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

To: Shane M who wrote (55360)

5/27/2015 8:18:22 PM

From: Mattyice

Read Replies (1) | Respond to of 78751

Shane - Interesting on the retention nugget.

It does seem to be ignored in the investment pitch and more emphasis placed on employee retention thus being able to keep expenses/R&D/Cost of float down.

I also agree with you on people shopping for policies, I don't believe this happens as much as people suggest. I for one as a young guy dont mess with it, not worth my time.

I do like the concept the pitch mentions of '$1 of earnings converting to $1 of market value' ie emphasis on conservatively growing bookvalue.

I ran couple of different quick scenarios one with growth of 5% (left) and growth of 2% (right) and adjusting for risk with higher cost of capital than probably what is needed (also compared with very conservative graham number). The stock seems undervalued to fairly valued which usually when i run these especially in past few years I am no where close - usually trading way above.

Reinvestment Rate	29.83%	Reinvestment Rate	11.93%	EBIT / EV	13%
Value of Operating Assets	31893	Value of Operating Assets	12189	EBITDA / EV	13%
+ Cash	2,149	+ Cash	2,149	FCF / EV
- Debt	2,165	- Debt	2,165
Value of Equity	31877	Value of Equity	12173
Per Share	54	Per Share	21
Current Share Price	27	Current Share Price	27
GN	24	GN	24

MKT CAP	16000
# of shares	589
EV	16,016

I also like the fact that If I invest 16,000 today (16 bil Enterprise Value) I can pretty much guarantee that I'll get 1,600 in EBIT (current EBIT 2,000) on a yearly basis assuming no brand erosion which i suppose is what we are discussing. But I'm not going to lie that is pretty good deal. I'm not getting that with my cash pile sitting in my bank.