Today’s chart is thank’s to this tweet by the People’s Hedge Fund Manager, showing the EV/EBITDA valuation ratio of the S&P 500 US stock index over the past 30 years. EV/EBITDA is sometimes called the “acquirer’s multiple”, and has certain advantages over Price / Earnings (P/E) as a valuation metric. Here are five earlier posts […]
Thanks to this tweet from Meb Faber for sharing the below chart of multiples paid by private equity firms for leveraged buyouts (LBOs) since 2000 by “vintage year”. When asked why I don’t believe private equity will generate returns anywhere near as high as pensions and endowments have seen over the past 30 years, these […]
Anand and I are long time fans and students of Warren Buffett. The recent news that the legendary investor’s firm Berkshire Hathaway lost $2.7 billion last month on their stake in Kraft-Heinz did not reduce my respect and admiration of his wisdom by even one bit, but of course drove me to ask how I […]
When valuing a stock, I have to be careful to avoid falling for value traps that seem cheap just because they are trading at low multiples to earnings, cash flows, or book value. That said, at any price, a stock implies a certain level of future cash flows above which an investor will make money, […]
Here is a table listing some of the best performing and worst performing country stock markets as of the beginning of December 2018, with the first two columns showing 2018 year-to-date and 3-year total returns by country respectively. The next two columns show Price/Earnings ratios and historical earnings growth statistics by country. I chose to […]
One major landmark for 14-year-old Tesla Motors (TSLA) this year was surpassing the market cap of 109-year old blue chip US automaker General Motors (GM), despite having only sold 76,000 cars in 2016 vs. GM’s 10,000,000 cars sold, and despite Tesla continuing to lose almost $1,000,000,000 each year as GM has been posting annual profits of almost $10,000,000,000. Of course, […]
There are many textbooks covering how to used discounted cash flow calculations to value an investment like a stock, but it seemed valuable to post a spreadsheet showing how this applies to projecting the implied future cash earnings of a high-growth company like Tesla Motors. Here is a link to the spreadsheet for your reference. […]