Value Investing How do you value cash holdings?

How do you value cash holdings?
Why The Trade Balance (Still) Matters
Anyone know why Warren Buffett and Peter Drucker never worked together?
When you're the CEO of Snapchat, your company's stock has fallen 46% since IPO, earnings are down every quarter with Q3 earnings posted at -$400 million, Spectacles posted $40 million in loss because no one bought them, so you throw a $5 million NYE party...

Posted: 01 Jan 2018 12:35 AM PST

Theoretically, you can just add Net Cash to calculated operating value but i think it's insufficient.

For the debt, as long as a firm can earn more than interest. it's okay except excessive amount that might hurt the sustainability of the financial structure. i think it's why we don't deduct Net Debt from operating value unlike Net Cash case.

But for the cash, the logic implied in people do not discounting cash is that cash doesn't have any risk. that's why people simply add it to operating value in all cases whether the firm is great business or not. here's the point that i want to argue.

Let's say you can invest to an equity investor rather than equity directly. and there are three people that has same amount of cash. say $10,000 per person. and your required return is 10%.

A : has 5% per year track record.
B : has 10% per year track record.
C : has 20% per year track record the warren buffett.

Now, the question is that how would you value their cash? same $10,000 for all as you do when valuing equities? i've struggled last year and my friend earned decent money which made big gap between us though we had same amount of money at the beginning. this made me to realize that cash holding is also could be risky when the holder is poorly employing it. the Capital Allocation what buffett says.

Even if a firm has large amount of cash. we should discount them if they don't employ it efficiently. it can happen even in good business because good business doesn't also mean that have unlimited opportunity to employ capitals. it's my 2cents. what are your thoughts on it?

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Why The Trade Balance (Still) Matters

Posted: 31 Dec 2017 11:24 AM PST

submitted by /u/ZiVViZ
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Anyone know why Warren Buffett and Peter Drucker never worked together?

Posted: 31 Dec 2017 07:31 PM PST

Peter Drucker is considered "the founder of modern management" so it seems odd that he and Buffett didn't work together. I tried to do some research on why but all I found was this: https://www.quora.com/Did-Drucker-meet-Buffett-or-Munger

Anyone know any more about this?

submitted by /u/bapu_151719
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When you're the CEO of Snapchat, your company's stock has fallen 46% since IPO, earnings are down every quarter with Q3 earnings posted at -$400 million, Spectacles posted $40 million in loss because no one bought them, so you throw a $5 million NYE party...

Posted: 31 Dec 2017 01:58 PM PST

submitted by /u/layeon
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