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Seemed impossible to comprehend when mungo posted this so I looked around and it is indeed a quirk in accounting data.

It's not so much a quirk in the accounting data as a real world phenomenon about how business works.
In a way, being "technically bankrupt" should be the goal...provided the earnings keep going.
A company that makes a buck requiring assets is not as good a company to own as one that makes the same buck WITHOUT requiring a pile of assets.

Some companies, usually only a few of the very best, have business franchises that are so good that they can continue to make make a lot of money on a regular basis with no net assets.
They probably have some gross assets (though not necessarily very many), but can easily support in a
long term sustainable way the debt that allows them eventually to pay out all the equity as dividends.
The earnings stream generally has to be well protected, or nobody will lend them that much.
A typical negative equity firm that is still making good money year in and year out will be able to borrow pretty well.
IBM has a lot of debt, but even with their recent bad few years they have no problems making a whole lot of money with no net equity, and no problems supporting their debt.

(It can also be done with sufficient buybacks rather than dividends, though that's qu9ite a bit rarer.
It takes a slopton of buybacks to move the needle that much.
Every buyback at a high multiple of book will reduce the book value of equity somewhat.
That's somewhat more like an accounting quirk than the dividend approach which is simply "pay it all out")

It's not just something at the negative extreme of book value.
Very high P/B firms outperform low P/B firms on average, too.
Those are firms that merely have few new assets (so far) rather than no assets.
Think of it this way: two typical firms might trade at similar multiples of earnings in a typical year.
One has a high return on assets (a luxury goods firm, perhaps), the other has a low return on assets (a steel firm, maybe).
The one with a high return on assets is probably the better business to be in.
It's not capital intensive, and more importantly the steadily high return on assets/equity means
that for some reason they aren't being undercut by new entrants competing with them.
It the P/E ratios are similar, the better business will be the one trading at the higher P/B or higher multiple of gross assets.

Firms that have negative equity because they're in trouble, typically because they just lost a huge amount of money, are a different kettle of fish.
They generally don't show up on the screen because they aren't making money and aren't seeing high earnings growth expectations.

This has interesting implications for the banking industry.
A lot of people value banks on multiple of book, but book doesn't really matter. Tangible or not.
A bank can be happily profitable indefinitely with no net asset value at all.
(heck, if you can run with 20:1 leverage you can run with 20:0 leverage)
The only reason they need some positive net assets is to stay attractive to the lenders they'll need to keep sweet, and to keep the regulators sweet.

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