Re CBI - I don't think that you understand the claim if the author. There is no piggy bank - the author claims that CBI creates goodwill (coming from the Shaw purchase) almost every quarter as an asset and then book this phantom gain as earnings.
When I looked at CBI balance sheet, i in fact noticed that CBI goodwill has increased significantly after the Shaw acquisition, which is consistent with the authors claim. Also, looking at CBI cash flow statement, it looks like free cash flows are nonexistent or even negative most quarters, Of course this can in fact occur, because accrual accounting is used with the large projects that CBI is working on, but it still is not very comforting.
Since the valuation is not attractive, even if CBI accounting were kosher, I'll leave it at that, but I think it's a better candidate to buy puts for, than going long. |
