Tag Archive for 'Principles'

by k-ideas

Dr. Reza Arabpour, a financial advisor for countless large companies and stockholders, agrees that an investment with TGEG qualifies with Warren Buffets’s investing principles.

Warren Buffett’s Philosophy in investing came from the Benjamin Graham School of Value Investing.  Below are the following strategies he studied and learned and applied to his investment ventures.

Six Investment Principles from Warren Buffet:

Highly-acclaimed investor, Buffett always look upon what they refer to as “stockholder’s return on investment” or sometimes termed as return on equity.  Return on equity is the company’s net income divided by the shareholder’s equity or book value.  This methodology from Buffett is his way of measuring if a company has been consistently performing well put side by side against its contemporaries. ROE should be viewed within a 5 – 10 year period for a good picture of historical performance.
Avoidance of excess debt.  The debt/equity ratio is what Buffett uses to evaluate if a company carries too much debt compared to its equals.  He has preference for profit earnings generated by shareholder equity opposed to borrowed money or funds.  The Debt / Equity ratio is computed as Total Liabilities divided by Shareholders Equity.  The higher the ratio, the more debt the company has.  Though the amount fluctuates from industry to industry, a good way to assess it is by looking for a ratio that is less than 80% of the industry average.
High profit margins.  Increasing ones.  Companies with above average profit margins are what Buffett seeks out upon foreign direct investment.  A good profit margin counts but also a consistent increasing profit margin.    It is estimated by dividing the net income by the net sales.  Investors should look back on at least five years about its historical performance.  A high profit margin signifies that the company is doing well in handling and controlling expenses and that management has been exceedingly efficient.  Normally, an above average performer holds profit margins that are 20% above the industry average.   Likewise those with same gross margin will mostly be inclined to increase overtime. The profitability of a company that is consistent and transparent has its company performance based on return on equity and shared common goals with investors are another important factor when investing.
Greedy when the market is fearful and is at its lowest.  Great companies are bought at great discounts.  Generally, Buffett thinks of investing in a company that has been around for 10 years which gives them a historical track record to have a proper evaluation of the company’s possibilities.
What sets apart a company from its competitors is one feature that gets the attention and holds the interest of Buffett to invest in a company.  But he does note that if the company relies on the usual product or service and has a distinguished characteristic that is hard to duplicate is what Buffett coined as economic moat, or competitive edge.
Lastly, he deals with the company’s intrinsic value.  It’s the value that exceeds its liquidation value and includes all intangible assets that are not that easy to place a figure on such as a brand name.  Overall, Buffett resolves to obtain a company offered at a 25% discount to its intrinsic worth.

In summary, one great factor that investors look for when investing in securities with extremely low prices is based on their intrinsic value.  When talking about stocks, uncovering its intrinsic value can be quite a risk as there is no general accepted standard of attaining this figure.  Analyzing a company’s fundamentals is mainly the calculated approximate of its intrinsic worth.  Value investors typically just like bargain shoppers search for products, services and corporations that are advantageous and of superior excellence but underpriced.  In short, value investors find stocks that he deems to be undervalued by the market.  The value investor like the bargain hunter challenges himself to find such items that are worthy but not identified by the crowd buyers.

By and large, Buffett prefers stocks exclusively on the basis of their entire potential as a company.  He looks for ownership in divergent quality companies particularly capable at  producing income, he is not after capital gain.  When he invests in a corporation, he isn’t affected if the market will acknowledge its worth sooner or later; he is more concerned with how well that corporation can make money as a business.  True Green Energy Group may not yet possess all the qualities described on Buffett’s investment standards but TGEG has its cutthroat edge over other green technology industries.

A sensible investor does not only invest his money but considers himself as part owner of the company and not just a plain bystander expecting to earn some instant cash.  A very imperative lesson to learn in investing, this is the same as saying that one can’t earn instantaneously at the stock market.

“From the start, we promised the initial pioneer shareholders that they would get the first opportunity to participate just like a large stockholder would. Today, we fulfilled that promise by going public, executing the road show, extending a certain number of shares and warrants of TGEG Canada (DB: TGG) for our pioneer share holders, and most importantly deploying the first ever MRF and Biosphere MKV to the Republic of the Philippines. The founder went on to say, I wish to thank every shareholder, for their continuing support and look forward to the continued growth of our public company,” further said Ronald Shane Flynn, the founder and C.E.O. of True Green Energy Group.