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Strategies & Market Trends : Value Investing
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To: Paul Senior who wrote (38102)5/29/2010 2:38:26 PM
From: Spekulatius1 Recommendation  Read Replies (2) of 78707
 
re ATPG model - this is an interesting valuation model. one thing I noted was is that he seemingly did calculate ATPG value in different ways. I also think that the way he did is on 3/30 does not fully account for the risk. ATPG capital structure is 2/3 debt and 1/3 equity and debt get paid first. His model estimates for capex seem way too lower as well.

In a way his model does not account for a variation of outcomes (safety margin). the way do do this is not tto add a variance to the end product - the NPV but too look at a variety of scenarios because if they make a mistake along the way the equity will never get the FCF, but the bondholders will.

This might be the case where the true believer buys a mix of bonds and stock.
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