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Author: Yabapmatt Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 40  
Subject: Re: overvalued? Date: 12/28/2006 4:47 PM
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I will take a stab at this.

Their TTM EPS was $1.56, which put into the DCF calculator on moneychimp.com with 30% growth for the next 5 years and 2% thereafter yeilds $51.80 / share. So the question becomes, can they grow at over 30% per year?

They obviously had a huge year in '06 which, as far as I can tell, was thanks to the large increases in precious metal prices, but it also says a lot for their fund managers. Their assets under management grew significantly in '06, and with their new director of institutional services, they could continue to grow in the future. I personally look for 20-30% growth in 2007, but as I am far from an expert on the company I'm not willing to bet too much on that estimate.

If they fall within my estimates then I would look for a fair value of $45 - $55 for a share. When I bought at around $30, it looked really good, now at $70 it looks overvalued.

On the other hand, I am relatively new to this, and I dont know how to explain the crazy run-up it has had recently. My only guess is that after its stellar year it has gained publicity and the big money is starting to invest in it. You are right that they are splitting the shares in january as well as offering a $0.50 dividend ($0.25 post split) which are both bullish signals.

After reading over what I wrote above, I realize that while I do think it is overvalued now, I dont have any idea how much it is overvalued, and I'm not sure that it will be reflected in the share price any time soon. There will probably be a pull back just because there has been such a fast run-up, but the question is whether or not it will rebound after the pull back or not. If anyone wants to add their opinions or insights to my hodgepodge of thoughts, I'd appreciate it.
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