Wednesday, 07 December 2022

A Analysis

Financial Issues of Interest

Financial Issues of Interest (2)

adidas drop


A little less than 4 months ago we released a lesson to determine whether the stock was under or overvalued (reference

Introduction to Fundamental Stock Valuation). In this lesson we demonstrated our methods on the sneaker company Adidas and the ADR, ADDYY. We predicted that adidas was around 20% overvalued. Almost 4 months after we came to that conclusion adidas plummeted 17% from the time we released our data, while the German and US markets stayed relatively unchanged. Since 1926 till 2011 the average annual return of the stock market was 11%. A short position at the time of when we released our lesson would of beat the average annual return of the stock market by 20%, 3 times as fast. The it took a few hours to complete the research to predict that adidas was overvalued and we will soon be releasing more accurate and more in depth strategies.

adidas short sale profits

Aswath Damodoran has weighed in on the Deutsche Bank debacle. For those who are not familiar with him, he is a very prominent NYU Finance professor and author of over 30 books on corporate finance and valuation - and a man whom I respect greatly. As a matter of fact, I cut my teeth on his valuation books early on in my valuation pursuits. That being said, I'm in disagreement with his valuation of DB shares on his blog. On said blog, he went through a quick history of DB's situation and then put together an open sourced model where he found DB to be at least 35% undervalued. The other users of the open sourced model have come to an average price that's even higher.

DB valuation as per Damodoran model median value

I value DB (using Aswath's model, not our own) at a dramatically lower price than everyone on that list, save one. Why the difference? Well, if you remember my videos on knowledge...

Aswath's model inputs err in several ways from our perspective.

  1. They take the reporting of DB at face value. After wading through the notes in the financial statements, that does seem like a good idea. They need to be forensically scrubbed!
  2. The assume the issues that have received a lot of media attention are the only issues that endanger DB. Again, that doesn't seem like a value assumption. Reference the raising capital video below.
  3. The coming dearth of affordable capital is also not being adequately addressed.

DB's capital situation is not as rosy as Mr. El Arian is making it seem. All you, I or Mr. El-Arian has to do is read the balance sheet. Here, I'll do it for you - as excepted from page 5 of Derivative Risk Exposure of Major Banks to Deustche Bank:

Reference the video below...

The DOJ fine is but one in a cacophony of litigious sounds to be heard...

Aswath's stuff:

  1. My valuation of Deutsche Bank
  2. Global Banks - Data
  3. Google Shared Spreadsheet: Crowd Valuation of Deutsche Bank

Our stuff:

Knowledge subscribers of any level can email me at reggie AT to get a copy of Aswath's model with a few of my assumptions and comments in it. Feel free to leave your own comments as well.

Click here for our paid research on DB risks and click here for our more comprehensive EU Bank Crisis research - European Bank Contagion Assessment, Forensic Analysis & Valuation

More free links on the topic...

Why Do So Many Financial Pundits Try To Downplay the Obviously Serious Financial Problems of Deutsche Bank?


Here's What A Real, Live Veritaseum 5x Short DB Smart Contract Looks Like to Our Research Subscribers 

db research dynamic market driven rebate

 If you haven't heard, we're giving out free, fully smart contracts as a 5% rebate to anyone who purchases any of our research packages above the introductory novice $50 level. This is not your Daddy's rebate! The rebate actually gets larger as DB goes down in price. For those who may be coming late to the party, we can offer a 5x long gold (or even a long gold, short DB) smart contract rebate as well. Of course, the bulk of our research targets banks and entities other than DB, but I thought we'd make DB the subject of the rebate to drive the point home. Below is an actual contract crafted off of the price of a single share of DB for about 2 weeks.


The research and knowledge subscription module "European Bank Contagion Assessment, Forensic Analysis & Valuation" contains a full report of a very large European Deutsche Bank counterparty that faces a full 27% downside from current levels. It appears as if no one suspects a clue. It also contains much, much more (including at least 3 to 5 suspect banks). We can break this apart a la carte, if requested.

As excerpted:

Susceptible Bank 1: Financial Modeling


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