There’s a rule of thumb, which is a sort of a Buffett and a number of others rule of thumb, which is if you can invest in a quality company, one where you could foresee growth and pretty consistent returns you think from it, and you can buy on a free cash flow yield, or even better dividend yield, which is the same as or higher than the long bond yield, just buy it, because that’s the discount rate. And the long bond coupon doesn’t grow, whereas the company yield will grow.
If rates go up an awful lot, more than the market is currently discounting, we will definitely have a torrid period where share prices will react to that. But I think if you prepared to sit there and take that, you’ve definitely got an equity which is cheap in comparison with the long bong yield and therefore in comparison with the only reality you can judge it against.
You can listen to the entire meeting here:
For all the latest news and podcasts, join our free newsletter here.
The Acquirer’s Multiple® is the valuation ratio used to find attractive takeover candidates.
It examines several financial statement items that other multiples like the price-to-earnings ratio do not, including debt, preferred stock, and minority interests; and interest, tax, depreciation, amortization.
The Acquirer’s Multiple® is calculated as follows:
Enterprise Value / Operating Earnings*
It is based on the investment strategy described in the book Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations, written by Tobias Carlisle, founder of acquirersmultiple.com.
The Acquirer’s Multiple® differs from The Magic Formula® Earnings Yield because The Acquirer’s Multiple® uses operating earnings in place of EBIT.
Operating earnings is constructed from the top of the income statement down, where EBIT is constructed from the bottom up. Calculating operating earnings from the top down standardizes the metric, making a comparison across companies, industries and sectors possible, and, by excluding special items–earnings that a company does not expect to recur in future years–ensures that these earnings are related only to operations.
Similarly, The Acquirer’s Multiple® differs from the ordinary enterprise multiple because it uses operating earnings in place of EBITDA, which is also constructed from the bottom up.
Tobias Carlisle is also the Chief Investment Officer of Carbon Beach Asset Management LLC.
He's best known as the author of the well regarded Deep Value website Greenbackd, the book Deep Value: Why Activists Investors and Other Contrarians Battle for Control of Losing Corporations (2014, Wiley Finance), and Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors (2012, Wiley Finance). He has extensive experience in investment management, business valuation, public company corporate governance, and corporate law.
Articles written for Seeking Alpha are provided by the team of analysts at acquirersmultiple.com, home of The Acquirer's Multiple Deep Value Stock Screener.
All metrics use trailing twelve month or most recent quarter data.
* The screener uses the CRSP/Compustat merged database “OIADP” line item defined as “Operating Income After Depreciation.”
An investment industry executive could face 20 years in jail for misusing customer segregated funds in the brokerage industry, representing the biggest financial fraud case ever brought in Chicago.
U.S.... Read More
The New York Post and United Press International Twitter accounts were hacked and were sending out bogus and somewhat frightening messages today.
The New York Post Twitter account reported that... Read More
Interview with Sandy Mehta, CFA - CEO of Value Investment Principals Ltd.
Value Investment Principals Ltd. is a Hong Kong based investment advisory firm focusing on unique “deep value” stocks globally. Their clients include... Read More
Booth Laird newsletter for the second quarter dated, July 11, 2015.
“All men’s miseries derive from not being able to sit in a quiet room alone.” – Blaise Pascal
This quarter’s... Read More
The Financial Times apparently has concerns regarding the method the Quindell PLC (LON:QPP) (OTCMKTS:QUPPF)’s utilized for accruing for income.
Gotham first to question Quindell's accounting quality
First came the onslaught from Gotham... Read More
The big investment buzz a year ago was the so-called "Great Rotation," an expected shift out of bonds and into equities. In response, we devoted our January 2013 commentary... Read More
How to Write a Book - Tips for Writers by Guy Spier, The Education of a Value Investor
https://www.youtube.com/watch?v=ba7fsl-cFR8&feature=youtu.be
Read More
Hedge Funds Down 0.37% In 1Q16; AUM Declined By US$6.4 Billion Eurekahedge
Key highlights for March 2016:
Hedge funds were down 0.37% as of Q1 2016, with total AUM declining... Read More
Chapter 8 of A Fistful Of Valuations In The Style Of Warren Buffett & Charlie Munger by Bud Labitan
Also see
A Fistful Of Valuations In The Style Of Warren Buffett Chapter 1
A... Read More