Founder Evidente. Top rated quantitative analyst, Evidente

Sam Ferraro

Founder Evidente. Top rated quantitative analyst

Evidente

Evidente is an independent financial education firm that delivers innovative financial advice to wholesale investors, including active long only funds, hedge funds, pension funds, and sovereign wealth funds, in Australia and globally.  Drawing on academic research in asset pricing, behavioural finance and portfolio construction, Evidente provides wholesale investors with commercial solutions to stock selection and asset allocation decisions across equities and other asset classes.

<ul><li>In this report, we identify financial forensics as an indispensable part of the short-seller's tool-kit.  Specifically, we examine the role that a deterioration in earnings quality has played in the demise and poor performance of two high profile Australian small caps that were once market darlings: electronic retailer, Dick Smith Holdings and law firm, Slater &amp; Gordon.</li><li>Now that over three quarters of the ASX200 companies have reported their 2016 full year results, Evidente has undertaken a comprehensive analysis of company annual accounts and identified three companies that have reported a high non-cash component of earnings and a substantial deterioration in earnings quality in the past year: A2M, BAP and BLK. </li><li>In the second instalment of Financial Forensic, Evidente will use its cash based accruals measure to develop a more robust and clean estimate of cash based operating profitability.</li></ul>

In this report, we identify financial forensics as an indispensable part of the short-seller's tool-kit.  Specifically, we examine the role that a deterioration in earnings quality has played in the demise and poor performance of two high profile Australian small caps that were once market darlings: electronic retailer, Dick Smith Holdings and law firm, Slater &amp; Gordon.Now that over three quarters of the ASX200 companies have reported their 2016 full year results, Evidente has undertaken a comprehensive analysis of company annual accounts and identified three companies that have reported a high non-cash component of earnings and a substantial deterioration in earnings quality in the past year: A2M, BAP and BLK. In the second instalment of Financial Forensic, Evidente will use its cash based accruals measure to develop a more robust and clean estimate of cash based operating profitability.

Slater & Gordon

Financial Forensic - Part I