The Aggressive Conservative Investor

Foreword xiii

Preface xvii

Section one

The Approach

1 / An Overview 3

2 / The Financial-Integrity Approach to Equity Investing 17

Section Two

The Uses and Limitations of Fundamental Analysis and Technical Analysis

3 / The Significance of Market Performance 39

4 / Modern Capital Theory 52

5 / Risk and Uncertainty 66

Section Three

Disclosures and Information

6 / Following the Paper Trail 81

7 / Financial Accounting 97

8 / Generally Accepted Accounting Principles 123

Section Four

The Financial and Investment Environment

9 / Tax Shelter (TS), Other People’s Money (OPM), Accounting Fudge Factor (AFF) and Something off the Top (SOTT) 145

10 / Securities Analysis and Securities Markets 160

11 / Finance and Business 176

Section Five

Tools of Securities Analysis

12 / Net Asset Values 189

13 / Earnings 209

14 / Roles of Cash Dividends in Securities Analysis and Portfolio Management 220

15 / Shareholder Distributions, Primarily from the Company Point of View 236

16 / Losses and Loss Companies 248

17 / A Short Primer on Asset-Conversion Investing: Prearbitrage and Postarbitrage 255

Section Six

Appendixes—Case Studies

Introduction to Appendixes I and II 269

I / The Use of Creative Finance to Benefit

Controlling Stockholders—Schaefer Corporation 273

II / Creative Finance Applied to a Corporate Takeover— Leasco Data Processing Company 319

III / A Guide to SEC Corporate Filings— What They Are/What They Tell You (Reprinted Courtesy of Disclosure Incorporated) 341

IV / Examples of Variables Using the Financial-Integrity Approach—Pro and Con 358

index 411