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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Brendan W who wrote (12933)	8/11/2001 3:50:59 PM
From: TimbaBear	Read Replies (1) \| Respond to of 78762

Brendan Watt "....My take on M&F is that absent Perelman and the Panavision deal the company is clearly worth worth more than 10x trailing eps of about a dollar...." How do you quantify how much earnings are worth to you? Do you have a set formula? Say, wanting to earn a minimum of 2 times the going "risk free" rate? For example, if CD's are at 4%, do you want that dollar of earnings to represent an 8% return? $1.00/.08= $12.50....or do you use some other method? "....I place my own minority discount of 95% on any Perelman controlled entity...." Is this a token attempt at objectivity? 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? To me, the question is: "Are the fundamentals of the company to be completely discounted because of Perelman's involvement?" if so, then I move on to the next investment analysis. (I don't leave part of my foot back there to possibly shoot at later(i.e I'll buy it at 2.55), if I can't trust him, I can't trust him at any price) If not, then do I take Perelman into account at all? If so, how do I quantify his impact? So far, I'm not selling my position in MFW because of hearsay. I'm not selling it because of the opinions of respected posters here, because then they would be making my investment decisions on this issue, and I would never have confidence in what to do next if this company came up again in any of my screens. As compelling as expressed feelings may be, they are not facts, they are expressed feelings. My analysis of the fundamentals of this company suggest that it is a bargain at these prices. I have a NetNet valuation of $5.29/share; a book value of $11.89/share; using Graham's valuation I get $8.00/share; and applying Graham's valuation to Free Cash Flow, I get $11.65/share; Using a currently high risk free rate of return of 6%, I get that I would have to have $22.00 invested at that rate to get the same cash flow I can buy for the current stock price of about $5.00/share. Powerful numbers. Carefully calculated. That's not to say I wouldn't just turn the page and move on to find the next value if I felt it was prudent. But I am saying, I'm still thinking about this issue of Perelman and his impact, and will continue to own the stock during the interim. If you can get this company at $2.55/share, then that would represent an even better value than I achieved....possibly.... but then, if the stock drops to there, then maybe it is Perelman after all, and it would still be too expensive. Timba