Growth Investing - Be Careful About Extremes [View article]
Hi Marc,
Could you share your P123 formula you use to eliminate the outlier companies? The one I'm using just seems to calculate the zscore, but doesn't apply is to the data set.
Apple's Best Option Is To Initiate A Share Repurchase Plan [View article]
Hi Davel,
If you look at our example in the table above you can see that the repurchase of share directly affects share price. My advice is to replicate the table, often doing the calculation is the best way to learn.
Apple's Best Option Is To Initiate A Share Repurchase Plan [View article]
Hi Davel,
If you think Apple is going down in price, then yes, a share repurchase plan is a waste of money. If however, you believe buying Apple stock is a good investment then a share buyback is worth while.
Apple's Best Option Is To Initiate A Share Repurchase Plan [View article]
"I don't favor a buyback. It requires a"reaction" from the investment community to add to my bottom line. Where as a dividend would have a "direct" impact on my bottom line, not requiring others to see the value in AAPL."
Apple's Best Option Is To Initiate A Share Repurchase Plan [View article]
Hi Davel,
Thanks for the comment. I'll do my best to address your questions:
1. We don't think Apple should keep $40B, this is my best guess as to how much they will WANT to keep for purposes of working capital, acquisitions, etc. 2. We think changing the P/E multiple is a easy way to manipulate price targets and is speculation. To be honest we don't know what multiple the market will assign the company over the next twelve months. It could be 16x or 8x, so we assume status quo (14x). 3. Based on our DCF analysis, there is 40% upside in Apple shares. This is much greater than the market. One can assume that once an investor receives their cash dividend they will invest it into the market. We think the potential for broader market returns over the next ten years is limited. In other words, Apple is a better investment than an index fund or cash. 4. The $845 intrinsic value is an updated DCF calculation from our previous article here: http://seekingalpha.co...
Apple's Best Option Is To Initiate A Share Repurchase Plan [View article]
Yes I believe the share price is holding back the average investor from getting in because it is perceived "expensive". But the more sophisticated investor knows the shares are actually cheap at 11x ex-cash earnings.
Apple's Best Option Is To Initiate A Share Repurchase Plan [View article]
Hi thanks for the comment. Our $875 intrinsic value estimate does NOT take into account any share buybacks. It actually factors in 1% share dilution per year.
Apple's Best Option Is To Initiate A Share Repurchase Plan [View article]
Yes, they would have to repatriate dollars to do a share repurchase on the order of magnitude that this example lays out. It was intended not as a realistic example of what will happen, but more to illustrate the size of the balance sheet and the optionality that Apple has because of their success.
Och-Ziff: A Hedge Fund With an Upside [View article]
Hi,
The $1.40 EPS figure is Reuter's compilation on analyst estimates. Incentive income swings by the day. You can try to run some sensitivity tests based on different market conditions and different inflows/outflows to get a rough estimate. For example, if their funds return 10% this year they will earn approximately 20% of $26B, or $520mm in performance fees. There are 98mm class A shares outstanding so this would represent $5.31 per share in revenue. Back out costs and one-time items to arrive at economic income. Put an estimate on what OZM's management will decide to distribute as a percentage of economic income and you can back into distributable earnings and yield.
Och-Ziff: A Hedge Fund With an Upside [View article]
Hi Adjusted Return,
Thank you for your comments. Sales are really just the management and performance based fees that OZM derives from managing their underlying funds. I'm not sure how the EPS concept is unclear, it is simply revenue minus costs and then dividend by shares outstanding. I do agree there is a bit of star manager risk here, but keep in mind that there are many underlying managers for each area of their hedge funds. For example, there is a lead manager for the credit division, one for their long/short division, etc. Dan has been instrumental in hiring these talented individuals, but he isn't running every aspect of the fund on a day-to-day basis. They have a couple hundred investment professionals working on these strategies. I hope this helps.
