Kenny wrote:If any investor cannot understand a company's accounts, they should not invest in that company.
Well Kenny requiring people to be able to read and understand the accounts of any company they invest in would set a very high bar and would constrain share ownership to only an elite community. I freely concede that it would not include me.
BUT I DO read all the annual reports, half yearly reports and trading updates for all my investments. I specifically look for the following:-
a) Increasing revenue, profit, free cash flow, dividend and dividend cover, NAV - all year on year
b) Limited and ideally reducing debt or LTV
c) For REITs and property companies I also look for increasing occupancy rates and rents
d) Any significant events that might be red flags.
So hopefully I am not totally ignorant (please feel free to think differently, its already clear that you do).
Looking at the March 2019 Edison report RAV has fallen into loss in 2018 having been profitable previously and I am concerned that this might possibly continue into future years. As far as I can see revenue is down, rental income is down, occupancy rates and rents are both up, expenses are up and the company reported a loss due to the property revaluation and FX effect apparently. Assets are up but so is debt. NAV per share is down significantly.
A pretty mixed picture there in total IMHO and I could see nothing (obvious to me) to say that it won’t happen again in the future - especially if the GBP/Rouble exchange rate is poor.
So what with the current Woodford situation I took the decision some days ago to exit from this investment. I still like the company but wont be re-investing here until there is further clarity and perhaps not even then. So Kenny you will be pleased to hear that I now fully comply with your rule in respect of RAVP.
I wish all holders the very best with their investment.