Around two years ago the CFA blog published a blog by Alon Bochman, CFA, which looked at negative enterprise value investing. The post entitled, "Returns on Negative Enterprise Value Stocks: Money for Nothing?" looked at the performance of all negative EV stocks trading in the United States between 30 March 1972 and 28 September 2012 in an attempt to establish whether or not negative enterprise value investing leads to outperformance. While this data may be some years out of date, it’s still extremely interesting.
Bochman studied the historical enterprise values for every company every month (data taken from Standard & Poor’s Compustat database) and matched this data to forward 12-month returns. To minimize look-ahead bias, a key issue Setup a free account to get access to this article (no credit card required).Login required to continue reading.
