Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: FLSTF97 who wrote (6753)	9/21/1999 10:40:00 AM
From: DownSouth	Read Replies (1) \| Respond to of 54805

Falstaff, I suggest you post this most interesting question to unclewest on the RMBS thread. I would like to see the response.

To: FLSTF97 who wrote (6753)	9/21/1999 11:39:00 AM
From: unclewest	Read Replies (1) \| Respond to of 54805

If I crunched the numbers correctly that means profit of $440 million in 2003. 1.) dataquest has projected the dram market as $63 billion in 2002, i have to ask where does the $50 billion in 2003 come from? 2.) math is off slightly. using your numbers i get $450 million. that is $18 per share. 3.) i question the pe of 10. show me one company anywhere that has $18 per share in earnings with a pe of 10. especially after growing the earnings from $.25 to $18.00 in three years. unclewest edit...4.) combining your #'s with dataquests dram forecast i calculate almost $23 in earnings.

To: FLSTF97 who wrote (6753)	9/21/1999 10:01:00 PM
From: Mike Buckley	Respond to of 54805

FLSTF, I liked your Rambus post a lot. It appeals to the number-crunching valuation junkie that I am. :) And I especially like it when people are systematically skeptical of any investment thesis, including gorilla gaming. I propose at most 10x because even the most aggressive projections are showing barely 10-11% CAGR growth. Has there been an established gorilla that at some point wasn't valued at a PE multiple that is twice the growth rate? I doubt it but I really don't know. Let's assume a multiple of 20 and follow-up on the good stuff you figured. Rambus's market cap would be 4 times larger than today's cap in four years (not the three years you mentioned). That's an average annual growth rate of 41%. Still low for a gorilla. You might be right. :) I haven't gotten into valuation much in the folder, but I've always felt that's the missing element in the book. One reason I didn't invest in SAP is because I didn't feel comfortable with the valuation. In a nutshell, I'll propose my thinking about a reasonable investing strategy: #1: Research some existing and potential gorillas. #2: Value them. #3A: All other things being equal, invest in those with the most attractive valuations. 3B: Because all other things are rarely equal, take into account the fundamentals and determine if the varied fundamentals explain, at least partly, why the valuations of some might be higher than others. --Mike Buckley