• August 4, 2023
    Clay Tokens – UAFRS vs AR Monthly Highlights | Taxes – August 4, 2023

    The process of filing every year is met with dread and resignation from businesses and individuals alike. The U.S. tax code is extremely large and complex. What’s worse, even a small mistake could lead to an audit or fine from the IRS.

    For context, tax statutes passed by Congress into law total about 2,652 pages and explain tax regulations in over 1 million words. By comparison, that is longer than the King James Bible, with 788,280 words, and comparable to the entire Harry Potter collection of novels....

    Read More

  • May 5, 2023
    Clay Tokens – UAFRS vs AR Monthly Highlights | Enterprise Value – May 5, 2023

    In 1993, Quaker Oats bought Snapple for $1.7 billion… about $1 billion higher than what most thought the company was “worth” on Wall Street. Following its previous success with Gatorade, Quaker must have thought it could replicate the formula, leveraging its expertise with supermarkets and retailers to generate great rewards for investors.

    However, its efforts failed to materialize. Quaker Oats sold Snapple just a few years later for only $300 million, a massive loss in equity value....

    Read More

  • March 3, 2023
    Clay Tokens – UAFRS vs AR Monthly Highlights | Acquired Assets – February 28, 2023

    Ames Department Stores serves as a great reminder to investors of the dangers of flawed fair value accounting.

    Ames was a discount retailer in the US that filed for bankruptcy in 1990. It closed well over 300 of its stores and fired 26,000 employees in an effort to pay off its creditors....

    Read More

  • November 30, 2022
    Clay Tokens – UAFRS vs AR Monthly Highlights | Interest Expense – November 30, 2022

    Last issue, we discussed our financial subsidiary adjustment. This adjustment helps rectify the incongruence in balance sheet accounting between operating companies and their bank-like financial subsidiaries.

    For a bank, its assets are akin to a normal operating company’s liabilities and vice versa. This is because traditional loans (which represent liabilities to a retail company, as an example) are actually the bread and butter of how banks conduct business and make profits....

    Read More

  • September 30, 2022
    Clay Tokens – UAFRS vs AR Monthly Highlights | September 30, 2022

    Mitsubishi Group is a classic Japanese conglomerate.

    Also known as “Keiretsu” in Japanese, it is a series of cross-share holdings that form a complicated corporate structure under a single business group....

    Read More

  • June 30, 2022
    Clay Tokens – UAFRS vs AR Monthly Highlights | June 30, 2022

    It is a great compliment to say something ages like fine wine.

    It means that something has gotten better over the years. Over time, fine wine develops a more nuanced and complex flavor that is often thought of as higher quality. Similarly, a person who has “aged like fine wine” has gotten better over the years, often by becoming more dashing in appearance or more well-rounded in personality...

    Read More

  • April 30, 2022
    Clay Tokens – UAFRS vs AR Monthly Highlights | April 30, 2022

    Three months ago, in Clay Tokens, we covered the concept of excess cash…

    Specifically, we discussed how not all cash is created equal. As Benjamin Graham identified in The Interpretation of Financial Statements in 1937: “there is a tendency to hold more cash than the business needs.”...

    Read More

  • March 31, 2022
    Clay Tokens – UAFRS vs AR Monthly Highlights | March 31, 2022

    What does it mean to be “special”?

    Many folks typically think of things that imply being “better than” or “greater than” when it comes to something being “special.” Think special events, special promotions, or special athletes…...

    Read More

  • February 28, 2022
    Clay Tokens – UAFRS vs AR Monthly Highlights | February 28, 2022

    The primary focus of investors can be summarized by one word: returns.

    Namely, investors would love to know how much of a return they will make on the capital they invested in a given investment. Of course, this is all but impossible in practice. Instead, investors often must settle for looking back at the returns they have made....

    Read More

  • January 31, 2022
    Clay Tokens – UAFRS vs AR Monthly Highlights | January 31, 2022

    Folks in finance often use the phrase “cash is king.”