Growth Investing - Be Careful About Extremes [View article]
Could you share your P123 formula you use to eliminate the outlier companies? The one I'm using just seems to calculate the zscore, but doesn't apply is to the data set.
Here's what I'm using:
SetVar(@zeps%chgTTM,ZS...
Any help would be greatly appreciated.
L-3 Communication: Camouflaged Value [View article]
I'm glad you enjoyed the article!
Regards,
Steven
L-3 Communication: Camouflaged Value [View article]
Don't forget about that growing dividend!
Regards,
Steven
Apple's Best Option Is To Initiate A Share Repurchase Plan [View article]
If you look at our example in the table above you can see that the repurchase of share directly affects share price. My advice is to replicate the table, often doing the calculation is the best way to learn.
Regards,
Steven
Apple's Best Option Is To Initiate A Share Repurchase Plan [View article]
If you think Apple is going down in price, then yes, a share repurchase plan is a waste of money. If however, you believe buying Apple stock is a good investment then a share buyback is worth while.
Apple's Best Option Is To Initiate A Share Repurchase Plan [View article]
Well put, thanks for the comment.
Regards,
Steven
Apple's Best Option Is To Initiate A Share Repurchase Plan [View article]
We address the tax issue in a previous comment.
Regards,
Steven
Apple's Best Option Is To Initiate A Share Repurchase Plan [View article]
Thanks for the comment. I'll do my best to address your questions:
1. We don't think Apple should keep $40B, this is my best guess as to how much they will WANT to keep for purposes of working capital, acquisitions, etc.
2. We think changing the P/E multiple is a easy way to manipulate price targets and is speculation. To be honest we don't know what multiple the market will assign the company over the next twelve months. It could be 16x or 8x, so we assume status quo (14x).
3. Based on our DCF analysis, there is 40% upside in Apple shares. This is much greater than the market. One can assume that once an investor receives their cash dividend they will invest it into the market. We think the potential for broader market returns over the next ten years is limited. In other words, Apple is a better investment than an index fund or cash.
4. The $845 intrinsic value is an updated DCF calculation from our previous article here:
http://seekingalpha.co...
Regards,
Steven
Apple's Best Option Is To Initiate A Share Repurchase Plan [View article]
Thanks for the comment. I completely agree with you assessment.
Regards,
Steven
Apple's Best Option Is To Initiate A Share Repurchase Plan [View article]
Apple's Best Option Is To Initiate A Share Repurchase Plan [View article]
Apple's Best Option Is To Initiate A Share Repurchase Plan [View article]
MediWare: Profiting From Government Healthcare IT Stimulus [View article]
We will be posting our research on a number of defense stocks soon.
Please stay tuned!
Regards,
Steven
Och-Ziff: A Hedge Fund With an Upside [View article]
The $1.40 EPS figure is Reuter's compilation on analyst estimates. Incentive income swings by the day. You can try to run some sensitivity tests based on different market conditions and different inflows/outflows to get a rough estimate. For example, if their funds return 10% this year they will earn approximately 20% of $26B, or $520mm in performance fees. There are 98mm class A shares outstanding so this would represent $5.31 per share in revenue. Back out costs and one-time items to arrive at economic income. Put an estimate on what OZM's management will decide to distribute as a percentage of economic income and you can back into distributable earnings and yield.
Regards,
Steven
Och-Ziff: A Hedge Fund With an Upside [View article]
Thank you for your comments. Sales are really just the management and performance based fees that OZM derives from managing their underlying funds. I'm not sure how the EPS concept is unclear, it is simply revenue minus costs and then dividend by shares outstanding. I do agree there is a bit of star manager risk here, but keep in mind that there are many underlying managers for each area of their hedge funds. For example, there is a lead manager for the credit division, one for their long/short division, etc. Dan has been instrumental in hiring these talented individuals, but he isn't running every aspect of the fund on a day-to-day basis. They have a couple hundred investment professionals working on these strategies. I hope this helps.
Regards,
Steven