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13-12-2023, 08:09 AM
All valuations are based on assumptions. The values we obtain will depend on how we see the future and the model we use. At the same time, biases will enter our valuations. To address these issues, I use 2 ways to triangulate the value or margin of safety.
Computationally, I use Asset Value, Earnings Value and the Acquirers Multiple to triangulate the margin of safety. I don’t use the Acquirer Multiple in a relative sense by comparing it with those of its peers. Rather I use it in an “absolute” sense by looking at the actual ratio. According to Tobias Carlisle a value less than 5 or 6 is considered cheap.
Next, I look at other analyst reports. These could be from stock-brokers, bloggers and investing sites such as Seeking Alpha or The Motley Fool. That is why I spend considerable time looking at investment case studies. I would be happy if my margin of safety is lower than those of those of other analysts given my conservative approach.
For more insights on how you can benefit from investment case studies, go to “Can we learn anything from investment case studies?”
Computationally, I use Asset Value, Earnings Value and the Acquirers Multiple to triangulate the margin of safety. I don’t use the Acquirer Multiple in a relative sense by comparing it with those of its peers. Rather I use it in an “absolute” sense by looking at the actual ratio. According to Tobias Carlisle a value less than 5 or 6 is considered cheap.
Next, I look at other analyst reports. These could be from stock-brokers, bloggers and investing sites such as Seeking Alpha or The Motley Fool. That is why I spend considerable time looking at investment case studies. I would be happy if my margin of safety is lower than those of those of other analysts given my conservative approach.
For more insights on how you can benefit from investment case studies, go to “Can we learn anything from investment case studies?”