Businesses must pass the one dollar test. That is, they must earn a return of invested capital (ROIC) in excess of the opportunity cost of capital. In their paper, Calculating Returns on Invested Capital, Credit Suisse’s M. Mauboussin & D.Callahan from Credit Suisse provide a helpful introduction to the topic. Continue Reading …
Theranos, the biotech startup that once promised revolutionary blood test technologies to the world, came to an end after evidence of its fraud finally came to bear. Journalist John Carreyrou unravels the rise and downfall of the company, once valued at $9B, in his book Bad Blood: Secrets and Lies in a Silicon Valley Startup. This post summarises a few factors that enabled Theranos’ rise, and several red flags that warranted greater scrutiny from cautious investors (in hindsight). Continue Reading …
In his 1997 book, The Warren Buffett Way, Robert G. Hagstrom outlines the core business and investment principles of value investing that Berkshire Hathaway’s Chairman and CEO Warren Buffett practised. Continue Reading …