ValuationEven if I assume a 13% discount rate with a very conservative 50% growth rate yrs 1-5 years (for perspective, bottom line growth was up 108% quarter over quarter), then 25% yrs 6-10 with a 3% terminal, I value Baidu at around $410 per share. If I’m close, that would yield a safety net of about 20%. I consider this an exceptional deal for such a bright prospect. Minor comment. I just find it exceedingly unusual that when projecting 50% growth for 5 years followed by 25% growth for another 5, that only a 20% margin of safety would be considered adequate. I'd guess that if you knocked that 50% growth down to 45% (holding everything else constant), your margin of safety would evaporate. Nothing wrong with buying a growth stock and ignoring valuation. Lots of money can be had that way, I'm sure. I just don't think it wise to kid yourself that you are buying value when I don't think you can reasonably say you are.Assuming Baidu grows that fast, that long, how big will it be?Bigger than Exxon? Bigger than Google? 5xGoogle? Bigger than US?I could be way off in left field though. Never looked at Baidu.Rich
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