Value Investing LIST - Best sellside analyst by sector |
- LIST - Best sellside analyst by sector
- Being the only active investor in a passive world
- IAG Long
- Does a private company's discount rate reflect the long-term risk of multiple compression 5+ years in the future?
| LIST - Best sellside analyst by sector Posted: 03 Sep 2019 01:15 PM PDT Hoping to compile a list of the best analysts by sector. Nothing official but please just share you opinion on one or all the sectors. Specifically, looking for consumer retail at the moment but long-term should have a go to list for all sectors. I'll start European Telcos - Akhil Dattani (JPM) MCO's - Gary Taylor (JPM) Auto retail - Chris horvers (JPM) Financials - Betsy Graseck (MS) Macro - Torsten Slok (DB) Malone/liberty complex - Jason Bazinet (citi) Edit: To be clear, I am looking for strongest competency as it relates to industry, geo, or sector. For someone that developed as a generalist, I rely on sellside to bring me up to speed on specific industries as efficiently as possible in areas my primary sources may overlook. Experience highly correlated with quality but not a perfect guide. Many SS analysts have been around forever and still produce garbage as output. [link] [comments]  |
| Being the only active investor in a passive world Posted: 03 Sep 2019 02:04 PM PDT I recently read something Howard Marks wrote about the move towards passive investing:
I'm interested in hearing your thoughts on this. Even if you're able to identify market inefficiencies, how would you most effectively take advantage of them if you're literately the only active manager in the world? Assume that your investors are speculating by investing with you, the world's only active manager, so underperformance will lead to tons of redemptions. [link] [comments]  |
| Posted: 03 Sep 2019 04:19 PM PDT International Airlines Group is the sixth-largest airline company in the world when measured by revenue. It transports ~113 million passengers annually through its five passenger airline brands (including British Airways and Iberia) and also makes additional cargo revenue (5% of total revenue). Total group revenue was £22.2bn for year-end 31st Decemeber 2018 (+6.7% YoY), whereas profits after tax were £2.6bn (+44% on an actual basis or +11% on a pre-exceptional items basis). The business had a decent ROIC of 17.4% last year (16% in 2017), much lower than the ROE figure of 37% due to high long-term borrowings of £6.8bn (yielding a D:E ratio of 1.1), although it's worth calling out that the majority, £5.4bn, of the borrowings is in the form of leases on aircraft. Where am I going with this? This came up on a screen I made of UK companies with high ROIC and low PE ratios. It seems on the face of it like a decent business. Plus, given its size, there should be enough analysts following this for it to be priced vaguely correctly. However, of the top 10 airline companies globally- IAG has a price to earnings ratio (2.6) of roughly half the next lowest, Lufthansa (4.91). Admittedly, it comes 7th when ranking on price to sales ratio, maybe suggesting the market expects future profits to dip much more severely than other companies. Margin of Safety price: If the business were to grow profits at 10% per year for 10 years, with a 15% cost of capital, and assuming a future PE ratio of the median of the 10 companies, at 9.2, the business is 46% undervalued today. Owner Earnings: starting with the £2.62bn of reported earnings and adding back on £1.11bn of depreciation & amortisation, then subtracting my £2.55bn estimate for maintenance Capex (this year's aircraft lease agreements + the line billed as 'engineering and other aircraft costs) and reducing working capital by £58 million as per the financial statement. This gives me owner earnings of £1.16bn and a ten-cap price of £11.6bn, 40% above today's price of £8.29bn. Clearly the above is a quick, initial valuation and doesn't look into the attitude from managers to shareholders, insider buying, or any comment on whether IAG can maintain its current market position, all of which I'd want to include in a more detailed analysis, but I thought I'd share to get thoughts from others and start a discussion. [link] [comments]  |
| Posted: 03 Sep 2019 05:03 AM PDT TL;DR: Do exit multiples 5+ years in the future need to be sandbagged, or does the discount rate already do this? I'm thinking about a valuation for a private business. I did the DCF, but I also want to apply the exit multiple method to ensure things are lining up. There is a more relevant comp set, mainly of public companies that have been taken private, that I can use after applying a private company discount factor. As the exit valuation is based on Year 6 numbers, I see two approaches: - Option 1: Take the exit multiple of that year's results and discount it back to PV at the discount rate, or - Option 2: Use a lower (but somewhat less appropriate) exit multiple to reflect the additional duration risk, and discount that back to PV at the discount rate I think that there is a more theoretical question here is: does the discount rate reflect the economic, industry, and company-specific risks only, or does it also reflect long-term risks of multiple compression/pricing? [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