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FRANCES AYLOR
Author
 

 
Welcome! After 28 years in the financial services industry, I'm now focused on writing.

The final proof of Money Grab, my first financial thriller, has just arrived. The book will be available on May 16. More details to follow!

In this newsletter, I discuss the power of a penny in company earnings, Parker Field, and Money Grab's trip to Croatia.

The Power of a Penny

April brings flowers and baseball. But it's also a frantic time for anyone in the investment business, as companies with a fiscal year end of December 31 start to report their first quarter earnings.

As I wrote in Money Grab, this can be very stressful:

Companies that beat Wall Street analysts’ estimates could see their stock price soar. Those that missed, even by a penny, faced major downside risk. Getting our clients’ portfolios correctly positioned before the earnings release meant the difference between beating our benchmarks and lagging painfully behind them.

So how does this process work? And why is missing by just a penny such a disaster?

Wall Street analysts constantly talk with company managements to share their expectations for upcoming earnings. If the company feels the analyst’s projections are too high, management might suggest dialing back on future revenue growth or lowering operating profit margins, to bring the estimates down. Savvy managements know it is always best to under-promise and over-deliver.

Earnings are reported on a per-share basis. So, if a company has 500 million shares outstanding, and the estimate is for $2.75 in earnings per share, then the expectation is that the company will earn $1.375 billion. If the company misses by a penny and earns only $2.74 per share, then that is total earnings of $1.370 billion. That one penny miss has suddenly turned into a $5 million miss.

More important than the actual dollar amount of the miss, however, is the signal that it sends to shareholders. Those who bought the company for earnings growth will be disappointed. They are likely to sell this stock and look for another one that better fits their expectations. That selling pressure will push the price of the stock down, causing investors to lose money and portfolio managers to underperform their benchmarks.

What do you think?  Let me know on Facebook.

 Turning to Mysteries 

Parker Field

Howard Owen

What better way to celebrate spring and the start of baseball season than by reading Parker Field, a mystery about baseball? Especially when the book is written by Richmonder Howard Owen, who is one of the founders of James River Writers, a local writing group.

In the novel, Owen brings back his crusty protagonist Willie Black, a newspaper reporter who drinks too much, smokes too much, is thrice-divorced, and works in an industry reeling from downsizing and budget cuts.

Willie investigates the shooting of Les Hacker, the boyfriend of Willie’s marijuana-addicted mother. Les was a member of the 1964 Richmond Virginians, a minor-league baseball team. As Willie digs into the story, he discovers that other members of the Vees are dying under mysterious circumstances, and realizes that the sins of the past can fester into an unceasing appetite for revenge.

Parker Field will especially appeal to Richmonders as it mentions many well-known locales, including Virginia Commonwealth University, Monroe Park, Oregon Hill, and the Penny Lane Pub.
What mysteries have caught your attention? Tell me on Facebook

 Travel Tips

Money Grab visits Croatia

This month Money Grab travels to Croatia, located in Central Europe along the Adriatic Sea. Its beautiful beaches and medieval buildings make it a popular site for tourists.

The Croats first settled the area in the 7th century A.D. After World War I, Croatia merged with Yugoslavia. In 1991 Croatia and other areas of former Yugoslavia declared independence. A bloody civil war followed, the effects of which can still be seen in some places today. The war ended in 1995.

I haven’t been to Croatia myself, but family members took along a “flat Stanley” of Money Grab on their vacation. They visited Pula, the 8th largest city, where they saw the Temple of Augustus and the Amphitheatre. The Temple, with its rectangular shape and Corinthian columns, is an example of early imperial Roman temple architecture. The Amphitheatre, built in the first century, can hold 20,000 spectators, hosts more than 400,000 tourists annually, and was originally used for animal fights and gladiator combat.
The next stop was Plitvička Jezera National Park, a UNESCO World Heritage site known for its lakes and waterfalls. The water is a beautiful green color, and paths have been built alongside gushing waterfalls for close-up views. They recommend the nearby Hotel Jezero.
The final stop was Rovinj, a fishing port on the Adriatic, with quaint cobblestone streets. They enjoyed the Hotel Adriatic, dinner at Pizzeria Da Sergio, and bike riding in Park Šuma Zlatni rt (Golden Cape Forest Park).
If you've been to Croatia, please drop me a line to share your favorite destinations. If not, what are some of your favorite travel spots? I look forward to hearing about them on Facebook. 

Thank you for reading!
Look for Money Grab on May 16. 

I would love to hear your thoughts and suggestions for future newsletters. Please comment on Facebook or email me at fjaylor@hastingsbaycapital.com.

I have 28 years experience in the financial services industry as a corporate credit analyst, international trade finance officer, and equities analyst. I hold the Chartered Financial Analyst (CFA) designation and am a member of CFA Institute and a past president of CFA Society Virginia. Formerly a director at IronOak Advisors LLC, which managed $3 billion in assets, I am currently focused on managing family money and writing financial thrillers.

I am not a Registered Investment Advisor. Do your own investment research or consult your financial advisor before making your financial decisions.

Copyright © 2017 Frances Aylor, Author, All rights reserved.


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