    These three words are used to describe different financial concepts, from a belief that cash is more valuable than other investment tools to an emphasis on cash in analyzing businesses to the importance of cash flow for the overall health of a business....

    Read More

  • December 21, 2021
    Clay Tokens – UAFRS vs AR Monthly Highlights | December 21, 2021

    In our most recent issue, we highlighted how M&A accounting violates the matching principle and misrepresents economic reality by consistently underreporting the profitability of an acquired company. This causes multiperiod distortionsin the acquiring firm’s income statement...

    Read More

  • October 1, 2021
    Clay Tokens – UAFRS vs AR Monthly Highlights | September 30, 2021

    When I teach advanced accounting to up-and-coming future accountants, I have to tell the students to just memorize GAAP rules and do what the standards tell them to do...

    Read More

  • August 16, 2021
    Clay Tokens – UAFRS vs AR Monthly Highlights | July 31, 2021

    Professor Baruch Lev is one of the foremost academic experts when it comes to analyzing the impact of deficiencies in corporate financial reporting....

    Read More

  • July 15, 2021
    Clay Tokens – UAFRS vs AR Monthly Highlights | June 30, 2021

    This month, we turn to another all-time great value investor the co-founder of legendary hedge fund Baupost Group, Seth Klarman—for his take on financial reporting deficiencies in general and the focus of this month’s report… inflation or more accurately, currency devaluation....

    Read More

  • June 9, 2021
    Clay Tokens – UAFRS vs AR Monthly Highlights | May 31, 2021

    Last month, we highlighted Warren Buffett and his distaste for GAAP and IFRS accounting standards.

    When Warren Buffett talks, his comments are worth listening to. And if you were not already aware, Buffett has said a great deal about problematic accounting standards....

    Read More

  • May 6, 2021
    Clay Tokens – UAFRS vs AR Monthly Highlights | April 30, 2021

    I recently had a wonderful conversation with Ralph Nach. Ralph is a former co-author of the Wiley GAAP Guide. He teaches continuing professional education courses for practicing CPAs on many of the most difficult and complex accounting topics. Ralph was also one of the very first members of the UAFRS Advisory Council for Uniform Accounting....

    Read More

  • March 31, 2021
    Clay Tokens – UAFRS vs As-Reported Monthly Highlights | March 31, 2021

    Whitman built impressive investment results over decades. While he accomplished this feat, Whitman also found time to call out the problems with as-reported financial statements under GAAP....

    Read More

  • March 3, 2021
    Valens Research – UAFRS vs As-Reported Monthly Highlights | February 28, 2021

    No industry is free from the inconsistent rules of GAAP accounting that create extensive distortions from economic reality. In this issue, we highlight a chemicals company, a payroll servicer, and a diversified industrial conglomerate. Everything from net earnings to total assets is calculated in ways that seem almost arbitrary under Generally Accepted Accounting Principles....

    Read More

  • February 22, 2021
    Valens Research – UAFRS vs As-Reported Monthly Highlights | January 31, 2021

    Stock-based compensation (SBC) is an accounting headache. Just last year, PwC published a 250+ page report to help its clients navigate its intricacies....

    Read More

  • April 21, 2020
    When Cash is Not Cash and Why

    Investors, other analysts, and management often rely on cash flows reported in the financials as a foundation of performance analysis and valuation. Unfortunately, those cash flows are not what they appear to be.

    Many use the statement of cash flows (such as “cash flows from operations”) for judging earnings quality, measuring performance, and as key elements of discounted cash flow analysis. The cash flows reported from operations, however, are not truly from operations. Cash flows for financing do not accurately report the company’s financing activities. Cash flows reported for investing simply are not what the financials would purport....

    Read More

You don’t have access to the Valens Research Premium Application.

To get access to our best content including the highly regarded Conviction Long List and Market Phase Cycle macro newsletter, please contact our Client Relations Team at 630-841-0683 or email

Please fill out the fields below so that our client relations team can contact you

Or contact our Client Relationship Team at 630-841-0683