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  • Return To The Firing Line: Revisiting Tesla [View article]
    Dear Professor,
    thank you very much for the knowledge you shared with us.
    I appreciate your model and thoughts. Just let me point out some remarks (in brackets).
    It looks like the following assumptions, among the others, were included into the model:
    1) an effective tax rate equal to a statutory tax rate of 35%. (During FY2013 the Company realized a $71M net loss before taxes and paid $257K of Income taxes - from Consolidated Statements of Cash Flows.)
    2) a 14.75% cost of debt (through the computation of a synthetic rating of D2/D for a company with a 0% probability of failure as assumed in the article. During FY2013 the Company paid $9.04M Interest - from Consolidated Statements of Cash Flows - with an average total debt of $536.45M for the years 2013 and 2012).
    3) a 30% standard deviation on stock price to compute the value of stock options. (The Hist. volatility 180 should be currently around 65.25%. The $101.9M aggregate intrinsic value of RSUs outstanding as of December 31, 2013 may be also considered as further addition to the total value of options.)
    4) a $341.17M of NOL carried forward from prior years. (In the last 10-K they say: "Liquidity and Capital Resources - Since inception and through the year ended December 31, 2013, we had accumulated net operating losses of $1.14 billion...".)
    Based on 1) -0.37% instead of 35%, 2) 1.69% instead of 14.75%, 3) 65.25% instead of 30% , 4) $1.14B instead of $341.17M and with an ERP based on "Operating regions" instead of "Country of incorporation" (which means 5.30% instead of 5%) the model leads to a price 11.1% higher than $99.85.
    Your comments are welcomed.
    Apr 4, 2014. 03:02 PM | 1 Like Like |Link to Comment
  • Go Where It Is Darkest: When Company, Country, Currency And Commodity Risk Collide! [View article]
    Thank you professor for your outstanding article!

    Let's keep your 8.91% cost of capital computed for this company and assume a 2% long term perpetuity organic growth of the free cash flows (FCF).

    In a DCF model, with $1.52 B of twelve trailing months FCF as a starting point, taking into account a total estimated value of operating leases and unfunded retirement and post retirement obligations equal to roughly $2 B, a 16.2% annual FCF growth for the next 10 years would be needed to justify the current (Nov 25 2014) market price. Even if said rate is not so far from historic long term CAGR of the operating cash flows, during last few years the operating cash flows have contracted strongly. That's why I have no positions in Vale and no plan to initiate any positions in the near future.

    I wrote this comment myself, and it expresses my own opinion. I am not receiving compensation for it. I have no business relationship with Vale.
    Nov 25, 2014. 06:02 PM | Likes Like |Link to Comment
  • Even At $68 Per Share, The Alibaba IPO May Still Be Interesting [View article]
    It’s easy: based on my calculations, at $68 per share a 18% per year growth rate is implied. At a higher price corresponds a higher rate. Do you feel comfortable to buy into such expectations? That’s up to you.
    Sep 18, 2014. 03:28 AM | Likes Like |Link to Comment
  • Alibaba: A China Story With A Profitable Ending? [View article]
    Online shopping in China (in billions of RMB) may be estimated (with the polynomial regression function: y = -3.1103*x^3 + 89.174*x^2 - 151.93*x + 205.3) in 4,493 and 5,184 for the years 2017 and 2018 based on data shown at page 131 of the prospectus (first graph). This gives a 23% CAGR from '13-'18E that may be applied to the model instead of 27% as compounded annual revenue growth rate over next 5 years. All other assumptions unchanged, the model would lead to a value per share of $51 instead of $60.
    May 13, 2014. 02:59 PM | Likes Like |Link to Comment
  • Microsoft: At This Stage Looks Pretty Undervalued [View article]
    This DCF analysis considers operating cash flow and capex (additions to property and equipment) figures as they are (until cash parked abroad isn't repatriated the tax advantage is there). Let's assume to incorporate your assumptions into the model. To keep things as simple as possible, we may see what happens by reducing computed FCF by $6.5 billion. This figure was found in an article published last October 10, 2012 in titled "To Tax, or Not to Tax, Overseas Cash Hoards" by Elizabeth Dwoskin about shaving tax bill by booking profits in offshore subsidiaries ( ). Given the new assumptions (100% of cash repatriation), the final calculation gives a value per ordinary share equal to $30.15*, which is about 10.6% higher than the closing price of $27.25 on January 18, 2013. So, at the end, where does the truth stay? May be in the middle: still pretty undervalued. *This refers to the date when the article was written, i.e. before the Company released its FY13 Q2 earnings.
    Jan 29, 2013. 05:28 AM | Likes Like |Link to Comment
  • Microsoft: At This Stage Looks Pretty Undervalued [View article]
    Your knowledge of the issue seems quite good. Thank you for your interesting insights.
    Jan 29, 2013. 04:55 AM | Likes Like |Link to Comment
  • Adobe: No Room For More Upside Potential [View article]
    Dear bolaughlin. May be I will get through said other companies. Just follow me and see.
    Jan 11, 2013. 05:21 AM | Likes Like |Link to Comment
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