Dr. Jacques Saint-Pierre

Deep value, research analyst, portfolio strategy, large-cap
Dr. Jacques Saint-Pierre
Deep value, research analyst, portfolio strategy, large-cap
Contributor since: 2013
In reading this article today (January 29, 2016) [article posted March 26, 2013] you need to account for the 7 for 1 split of Apple (AAPL) stock that occurred June 9, 2014. The market price adjusted for split is thus 65.99$ on March 26, 2013. The adjusted prices for the two intrinsic values (Convergence toward equilibrium case and the Optimistic case) are thus 68$ and 116$ respectively.
The market price today is 97.34$ (January 29, 2016). Thus, an increase of 47.5% over this period.
I also want to mention the interest of "convergence toward competitive equilibrium" scenario approach that we have proposed in the article. We wrote in our 2013 article:
“In this competitive landscape, we have estimated the intrinsic value under two scenarios... In a scenario called "convergence toward competitive equilibrium" we suppose that the performance spread will decline gradually over the next five years from 25% to 10% and stay at this level afterward. This scenario gives an intrinsic value of 478$. This price is not too far from the current market price.” [478$ should be divided by 7 to give around 68$].
The recent data show that the decline in their performance spreads has been slower than was expected in 2013. Simulations of scenarios with different degrees of convergence toward equilibrium are a valuable addition in stock valuation.
Thank you so much for your comment.
1. The Uber over-valuation was just an anecdotal evidence of the state of the capital market.
2. The interest rate is just one component in the cost of capital. An increase of interest rates, even if it is a small one, in connection with its impact on investors expectations in the actual investment climate could do a lot of damage.
Thank you so much for your comment.
Thank you so much for your comment.
I consider that it is not the time now to raise them even slowly to a level compatible with free capital markets because the cost of equity, the most important component of the cost of capital, is very high. I consider also that the Fed should not play with investors expectations. Also, the investment climate is bad in US and around the world.
Thank you so much for your comment.
I do consider that rates should be the result of free capital markets. I also consider that it is not the time now to raise them even slowly to a level compatible free capital markets because the cost of equity, the most important component of the cost of capital, is very high. Also, the investment climate is bad in US and around the world.
Thanks for your comment. Intel is fairly valued.
Thank you for your comment. The way the deal will be financed has practically no impact on the merit of the decision because it will affect marginally the WACC.
Thank you very much for your generous comment.
It is why you need to base your analysis, as I have done, on financial economics (i.e. performance spread).
You are correct.
You are correct. Thank you for drawing my attention to this transcription error. I made an error in transcribing numbers from Excel to Word. You can see this by comparing 114 606 494 (correct number) with 146 606.494 (wrong number). The last 6 digits are the same! So, it doesn’t change anything on the results and the conclusion. You can continue to think that my article is insightful and constructive.
Calling it “ridiculous” and “baseless,” IBM dismissed a report that said the technology giant plans to lay off 1 in 4 of its workers, or 100,000 people.
No! The performance spread is too small.
Thank you for your comment. I don’t agree with you for the reason presented in my article. Potential lawsuits based on the behalf that the shareholders didn't’t receive enough are the name of the trade in this world. The arguments presented by those who pursue do not support a serious economic study. This is the hogwash.
Thank you for your comment. I don’t agree with you for the reason presented in my article. Potential lawsuits based on the behalf that the shareholders didn’t receive enough are the name of the trade in this world. The arguments presented by those who pursue do not support a serious economic study. This is the hogwash.
Yes I know. There are always potential lawsuits in buyout deals. Thanks for your comment.
Ebersavr. Yes I know. Thanks for your comment.
Thanks. Writing an article on efficient capital markets is a project that I expect to realise in the near future.
A physician has a bachelor degree. I have a doctoral degree. Doctoral degrees are not Ph.D. outside the United States. It is an old European tradition to write Dr. in front of your name when you have a doctoral degree.
Thanks for your point of view.
Thanks! It is very kind of you.
Thanks for your comments with which I agree.
Thanks for your comments
Thank you for your comment. Even in an efficient market, you can find mispricing. You should not confuse "efficient market" with "perfect market".
Thanks for your comments. However, I think that they are too much "accounting based".
Thanks for your comment. Reading the 10K is a good starting point; but, just a starting point because the companies are too limited by regulations and the danger of being sued.
Thanks for your comments and the good questions.
Thanks for your comments. I agree with all of them. This is the reason why I insist on the economics foundation of financial analysis and on measures that are difficult to manipulate like the performance spread overtime.
Thank you for your comment.
Thank you for your comments. Although thay are very kind, I do not agree with you when you write that "financial markets are not efficient" and that "in the medium/long term what really drives a quotation are EPS".
Thanks for your comment. I hope you are wrong!
Thanks for your comments. It is very kind of you.