Buffett’s 1962 Deal: 83% Cash, 4× EBIT
Warren Buffett Case Study: East Sullivan Mines - 1962. 83% of Net Cash. 4x EBIT. https://t.co/xpfz5TrvtQ
Thorndike's Power Ratio Reveals Tiny Firms' Extreme Multiples
I like Thorndike's Power Ratio: TTM revenue growth rate divided by EV/EBITDA Multiple. PE has averaged 0.75x. Search funds 2-3x. You can get some wildly high numbers in small public companies. What's the highest you've seen?
Turn Savings Into Liquidity, Then Focus Your Efforts
If you're interested and driven, why look anywhere else? Build a healthy level of cash savings so liquidity is an asset instead of a liability. Then focus your efforts here: https://t.co/9UnC3uiLu6
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...