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Strategies & Market Trends : Value Investing

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To: Madharry who wrote (41134)	1/22/2011 12:44:40 AM
From: Spekulatius	1 Recommendation Read Replies (1) of 78958

re GOOG - I would not give them full benefit $ for $ for the cash on hand. The cash either just sit's there (dead money deserves a discount) or get's blown for an overpriced acquisition. Shareholders will not see any of the stash as dividends. So I believe the value of GOOG cash on hand should be discounted. My take 100$ are worth 66$ (2/3) The owners control everything via supervoting shares. My discount - 15%. If you believe that is too high look where my BMW3.DE (nonvoting shares, slightely higher dividend then voting shares) shares trade relative to BMW.DE (voting shares) or Via versus Via.b. So here I am: 610-66$ (discounted value of cash on hand)=544$ (adjusted GOOG EV/share) 544/35$=15.5 PE *1.15 (adjusted for supervoting shares)=17.9 PE. This is not expensive but it's not an ultracheap valuation either. GOOG is rapidly maturing, growth rates are bound to go down. I think mid teend growth rates may be possible for a while but I think the days of 30% growth are over forever - the law of large numbers.

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