Steve Clapham
Steve Clapham has been an investment analyst for over 25 years who has worked both on the buy-side and sell-side. He held senior positions at various leading investment banks, where he won numerous industry rankings in annual surveys, being voted for by many of the top investment institutions. Clapham set up Behind the Balance Sheet in 2012, and it counts in its client base some of the world’s largest as well as some of the most respected institutional investors, private equity firms, and hedge funds. A forensic accounting expert, Clapham is commonly quoted in leading media, including the Financial Times, the Times, and The Sunday Times. He writes occasional columns for City AM and is a regular on BBC Radio 4’s Today Programme.
- His research shows that most fraudulent companies reported significantly higher margins than its peers
- Belives that analyzing the balance sheet is crucial to understanding a company and spotting fraud
- Teaches that working capital ratios are also important to look at: compare them to peer group and past trends to identify problems
- Also important to look at cashflow: It's far easier to massage earnings than cash
- Believes in following a consistent process/checklist to analyze every company you consider investing in. The key is to have a process that suits you. For example:
1. Check the margins
2. Check the working capital ratios
3. Check the cash generation
- Circa 2020, expects that in the future many companies will need to restate earnings.
- Thinks fraudulent accounting is rampant.
Thoughts on Covid Crisis:
- Thinks that companies will come out of it more cautious - thus cleaning up balance sheets