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

To: Graham Osborn who wrote (57895)	8/28/2016 12:52:55 PM
From: Spekulatius	2 Recommendations Recommended By E_K_S Jurgis Bekepuris Respond to of 78751

Yes, I take a less agressive stance on a rollup. DVA looks fine, because they did not really increase their leverage; their leverage went from 3x Debt/EBITDA after the 2013 acquisition, but is now back to 3x and lower than it has been over most of DVA's history. Now, I agree for some 3x may still be too high, but I think that is more a matter of preference than of fact, because 3x is reasonable for a business with a steady cash flow. I don't think that tangible book is a metric that helps that much - the business is clearly worth much more than the tangible assets, so acquisitions and stock purchases will reduce tangible book. Same is true for many successful industrials like Honeywell or UTX, which nobody accuses of being financially weak.