This is the last part of the basics series on value investing. The series in its entirety can be accessed by clicking on the “basics” link under the topics section to the left. I hope this has lent a comfortable understanding of the value investing methodology. I can always be reached with questions or comments [...]
From the category archives:
basics
As mentioned in earlier posts, value investors like to make use of assumptions that they can be relatively certain about (i.e. last twelve months’ earnings, balance sheet valuations, etc). Even so, we know that nothing ever plays out as one would expect. As such, we make use of a “margin of safety”. This means that [...]
The intrinsic value (IV) of a potential investment is arrived at by comparing the results of the Net Asset Value (NAV) and Earnings Power Value (EPV) analyses.
If EPV is less than NAV then the intrinsic value for the company is derived from EPV and adds value for the probability of a catalyst taking place within [...]
Earnings Power Value (EPV) is an estimate of the value of a company from its ongoing operations. The beauty of EPV, for value investors, is that the numbers used to calculate it are NO GROWTH free cash flows. No growth free cash flows just mean that we are only subtracting from cash flows the amount [...]
Determining a figure for the replacement value of the balance sheet is the first step I take in arriving at the value I would pay for a company. This includes marking up land and buildings to current market values, adding assets and liabilities for operating leases, as well as adding intangible assets such as customer [...]
Over the next couple of posts I will be providing you with the basic knowledge you need in order to understand my value investing methodology. Also, if you haven’t done so already you may want to subscribe to my RSS feed so that you receive the posts as they are published (link is to the [...]
