Stocks flagging as "high risk" for DSI and Inventory Breakdown
Most companies provide a detailed breakdown of overall inventory in the notes to the accounts, showing how it splits into "Finished Goods", "Work in Progress" and "Raw Materials". Forensic Alpha’s systems can now extract this data and analyse changes over time to alert investors of any concerning patterns. European stocks flagging as "high risk" for both DSI and Inventory Breakdown include GN Store Nord, Pandora, SCA and Vestas Wind Systems.
Technology
Forensic Alpha always finds it interesting when a company flags on their system during a large capital raise since the incentive for manipulation is particularly high. GN's rapid increase in capitalisation of costs (especially since 2020) should be cause for concern. This pattern stands in sharp contrast to the amortisation of these intangibles remaining remarkably flat (aided by the "Useful Life" of the software intangible suddenly expanding from "1-7 years" in 2021 to "3-10 years"). If Demant is indeed actively looking at the company, some careful due diligence on the intangibles would be a good place to start.
