Intrinsic value, Mystery Co. “owner earning” & dancing the “joropo” on the ceiling
Let me turn down the volume, take you off the dance floor, sober you up a bit and let’s define “intrinsic value” and how I calculate “intrinsic value”. It is the measure of what an asset (a company, for instance) is worth. The measure is arrived at by means of an objective calculation, or sometimes a complex financial model, rather than using the current trading price thrown at you by Mr. Market. I myself take an average EBITDA (earnings before interest, taxes, depreciation and amortization, also called gross operating cash flow) over the last 2 to 3 fiscal years. I include the current year and take out the maintenance CAPEX. The result is what I’d like to call “owner earning”.
Lessons in Physics, the Mexican Hat and the persistent ZIRC - “I’m only human after all”
The Higgs Field is a scalar field exhibiting a potential energy at every point in space. Without that field particles would not have the mass required to attract one another, and would float around freely at light speed. Also, gravity as we know it would not work because mass sources would not be there to influence the path of other masses. The mechanism behind this, is called spontaneous symetry breaking and the potential function representing the Higgs Field has the shape of a Mexican hat. The instability of this geometry pushes the field down towards the trough of the hat and thus gives a particle its valuable mass.
“13” a blessing or a curse? – Smile to go!
On January 21, 2021, we celebrated the 13th anniversary of the Fund. No, we don’t suffer from “triskaidekaphobia”. On the contrary, we innovated. Due to Covid19, we held the anniversary by webinar, at which Coltene CFO, Gerhard Mahrle, presented the group, which is active in the dental sector.
What about the Two Sisters? – About consanguinity & “Back to the (drawing) board!”
Citing unidentified people inside the 2 banks, Inside Paradeplatz, an online finance newspaper, is speculating that the chairman of UBS & Credit Suisse are exploring a potential merger, nicknamed Signal, to create one of Europe’s largest banks. The rumour, emerged mid-September and I’ve been asked the whys & hows, the validity of such a plan, etc. Before I give you my present take on this, I should like you to look at my past take on this when I wrote the following 7 years ago, based on the news at that time.
Noah’s Ark, Time To THINK! & “Happy Birthday, Warren!”
Warren Buffett and his partner Charlie Munger have been criticized recently. Value investments, their credo, reached an epic level of underperformance versus the index and especially in growth stocks, the so-called GAFA. Now let me remind you that “it wasn’t raining when Noah built the Ark. And he didn’t look that smart for 39 days.”
Seeking Wisdom VI – “In those unprecedented times, why not think “backwards”?”
We are now 6 months into COVID-19 and during this hot summer lull, I thought it might be time to step back a bit, take stock and reconnect with our “seeking wisdom” series. These are unprecedented times, where we do need to avoid certain behaviours, risks, attitudes, etc. So why not approach things in an unprecedented fashion and think things backwards. “A lot of success in life and success in business comes from knowing what you really want to avoid – like early death and a bad marriage”, said Charlie Munger, Warren Buffett’s partner and Vice Chairman of Berkshire Hathaway.
Geberit – Interesting times! - When boring gets exciting!
We certainly live in interesting times, but sometimes I wish, like a wise oriental man once said, to be spared of that fate, and that I could live in uninteresting times. Well, enough talk, let’s walk, I told myself. Amid COVID-19, why not walk through Switzerland. And that’s what I did and after 2 weeks, I arrived at the village of St Gallenkappel, where the most innovative toilet manufacturer originated.
“The elephant in the room” (2) – Shakespeare, Newton, Elon Musk and me?
Like most of us, I have just spent one of the most singular months of April that I can remember. “Comparaison n’est pas raison”, but let’s wind back a few centuries to see what we can learn from history!
“It won’t last forever, but let me talk about “the elephant in the room””
We are now in the eye of the storm. Whenever & wherever you switch on, you only hear about the “elephant in the room”. We are where it feels the most unpleasant and/or unwise to own any equities, or any financial assets, as a matter of fact. The only good news that I can serve is: It won’t last forever.
Seeking Wisdom V – “Markets in turmoil” – On the path to “OCS”
In investment, as in other endeavours in life, it is a good idea, when in stress situations, to pause & think. In light of recent developments, namely the spread of COVID-19, the US primaries and a panicky Mr. Market, one is naturally tempted to cling to the latest piece of information, as if this will disclose some eternal truth.