How to Create Money

If you thought Magnesita cash flow was a deception, take a look at Julio Simoes Logistica (JSLG3):

• They add back residual costs associated with the sales of fixed assets, "which do not represent operational cash disbursements, as they represent merely an accounting adjustment to book value at the time of  sale." 

So far so good. The problem is that if they have sold an asset below book value then they are receiving less than they had paid. It could not be a cash consumption now, but it was a cash consumption, when they bought it. If you don't account for this now, when should you do it?

Copel Free Cash Flow

Year............................2007.....2008.....2009.....2010....2011(est)

Cash earnings...............1.636...1.587.....1.503....1.390....2.018
Changes in working K....-40.....-40.......-40......-40......-40
CFO.............................1.596...1.547...1.463.....1.350.....1.978
CFI.............................-465....-565.....-866.....-947.....-2.060
FCF..............................1131.... 982.....597......403.......-82

Vale Cash Flow

I'll try to evaluate Vale cash flow. I'll not consider 2010 results, because they are clearly over the average. Also, I'll not consider previous results for 2007, because Vale bought Inco and that had a huge impact on financial statements since then.

Gerdau Free Cash Flow

On this post I had estimated Gerdau free cash flow. But I hadn't deducted investments in work capital. I'll try to do that now.

Since 2005, Gerdau work capital has been around 20% of net revenue for the period of 2005-2007 and 25% for 2008-2010. So I'll take 25% of net revenue as a measure of Gerdau needs for work capital.

My Value Investing - Supplement

I'm just complementing my previous related post.

Annualized TIR

That's my total annual return on stock market:

Annualized TIR	Portfolio	Ibov	Diff
Total Period - From 2005 to 2011	32,6%	13,0%	19,6%
Value Investing - From 2006 to 2011	34,5%	9,2%	25,3%

RAPT4 - Randon Implementos

I was looking at Randon Free Cash Flow, but it's very difficult to analyse it, because RAPT is a growth company. So I did the following:

• I adjusted shareholder's equity since 2005 by inflation (IGPM).
• Then I calculated real growth in shareholder's equity:

My Value Investing

I'm posting my results so far. I started investing in the stock market at the very end of 2004 and until beginning 2006 I was lost. So I stopped for a while to study more and I was very luck then to read Graham's Intelligent Investor.

The results are shown below. Of course, 7 years is not that much, but it's a clue that the methodology is working. The results show only the gains invested in stock, not for the whole personal equity. I usually invest 30-50% in stock market, except in the end of 2008, when peaked above 90%.