Director | Exposing Creative Accounting, Bucephalus Research Partnership

Robert Medd

Director | Exposing Creative Accounting

Exposing Creative Accounting

Bucephalus Research Partnership

Bucephalus Research Partnership Limited. Exposing Creative Accounting.

At the Bucephalus Research Partnership (BRP) we analyse financial statements using our accountant's practical experience and our own quantitative algorithms for corporate governance, accounting risk and peer performance.

Our thematic research refines our unique algorithms while our single stock research focuses on examples where we discover a significant gap between published accounts and business reality.

​Bucephalus Research Partnership:
- Is an independent fee-based research service
- Does not take proprietary positions, long or short
- Does not solicit business or fees from the corporates we review

Forensic Accounting

The Bucephalus Idea Generator (BIG) picks stocks by combining our work on Creative Accounting and our work on capex and valuation cycles to see which companies are forecast to generate extreme returns and/or are on extreme valuations. The model then creates performance outcomes to search for absolute and relative investment ideas.We run the model every month to see what has changed and which companies are worthy of further investigation.<a href="https://www.buceph.com/bucephalus-idea-model-604975.html" target="_blank">Click here </a>to download a sample company overview from the Bucephalus Idea Generator.

The Bucephalus Idea Generator (BIG) picks stocks by combining our work on Creative Accounting and our work on capex and valuation cycles to see which companies are forecast to generate extreme returns and/or are on extreme valuations. The model then creates performance outcomes to search for absolute and relative investment ideas.We run the model every month to see what has changed and which companies are worthy of further investigation.Click here to download a sample company overview from the Bucephalus Idea Generator.

Extreme Valuations: Global Stock Ideas Using the BORUC Yield

Thematic (Sector/Industry)

<h2>Introducing the Bucephalus Operating Return on Utilised Capital</h2>We created BORUC, to reveal the true operating performance of businesses because ‘traditional’ measures (ROE, ROCE etc.) are easy to manipulate. Struggling companies often resort to creative accounting to obscure their problems and hide their decline. This alters the numerator in ROE, ROCE etc. and disguises their investment and capex cycles.

Introducing the Bucephalus Operating Return on Utilised CapitalWe created BORUC, to reveal the true operating performance of businesses because ‘traditional’ measures (ROE, ROCE etc.) are easy to manipulate. Struggling companies often resort to creative accounting to obscure their problems and hide their decline. This alters the numerator in ROE, ROCE etc. and disguises their investment and capex cycles.

<h2>Introducing the Bucephalus Operating Return on Utilised Capital</h2>We created BORUC, the Bucephalus Operating Return on Utilised Capital, to reveal the true operating performance of businesses because ‘traditional’ measures (ROE, ROCE etc.) are easy to manipulate. Struggling companies often resort to creative accounting to obscure their problems and hide their decline. This alters the numerator in ROE, ROCE etc. and disguises their investment and capex cycles.

Introducing the Bucephalus Operating Return on Utilised CapitalWe created BORUC, the Bucephalus Operating Return on Utilised Capital, to reveal the true operating performance of businesses because ‘traditional’ measures (ROE, ROCE etc.) are easy to manipulate. Struggling companies often resort to creative accounting to obscure their problems and hide their decline. This alters the numerator in ROE, ROCE etc. and disguises their investment and capex cycles.

Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

Event-Driven

Samsung Electro Mechanics Co, Ltd. / Event-Driven

<ul>
<li>This is the list of the realistically tradable prefs in Korea. Korea has a total 116 perfs. I filtered them by &gt; ₩100bil market cap and &gt; ₩0.2bil DTV. This filtering gives a total 23 pairs for share class trade. It is generally shown that dividend yield difference and liquidity affect pref discount. The higher div yield difference and the higher liquidity are, the less pref discount is.</li>
<li>Two names are currently catching my eye. Samsung E-M had a major recovery move last Friday mainly on bargain hunting. The duo made +2σ jump in one single day. Common/pref price ratio is now at 142% of σ.  This much premium for Common is something we haven't seen in nearly 6 months. The recent price rally should be more of a sentimental boost. Short-term correction should be expected.</li>
<li>CJ CheilJedang is also an interesting one here. The duo made -1.3σ jump last Friday. They are now at -185% of σ. Common/pref price ratio is currently close to 120D low on a 20D MA. The shares have been drifting sideways for almost a year now. There is no signal indicating any distinct trend that will break this sideways drift. This duo is also expected to see a quick mean reversion.</li>
</ul>


This is the list of the realistically tradable prefs in Korea. Korea has a total 116 perfs. I filtered them by &gt; ₩100bil market cap and &gt; ₩0.2bil DTV. This filtering gives a total 23 pairs for share class trade. It is generally shown that dividend yield difference and liquidity affect pref discount. The higher div yield difference and the higher liquidity are, the less pref discount is.
Two names are currently catching my eye. Samsung E-M had a major recovery move last Friday mainly on bargain hunting. The duo made +2σ jump in one single day. Common/pref price ratio is now at 142% of σ.  This much premium for Common is something we haven't seen in nearly 6 months. The recent price rally should be more of a sentimental boost. Short-term correction should be expected.
CJ CheilJedang is also an interesting one here. The duo made -1.3σ jump last Friday. They are now at -185% of σ. Common/pref price ratio is currently close to 120D low on a 20D MA. The shares have been drifting sideways for almost a year now. There is no signal indicating any distinct trend that will break this sideways drift. This duo is also expected to see a quick mean reversion.


