%
    • Most Attractive/Dangerous (Large cap stocks only): 51.6%
    • Most Attractive/Dangerous (Small cap stocks only): 47.8%

    Long Strat­egies:

    • Most Attrac­tive (Large and Small stocks): 113.6%
    • Most Attrac­tive (Large cap stocks only): 105.2%
    • Most Attrac­tive (Small cap stocks only): 111.9%

    Short Strat­egies:

    • Most Dan­ger­ous (Large and Small stocks): -52.1%
    • Most Dan­ger­ous (Large cap stocks only): -46.1%
    • Most Dan­ger­ous (Small cap stocks only): -60.1.5%

    These returns com­pare well to the major indices over the same time frame:

    • S&P 500: 43.9%
    • Rus­sell 2000: 77.4%
    • Risk-Free Rate: 15.5%
    Nov 05 3:11 PM | Link | Comment!
  • 4Q Best & Worst ETFs & Mutual Funds—By Sector—Recap

    Each quarter, we provide the most comprehensive review of equity ETFs and mutual funds available. We review the Best & Worst ETFs and Mutual Funds by sector and style.

    This article provides quick access to all our 4Q reports on sector funds.

    We began the 4Q13 Sector series with our Sector Rankings report, which details the best sectors for finding quality ETFs and mutual funds. Next, we highlight the ETFs and mutual funds that stand out in the Rating Breakdown: Best & Worst ETFs & Mutual Funds by Sector. We follow with detailed reviews of the Best & Worst for each sector (links below). The 3Q13 Sector Recap is here.

    Sector Series: Best & Worst ETFs and mutual funds for:

    1. Consumer Staples
    2. Information Technology
    3. Consumer Discretionary
    4. Industrials
    5. Telecom
    6. Health Care
    7. Materials
    8. Energy
    9. Financials
    10. Utilities

    Clients can perform similar analysis to all that is in the above reports using our ETF screener and mutual fund screener.

    Oct 25 3:05 PM | Link | Comment!
  • GM's Long Range EV A Further Threat To Tesla

    When I put Tesla (TSLA) in the Danger Zone last month, I argued that TSLA was overvalued due to investors discounting the threat of competition from the major players in the auto industry like Ford (F), General Motors (GM), and Chrysler. This week, we got more proof that Big Auto is taking electric vehicles seriously and doesn't plan on letting Tesla own that market, which is what TSLA's valuation implies the company will do.

    On Monday, September 19, GM announced their plan to develop an all-electric vehicle that could go 200 miles per charge, just like Tesla's Model S. The catch? GM plans to sell their car for only $30,000, less than half of the $62,000 sticker price for the Model S.

    To show just how serious they are about achieving this goal, GM revealed a 50,000 square foot expansion to its battery lab. The new addition nearly tripled the size of the lab. Those who believe Tesla has some great technological advantage should read this quote by GM Vice President Doug Parks: "There is nothing in the Tesla battery that we don't know." GM has taken apart and tested Tesla batteries. GM and all the other big auto players have the resources to copy Tesla now that the electric vehicle market is showing signs of profitability.

    The market continues to be irrationally optimistic about TSLA. GM's announcement barely moved the stock, but Thursday's Deutsche Bank upgrade sent the stock up 7%. This market will latch on to any piece of good news as a reason to send the stock price higher. Warren Buffet famously said to be fearful when others are greedy. TSLA investors are getting very greedy, which means now is the time to be fearful. TSLA shareholders should get out before the competition bursts this bubble.

    Sam McBride contributed to this article.

    Disclosure: David Trainer and Sam McBride receive no compensation to write about any specific stock, sector, or them

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Sep 20 2:16 PM | Link | 2 Comments
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