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  • Why Nokia Is Fairly Valued [View article]
    dwdallam,

    Thank you for the question. As long as the present value of the future free cash flows are equal to the purchase price, we have a value-neutral proposition. We'll work to clarify this in the next update. But to answer your question directly, unless there is some equity tied to the purchase price of the asset, the value of the sold asset should be fixed.

    Thanks again for reading!

    The Valuentum Team
    Apr 17 12:06 PM | Likes Like |Link to Comment
  • Why Nokia Is Fairly Valued [View article]
    dwdallam,

    Thank you for the question. An analyst can either capture the selling price and adjust the balance sheet or capture the transaction via the present value of future free cash flows.

    Thanks again for reading.

    The Valuentum Team
    Apr 16 10:23 PM | Likes Like |Link to Comment
  • Why Nokia Is Fairly Valued [View article]
    jomike,

    Thank you for your comment. We have had a published fair value estimate on Nokia for some time now. Thanks for reading!

    The Valuentum Team
    Apr 16 10:07 PM | Likes Like |Link to Comment
  • Why Nokia Is Fairly Valued [View article]
    Seppo,

    Thank you for the contribution. Though we acknowledge your opinion, our fair value estimate is fairly close to where the equity is trading, and our margin of safety bands reflect a highly-volatile and risky equity. We think these takeaways are quite informative.

    Now, if our model said Nokia was worth $100 per share and our margin of safety was few pennies, you may have an argument. But we think you may be applying GIGO too liberally.

    Thanks for reading!

    The Valuentum Team
    Apr 16 10:06 PM | Likes Like |Link to Comment
  • Why Nokia Is Fairly Valued [View article]
    Hi all,

    We'll do our best to respond here. Obviously, Nokia operates in a very troubled environment, and the idea that it is selling a portion of its troubled business should not be viewed as a positive regarding industry structure and long-term investment returns. We feel comfortable stating that the firm is fairly valued at current levels. We apply a wide margin of safety, because as many of you may know, Nokia's equity value has fluctuated quite rapidly through the course of the past few years. Unfortunately, while we plan to update our fair value estimate in coming periods, we don't see any reason to change it at this point.

    Perhaps it was the wording that may have distracted you from the work, but we are confident in the fair value range. As new information becomes available, we plan to update the fair value estimate.

    Thank you for reading.

    Kind regards,

    The Valuentum Team
    Apr 16 10:02 PM | Likes Like |Link to Comment
  • Why Baidu Is Incredibly Cheap [View article]
    Thank you for the kind comments Ken. Many of our members agree with you!

    Kind regards,

    The Valuentum Team
    Apr 15 03:05 PM | 1 Like Like |Link to Comment
  • Why Facebook May Approach Triple Digits [View article]
    Ur_Mom,

    Please use a margin of safety around your fair value estimate and then your personalized model may be as usefully applied as ours. In each model, there are future forecasts. Only through an application of a margin of safety and the acceptance that all the value is in the future and the future is unpredictable can wisdom be attained in the stock market.

    Thanks for reading.

    The Valuentum Team
    Apr 10 10:22 PM | Likes Like |Link to Comment
  • Why Facebook May Approach Triple Digits [View article]
    We think Facebook's business risk is equal to that of the underlying market. The company's finances are about as healthy as they can be. Remember, we use a fundamental beta, not a market-derived beta.

    Thanks again.

    The Valuentum Team
    Apr 10 10:20 PM | 1 Like Like |Link to Comment
  • Why Facebook May Approach Triple Digits [View article]
    Justin,

    You're just going to have to believe us that an academically calculated, market-driven beta is not useful in practical, real-life valuation analysis. Not only does it change daily, but there is a variety of complications -- what measurement period, how frequent should it be measured. Our process is much more practical, and when consistently applied across our thousand+ firm coverage universe, very insightful.

    Thanks for reading.

    The Valuentum Team
    Apr 10 10:19 PM | Likes Like |Link to Comment
  • Why Facebook May Approach Triple Digits [View article]
    monfrere,

    A 10% weighted average cost of capital represents the average cost of capital of firms across our coverage universe. We think Facebook's discount rate is average. We capture the uncertainty via the margin of safety bands we assign around the fair value estimate. Unfortunately, we're going to have to leave it there on this topic. Here is a link that goes into our methodology:

    http://bit.ly/viu9MH

    Thanks again for reading.

    The Valuentum Team
    Apr 10 10:17 PM | Likes Like |Link to Comment
  • Why Facebook May Approach Triple Digits [View article]
    monfrere,

    To be fair and reasonable, Facebook's weighted average cost of capital is not 18.5%. We think a 10%+ hurdle rate is more than appropriate. We capture the uncertainty via the margin of safety around the fair value estimate. For example, we think Facebook is cheap because it is trading below the low end of the fair value range.

    Thanks again for commenting!

    The Valuentum Team
    Apr 10 02:18 PM | 3 Likes Like |Link to Comment
  • Why Facebook May Approach Triple Digits [View article]
    Bently,

    Thank you for your kind comments. We wish you the very best on your investing endeavors.

    Kind regards,

    The Valuentum Team
    Apr 10 12:33 PM | 1 Like Like |Link to Comment
  • Why Facebook May Approach Triple Digits [View article]
    Justin,

    Thank you for your views on WACC. We use a fundamental beta that is based on the underlying volatility of the company's fundamentals. A traditional beta is market-driven and does not make much sense from a practical standpoint. For example, if a company falls in price, from a valuation standpoint it should be more attractive, not less attractive because the price has shown volatility.

    Kind regards,

    The Valuentum Team
    Apr 10 12:33 PM | 2 Likes Like |Link to Comment
  • Why Facebook May Approach Triple Digits [View article]
    Chicago_Bull,

    Thank you for your comment. The way to think about Facebook is not its fundamentals today, but its fundamentals 5, 10, 20 years from now and then discount them to today. What you would arrive at under this process is a fair value estimate of the company. We're not saying that thinking about Facebook's business model into the future is an easy task, but this is and will always be a critical factor behind valuation.

    Thanks for reading!

    The Valuentum Team
    Apr 10 12:31 PM | 2 Likes Like |Link to Comment
  • Why Facebook May Approach Triple Digits [View article]
    Justin Holm,

    Thank you for your comment. We think Facebook is well-equipped to continue to grow revenue for a long time to come. We've seen many Internet based firms grow their respective revenues for over a decade now.

    Thanks for reading.

    Kind regards,

    The Valuentum Team
    Apr 10 12:29 PM | 3 Likes Like |Link to Comment
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