List of 23 Tradable Prefs in Korea: Samsung E-M & CJ CheilJedang Currently Catch the Eye

Founder, Riedel Research

David Riedel

Founder

Independent equity research on GEM Markets

Riedel Research

Riedel provides equity research and analysis to leading financial organizations. By becoming members of a region (Asia, Latin America, Emerging Europe or Global), organizations have access to an integrated set of services including:

Regular company coverage reports
Up-to-date investment decision advice (buy, hold, sell)
Monthly regional and global conference calls
Customized company reports and unlimited on-line access to the program's services.

Riedel provides research coverage of companies across the full range of market capitalization. Experienced research professionals in each market develop company reports and analysis as well as earnings models and projections. Ratings are Buy, Hold and Sell with a focus on compelling investment ideas - both long and short. Downloadable, dynamic earnings models are built to facilitate sensitivity analysis.

Please feel free to contact us for complimentary access to our written research.  We want to show you that our unique research flow can add value and help develop a long-term, high value-add relationship.

Riedel's model focuses on providing clients with unique insights and consulting in addition to unlimited access to all produced research This model allows members to receive exponential benefits for their retainer fees.

<ul>
<li>Our proprietary corporate governance scoring system now covers over 1,985 stocks including over 200 in Korea.</li>
<li>We recently added a coverage of 28 new names in Korea.</li>
<li>The two lowest scores in this group are Samsung Electro-Mechanics and Advanced Process Systems both with scores of 40/100.</li>
<li>The involvement of a former executive at Samsung Electro-Mechanics in the Park scandal and ouster highlights the governance risk.</li>
<li>Companies with good governance include LS Corp, and Lotte Shopping. Past issues with the founding family of Lotte should be noted and taken into consideration. We welcome requests from clients of names they want to see added to the universe.</li>
</ul>


Our proprietary corporate governance scoring system now covers over 1,985 stocks including over 200 in Korea.
We recently added a coverage of 28 new names in Korea.
The two lowest scores in this group are Samsung Electro-Mechanics and Advanced Process Systems both with scores of 40/100.
The involvement of a former executive at Samsung Electro-Mechanics in the Park scandal and ouster highlights the governance risk.
Companies with good governance include LS Corp, and Lotte Shopping. Past issues with the founding family of Lotte should be noted and taken into consideration.  We welcome requests from clients of names they want to see added to the universe.


RRG Proprietary Corporate Governance Scoring System Identifies Poor Governance in Korea

South Korea

Samsung Electro-Mechanics Co., Ltd. manufactures a variety of electronic components used in computers, audio and video products, industrial electronics, and telecommunication equipment. The Company's products include multi-layer boards and capacitors, optical Pick Ups, deflection yokes (DY), keyboards, speakers, and light emitting diode (LED) products.

Samsung Electro Mechanics Co, Ltd. (009150 KS)

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Samsung Electro Mechanics Co, Ltd. (009150 KS)

Extreme Valuations: Global Stock Ideas Using the BORUC Yield

The Bucephalus Idea Generator (BIG) picks stocks by combining our work on Creative Accounting and our work on capex and valuation cycles to see...

Bucephalus Research Partnership

Using BORUC to Pick Asian Growth Stocks

Introducing the Bucephalus Operating Return on Utilised CapitalWe created BORUC, to reveal the true operating performance of businesses because...

Bucephalus Research Partnership

Using BORUC to Pick Asian Value Stocks

Introducing the Bucephalus Operating Return on Utilised CapitalWe created BORUC, the Bucephalus Operating Return on Utilised Capital, to reveal the...

Bucephalus Research Partnership

List of 23 Tradable Prefs in Korea: Samsung E-M & CJ CheilJedang Currently Catch the Eye

This is the list of the realistically tradable prefs in Korea. Korea has a total 116 perfs. I filtered them by > ₩100bil market cap and >...

Sanghyun Park

RRG Proprietary Corporate Governance Scoring System Identifies Poor Governance in Korea

Our proprietary corporate governance scoring system now covers over 1,985 stocks including over 200 in Korea. We recently added a coverage of 28...

David Riedel

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)