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

To: E_K_S who wrote (55485)	6/16/2015 2:05:35 PM
From: bruwin	Respond to of 78673

With regard to Paul Senior's reference to "... metric strains credibility ...", I believe I did state in my initial post that the resultant Equity Bond (EB) value " ... is one of the criteria that could make it attractive as a Buy." IMO, one should study all three of PG's Financial Statements and do some further analysis and interrogation, preferably in terms of what Warren Buffett looks for in a company before he invests, as summarised in .... Message 29804904 If I'm not mistaken, I believe that you, too, have a copy of Buffett and Clark's book on your shelf ? If too many of Buffett's other fundamental requirements are not being met, then it could very well be that now may not be the time to buy into PG. After all, 'One Swallow (EB value) does not a Summer (Buy) make'.

To: E_K_S who wrote (55485)	6/17/2015 1:37:41 PM
From: Mattyice	1 Recommendation Recommended By E_K_S Respond to of 78673

EKS - I tend to agree with you on this one.. when I do my valuation blend I tend to land around $35 - $39 I normalize EPS for the GN and get around $39. When I try to value the operating assets at a normalized operating level and a cost of capital at a normalized rate of 9-10% I land around $35. I will then mention here that I say normalized because probably the current cost of capital for PG is lot lower - I would estimate in the 5 or 6% range. I just have a hard time putting faith in that low of a number, but lot more smarter people than me can disagree. Its kind of like why i havnt picked up lot of larger cap O&G companies last couple of years, I use lot higher cost of capital. It seems to me that the bigger they get the more risk they have to take to move the needle.. so I am going to discount for this.. Just my opinion and probably alone on this. - - - - - Also it seemed Bruwin is not accounting for reinvestment which i calculate as an essential part of valuation since you have to put that money back in the business - P&G is running at around 14% for the last 10 years or so. To me if i was buffett I would look at sustainable earnings and cashflows.. What can I really rely on and then try to discount what i would pay for that.. I've read all the books.. but who the hell really knows. You can point to this or that chapter, but there is no simple rule. To me the market is valuing the operating assets to high even at $79. I wouldnt be interested until it was in the 40s. Here is my valuation with a lot lower cost of capital (5%) and my valuation with a higher cost of capital (10%). Obviously as you, graham, and others have alluded to - rates seem to be the big xfactor here.

To: E_K_S who wrote (55485)	6/20/2015 1:19:24 PM
From: Paul Senior	2 Recommendations Recommended By E_K_S ekimaa Read Replies (1) \| Respond to of 78673

MDU, fwiw: "A time for Defensive Thinking", this week's Barron's: "Nelson (...He runs the largest Edward Jones team in the country, managing $550 million, and he has been Barron’s top-ranked advisor in North Dakota for four years running) likes big, integrated oil companies whose strong balance sheets make them resilient. One of his favorites is right in his hometown of Bismarck. MDU Resources Group (ticker: MDU), whose shares have fallen 40% over the past year, has increased its dividends for 24 straight years and now pays a 3.6% dividend yield. The company is conservative and well run, and plans to spin off its exploration-and-production company to focus on lower-risk business lines, says Nelson." If MDU drops more on no adverse news, I may add to my few shares.