Value Investing Discussion on risk expressed as beta |
- Discussion on risk expressed as beta
- What am I missing? [Innoviva, Inc. (INVA)]
- Am I thinking about whole-company return correctly?
| Discussion on risk expressed as beta Posted: 02 Mar 2019 10:00 PM PST Hello value investors, I have been pondering on the topic of beta, or investment risk. I have been trying to use Discounted Cash Flow as a sensible way to evaluate a company but something about beta in the CAPM model doesn't seem very logical to me. So beta is basically how the market reacts to news about a company. I understand that it would represent a risk to someone who would be willing to sell the shares he owns in the company but for someone who doesn't care about market fluctuations do you think using beta makes sense? To me it looks like my evaluation would be distorted by something that is not relevant. If you think like me do you have any other proposals or ideas how risk can be evaluated and perhaps incorporated into the DCF model? Or do you perhaps have any resources on the topic that I can check-up? If you don't think like me would you care to try an convince me why beta makes sense? Cheers! [link] [comments]  |
| What am I missing? [Innoviva, Inc. (INVA)] Posted: 02 Mar 2019 05:49 PM PST I've done my due diligence on this company and I really don't understand the valuation. The market seems to have overreacted to their Q4 earnings miss which sent shares tumbling from a $20.54 high into the upper $14s before insider buying and additional buying from Sarissa Capital, which made Sarissa a 5% holder, gave them a good bump. The revenue streams from royalties appears very strong and there has been significant earnings growth over the past three years. Is there something I'm missing? I know I'm young and dumb, but I haven't been able to find anyone that can tell me if I'm missing anything in my analysis of the company. I've gone through the 10Ks, the 10Qs, the 13Gs, 13Ds, and the 8Ks and I can't find any red flags. I feel like there is something hiding in plain sight that I'm just too inexperienced to realize is there. Any help would be greatly appreciated! [link] [comments]  |
| Am I thinking about whole-company return correctly? Posted: 02 Mar 2019 11:50 AM PST I'm trying to answer the questions: "if I owned all of a company, how much would I make?" and "once I know that, how much should I pay?" Let's say I owned Wal-mart outright (took it private and owned 100% of the company). I'm not paying off all its debts so we'll leave interest expense, etc. the same. For this discussion, ignore any minority interest. I believe I would earn:
Adding these three, Wal-mart throws off about $24,943 billion per year. I say "throws off" in the accounting sense, not the free cash flow sense. If I spent $100bn to buy Wal-mart, I'd earn about 25% annual return. If I spent $400bn, it'd be only a 6% return. I'd want my return to at least equal an index fund, and perhaps a bit more since it's riskier, so 10-15% return would mean I'd value Wal-mart at maybe $150-250bn. Obviously, I'm ignoring future growth prospects, which greatly complicates the math, but let's pretend for a moment that Wal-mart is going to perform exactly as it did in 2018 for the foreseeable future. With that assumption, am I thinking about these numbers correctly? [link] [comments]  |
| You are subscribed to email updates from Value Investing. To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google, 1600 Amphitheatre Parkway, Mountain View, CA 94043, United States | |
No comments:
Post a Comment