James Montier: Who Is Cooking The Books - The C-Score via Value Investing Insight
In good times, few focus on such ‘mundane’ issues as earnings quality and footnotes. However, this lack of attention to ‘detail’ tends to come back and bite investors in the arse during bad times. There are notable exceptions to this generalization. The short sellers tend to be amongst the most fundamentally driven investors. Indeed, far from being rumor mongers, most short sellers are closer to being the accounting police. To aid investors in assessing the likelihood of accounting shenanigans, I have designed the C-score. When combined with measures of overvaluation, this score is particularly useful at identifying short candidates.
- Contrary to the silly populist backlash...
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