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Access to credible sources of information such as SEC EDGAR database , Treasury.gov , OECD GDP Forecast , Mergent Online, S&P Capital IQ, Hoovers, ValueLine, Yahoo Finance , MarketWatch , and Damodaran Online. Target’s current stock price: Can be obtained from sources such as Yahoo Finance.
As I mentioned in my last post, Discounted Cash Flow (DCF) is a valuation method that uses free cash flow projections, a discount rate, and a growth rate to find the present value estimate of a potential investment. The major steps of DCF are: Identify extraordinary, unusual, non-recurring items from the target’s 10-Ks and 10-Qs.
It’s integral to ensuring that the sale benefits all stakeholders and should be one of your priorities before advertising it to potential buyers. It’s a delicate balancing act, as inaccurate valuations have polarizing consequences. However, company valuation isn’t as simple as slapping a price on your business.
It can be useful for certain companies, such as power and utility firms and midstream (pipeline) operators in oil & gas … …but it’s also much harder to set up and use than a standard DCF. The main argument in favor of the DDM is that it best represents what happens in real life when you buy a stock.
They do this by setting up entire teams (“pods”) for specific sectors, having each team learn their stocks or other securities in-depth, and then trading frequently based on catalysts and changes in investor sentiment. Beta-Neutral Portfolios: For example, if the S&P 500 goes up or down by 5%, your team’s portfolio should move by ~0%.
A: As with hedge fund stock pitches , you need to research markets and companies and develop 2-3 solid ideas here. A: Assuming it is developing patent-protected products, you usually use a Sum-of-the-Parts DCF where you project revenue and expenses for each drug, discount the cash flows to Present Value, and then add them up.
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