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Learning to Invest / Valuation Strategies
|Subject: Re: Discounted Cash Flow Model - Negative FCF||Date: 2/8/2011 4:59 PM|
|Author: jackcrow||Number: 1638 of 1670|
Now Jack is probably just farther along the curve than I am. I still find value in doing it the hard way,
I doubt it. I too find far more value in the process than the final output which is why each company I own has a hand crafted, no cookie cutter, spreadsheet. What we focus in on probably differs by personality, experience and approach. My EVA output always changes when I get pickier about what goes into ROIC, IC and WACC.(stupid notes) Rather than mess with a fancier FCFF formula I create side metrics which track the bits and pieces that I think are pertinent.
As an aside I appreciate Dr. D's argument that in the end EVA = FCFF = FCFE if properly adjusted but I like the divergence, it gives me greater insight.
I'm am better at aiming and shooting quicker than I was years ago. Occasionally the hand crafted spreadsheet is built after initial purchase. CAT for example was a no brainer I had been waiting a decade for. Now with the more detailed spreadsheet I can keep watch on them so I can decide to hold through a downturn or sell out before we get there and pick them back up on the other side. Do I reinvest dividends or let them pile up in cash?
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