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Divergence in the Drug Businesses: Pharmaceuticals and Biotechnology
In the last two weeks, I have started writing about Pfizer’s courting of Allergan, the epic fall of Valeant and the unraveling of the Theranos story, but I have held back because all three stories have to be set against the backdrop of the changing health care business. While there are numerous...
Winning at a Loser's Game? Control, Synergy and the ABInBev/SABMiller Merger
I have been a long time investor in ABInBev, though I became one indirectly and accidentally, through a stake I took a long time ago in Brahma, a Brazilian beverage company . That company became Ambev in 1999, which in turn was merged with Interbrew, the Belgian brewer, in 2004, and expanded to...
Cash, Debt and PE Ratios: Cash is an upper and debt is a downer!
In my last post, I looked at the leavening effect that large cash balances have on PE ratios, especially in a low-interest rate environment. In making that assessment, I used a company with no debt to isolate the effect of cash, but many of the comments on that post raised interesting...
Reacting to Earnings Reports: Let's get real!
In my last two posts, I considered how earnings reports can generate narrative shifts or changes, thus affecting value, and pricing effects, when companies trail or beat investors’ estimates on metrics (earnings per share, revenues, user numbers etc.). In this one, I intend to apply the lessons in...
Possible, Plausible and Probable: Big markets and Networking effects
Mod Note (Andy) - This was originally posted on 7/16/14 I do not know Bill Gurley personally, but I do know of him, and I was surprised, sitting in Vienna airport waiting for a connection home on Friday morning, to get an email from him. In the email, he graciously gave me a heads-up that he was...
WSO Conference 2014 Announcement - Aswath Damodaran to be Keynote Speaker
We are VERY pleased to announce that the legendary Professor / Author / Blogger Aswath Damodaran will be the keynote speaker at the 2014 WSO Conference (Sat June 28th in NYC) along with speakers Josh Rosenbaum and Gene Rubio. The topic: " corporate finance and Valuation at Banks: Practice or...
Bitcoin Q & A: Bubble or Breakthrough? Both! Cult or Currency? Both!
As I have talked about or written on topics, I have learned that there are hot-button issues that almost always attract firestorms. Thus, when I write about Tesla, Apple or Facebook, I am guaranteed to provoke reactions, some strongly supportive and some strongly opposed, some rational and some...
Many a slip between the cup & the lip: From forward value to value per share today
Valuing young, growth companies is never easy to do but it is well worth doing, partly because it forces you think through the business that the firm is in and what it is doing (or needs to do) to succeed. I know that many of you disagreed with my assumptions on the Tesla valuation and this post is...
Love the company! Love the product! Love the stock? An Update on Apple
My first computer was a Mac 128K . I was a budget-constrained doctoral student from UCLA, teaching my very first class at UC Berkeley. At $2,500, in 1984 dollars, it consumed all of my discretionary income for that year, but it was love at first sight. Having sampled what the PC world had to offer,...
A Tangled Web of Values: Enterprise value, Firm Value and Market Cap
Equity Risk Premiums (ERP) and Stocks: Bullish or Bearish Indicator
If you have been following my blog postings, you are probably aware that I have an obsession with equity risk premiums (ERP), and have done an annual survey paper on the topic every year since 2008 ( with the 2013 update here ). I also post a monthly update for the ERP for the S&P 500 at the start...
The disclosure dilemma: Why more disclosure has led to less information
The last three decades have been the golden age of disclosure, as both accounting rule writers and regulators have pushed companies to reveal more and more about their prospects to investors, both in the US and internationally. Some of this push can be attributed to more activist investors,...
Winning (losing) by losing (winning): The power of expectations
If you are a baseball fan, I am sure that you know that both the New York Yankees and the Baltimore Orioles made the playoffs last week. While there was some celebration in New York on the news, it was nothing compared to the jubilation in Baltimore. The reason is not hard to fathom. In the last 16...
A new semester begins: Valuation class online
If you are a teacher, you measure your life in quarters and semesters. This is my fiftieth semester teaching, and, as in each of the prior forty nine semesters, I could not wait to get started. Coddled as only tenured faculty at a research university can be, I have only one class to teach this...
Are you a Value Investor (Aswath Damodaran
Patrick and Mods, I was in the middle of reading a great post about Apple as a value investment by Professor Damodaran that appears to have been removed due to spam. Can we please get this re-posted? We should be so lucky as to have one of the greatest corp finance/valuation professors in the world...
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