Hi, timba... re MFW
It looks like it is a really good company. I believe the market will put a PE floor of 10 on it assuming the debt is manageable because that is what the market tends to do on "really good companies" in these times. At $25 million the debt does seem manageable. I am confident the PE of 5 is entirely attributable to the deal and Perelman.
To answer your question, like most of the posters here I don't use any one valuation scheme. Discounted cash flow is too much work and involves too much guessing. Which metrics are a judgment call based on the company and industry and my own limited capabilities. I, however, welcome my own subjectivity into my analysis, and I think a lot is lost simply by looking at numbers, as in the case here: compelling numbers probably justified by the circumstances.
Timba, this wasn't really addressed to you. I didn't remember who talked about it. I thought I made it clear in the post that the judgments made should be considered personal. I brought this up to further discussion.
As to my personal 95% Perelman minority discount, you said:
I mean if you think Perelman's influence is such a severe negative on a company he influences, then why mess with it at all? I mean, what significance is 25 cents to an investment decision, except possibly for snigger value?
My response is that I don't want to mess with him at all if he is in control. Witness how he is trying to get $17.40 for his PVI shares, and since the deal was announced the outside passive minority investors in PVI have a market price ranging from $3 to 6. At the mid $4s PVI has an objective 75% Perelman discount. For my personal calculations, I'm taking an additional 20% for Perelman aggravation.
If I were to make an investment and Perelman won, I would sell as soon as practical.
Is the preferred b outstanding or not?
The recent proxy says "...Series B Preferred Stock; each of such shares has one vote. Mr. Perelman owns 53.47% of the Voting Stock (i.e. Common Stock and Series B Preferred Stock taken together) of the Company."
That was the fastest entry and exit on my alert list to date.
P.S. I am not trying to talk you out of your investment. Compelling valuations often work out fine despite mitigating circumstances. |
