kpar
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You talking systematic risk ? I mean you can't really model that in.
Systematic risk is priced into your cost of equity through your Beta...so you can 100% model that in?
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You talking systematic risk ? I mean you can't really model that in.
Not true, depends on the investment but I always do either a rough DCF or a full one. Of course your expectations then play a huge role in the investment. I like trying to find undervalued companies based on their earnings or assets, but a DCF only tells you so much. For example take oil, my DCF's said Tidewater (TDW) is undervalued at any price below ~$30. It is currently trading now for $9. My "high" valuation is predicated on the OSV market recovering by 2018 to TDW's historical levels (although below what their most recent levels would have been if you strip out their completed fleet update capital spending).No one here is discounting cash flows to figure out investments. Some have a fun money account which they post their trades from and others just put what their over arching investment philosophy is.
I actually use a Thomson Reuters Eikon terminal. In many ways a lot easier to use and much more customizeable once you get the hang of it.I have very limited access to our Bloomberg terminal. It'd be interesting to play around with.
Also my current market opinions:
Oil and gas: Gloom has finally set in. I like some of the service providers like TDW. Dislike GLF because they haven't been able to maintain their revenue and profits the way TDW has. This is really a game of picking survivors.
Long CHK which I'm not too happy about at my entry point, but at the current price it looks okay. Pref shares may be a better bet.
REITs: I really like mREITs right now. Rate raise is going to make them more profitable and the loss in book values is more than priced in IMO. AGNC, DX and CYS are my current new positions, but I hold a lot in NLY too.
Global equities: Investing in select EMs and a bit of Europe due to strength of the dollar. Occasional individual stocks like CIB.
Healthcare: Sector is no longer grossly overvalued, but significant doubt about the long term regulatory model remains. Long VRX (obviously).
Last time I checked the spreads were widening. Doesn't matter what their borrowing costs are as long as they can lend them out at a higher rate which is what the widening spread indicates. The only worry I have now is how book value will act when rates go up and if it will surpass the roughly 20% discount built into most names right now. I guess pre-payments worry me a bit too.mREITs thrive when rates are low because they make their money on the interest spread. I'd be bearish on mREITs now that their borrowing costs will be higher.
Not true, depends on the investment but I always do either a rough DCF or a full one. Of course your expectations then play a huge role in the investment. I like trying to find undervalued companies based on their earnings or assets, but a DCF only tells you so much. For example take oil, my DCF's said Tidewater (TDW) is undervalued at any price below ~$30. It is currently trading now for $9. My "high" valuation is predicated on the OSV market recovering by 2018 to TDW's historical levels (although below what their most recent levels would have been if you strip out their completed fleet update capital spending).
Also my terminal can run a rough DCF for me basically automatically. I really like the Implied EPS growth feature, which I can then compare to what Analysts are predicting the growth will be over the next few years. If analysts are saying the company will grow 5% and Implied EPS is negative I do further research.
OC what school do you go to? I know Boston University's finance club did something similar.
I did a DCF on Chipotle like 4 or 5 years ago and thought it was seriously undervalued. Had no cash at the time. Real shame because it turns out I was right.I actually live in DC. I go to smith at Umd. I wanted to go to bu when they had the mims program but unfortunately they did away with that.
Gf my buddy did a dcf on chipotle last spring and its dipped below his price target I can try to get a hold of it and send you it if you want.