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

To: Paul Senior who wrote (16301)	1/29/2003 10:20:06 AM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 78666

Paul, Do you have any elaboration on "astute management" in CX? This is something which is even more difficult to qualify in foreign companies. Any pointers to management evaluation would be great. I am still interested in CX. HD and your ROE model - hey did you steal mine? :-))) Or did we both steal it from Mike Burry? :-))) I have the same assumptions and the same target. GE - I just looked at it and put it into "beyond my competency" pile. I don't want to try understanding their 4.5 debt/equity and financing arm. MLM - same problem as LBY: debt is high and rising and the ROIC is low. Since ROE with debt is only ~15% that is Buffettology limit, I think I will pass. Jurgis

To: Paul Senior who wrote (16301)	2/5/2003 1:37:40 AM
From: Spekulatius	Read Replies (2) \| Respond to of 78666

Paul, i never understood the ROE model. Isn't the ROE model really implying a certain earnings growth as well as cash usage? I use the Net present value model (which is pretty much equivalent to a discounted cash flow model) to estimate the net present value of a stock. My model implies a discount rate (8%) and calculates the NPV of the dividends (which are growing by the same rate then earnings in my model) and the NPV of the stock after 10 years (based on an estimate PE ratio). I use an excel spreadsheet to do so.