How Value Investor benefits from Loan Loss Provision. A case from Bank of America

In response to the pandemic, in Quarter 2 (Q2) and 3 (Q3) 2020, Bank of America (BofA) set their “provision for credit loss” more than 4 times of last year’s figure for the same period. In accounting terms, provision for credit loss is merely an “anticipation” expense. Mean The Bank does not really pay it until it really happens. So when the bank sets a sky-high figure of credit provisions, could value investors see it as an opportunity?

Bank of America Q1 Q2 Provision for credit loss
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Seeing Blue Sky. Microsoft Income Statement Analysis

Like a high school student who makes a PowerPoint presentation for a company named Microsoft, We begin this section with a boring intro. Revenue is growing, so does their operating income. The windows maker has 3 segments that contribute almost equal portions for both revenue and operating income. Could we find something interesting here?

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Fantastic Business Advantage and Where to Find Them.

Business Advantage: Where to find. Photo by Andrea Piacquadio from Pexels
Business Advantage: Where to find. Photo by Andrea Piacquadio from Pexels

One of the best methods for finding great stock is searching for one with the strongest moat – sustainable business advantage. In this post, we will try to track where moat located for the retailer business. A typical business that familiar to us. We hope we could give you an example of how you can find your investing edge using your non-sophisticated knowledge.

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Physical Cloud

Misconception

Some Investors may think that software or cloud companies don’t need intensive tangible assets. They just make software and place it in the thin air, then the client download or operate in that cloud. Through this post, we try to counter that argument. It is important since there is a cost component with regard to tangible assets. For instance, They need maintenance and depreciation. Sometimes, they become obsolete and corporate needs to replace with new expensive technology. Misunderstanding about tangible assets will mislead investors to neglect depreciation and cost-related item.

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