Value‑focused ideas on cheap stocks, including small/micro‑cap special situations.
Social•Apr 7, 2026
Use EBIT/3 over Prime+5% to Spot Undervalued LBO Targets
Valuation trick that has served me well over the years:
Start with net cash companies.
EBIT / 3 / (Prime +5%) > EV
You can LBO the whole business with debt at prime + 5% that is covered 3x.
Good for identifying undervalued takeout targets.