Episode 66

66 - Net Operating Losses are a form of Hidden Asset

The DIY Investing Podcast · Trey Henninger: Private Investor, Portfolio Manager, Business Strategist, and Value Investing Expert

March 8, 20205m 52s

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Show Notes

Call to Action:

For You: Check your current stocks for the presence of net operating losses that can offset future taxes and read about Myrexis and Affymax to gain a better understanding of some of the extremes you may find in the market.
Support the Podcast: The best support you can give me right now is to follow me on Twitter: @TreyHenninger

Mental Models discussed in this podcast:

Tax Avoidance

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Show Outline

The full show notes for this episode are available at https://www.diyinvesting.org/Episode66

Net Operating Losses are a form of Hidden Asset

NOLs are past losses by the company that offset future taxes
They are only valuable if you have the ability to earn a profit in the future
Elementary Value recently highlighted two companies that are an interesting avenue for future research.
- Myrexis (MYRX)
  - https://www.elementaryvalue.com/blog/myrexis-inc-myrx-another-couchman-nol-stub
- Affymax (AFFY)
  - https://www.elementaryvalue.com/blog/affymax-affy-a-couchman-controlled-nol-stub

Summary:

When researching a company be on the lookout for hidden assets. Net Operating Losses are one form of hidden asset that can either be found on the balance sheet or in the notes to the financial statements about a company. The ability of a company to not pay any taxes for 10-15 years into the future can be extremely valuable in the right situation.

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