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Download Valuations - 30 Intrinsic Value Estimations in the style of Warren Buffett and Charlie Munger epub

by Bud Labitan




This book offers 30 sample "intrinsic value per share" business valuations in the style that Warren Buffett and Charlie Munger may use. In each case the author tried to simulate an approach that they would take to valuing a business, based on what they have written and talked about. However, all of the growth assumptions used are the author's own. No consultation nor endorsement was sought with Mr. Buffett or his business partner Mr. Munger. The examples given are chosen for educational and illustrative purposes only. The valuation cases are estimations written in a style that emphasizes a focus on free cash flow and the number of shares outstanding. Readers are also repeatedly encouraged to think about the business' competitive position. In reality, these businesses may outperform or they may underperform any of the author's projections.
Download Valuations - 30 Intrinsic Value Estimations in the style of Warren Buffett and Charlie Munger epub
ISBN: 0557483336
ISBN13: 978-0557483334
Category: Business
Author: Bud Labitan
Language: English
Publisher: lulu.com (February 2, 2011)
Pages: 186 pages
ePUB size: 1465 kb
FB2 size: 1891 kb
Rating: 4.7
Votes: 564
Other Formats: azw doc doc mbr

Drelahuginn
On a consumer level here is how i felt:

I bought this book and found it to be the only time in my life i ever felt ripped off buying a book. What bud considers a book is really 20 chapters that are word for word copies of the first chapter with one calculation changed.
Bud could have written this "book" as a blog post and printed the results of his 30 "analyses" as a one page description.

On and intellectual, academic, and value investor level...
Nothing is worse than a mediocre writer wasting everyone's time publishing a book. Bud does not even rise to this level. His analysis is simplistic formulaic and can be found on several websites for free and done for every company on the NYSE. Successful value investors spend time finding value that others overlook and how to realize that value. Bud insults us all with such a weak effort.

This book is a hustle and the author is embarrassing... hes a doctor and he published this crap, does he know people will find out this garbage is his???
Anarahuginn
I am amazed at how easily people can get away with writing such books. Avoid this book at all costs. All it has is the author's overly simple interpretations of companies' intrinsic values, arrived at in a mechanical way, followed by a dull assessment of its competitive advantages and such. I feel dumber after having spent time on this book.
Bort
I enjoyed this book and I look forward to reading an updated edition that shows the results and returns of each company's stock.
Nten
Bud Labitan is a fellow value investor and the author of Valuations - 30 Intrinsic Value Estimations in the Style of Warren Buffett and Charlie Munger. I recently met with him on the campus of Purdue University Calumet at their School of Management. I found his story interesting because he is a medical doctor, but he is transitioning from his current profession into a full-time investor and writer.

Mariusz Skonieczny: Classic Value Investors: Bud, you are a doctor - how did you become interested in value investing?

Bud Labitan, Investor and Author: In 1995, I read Roger Lowenstein's book, Buffett - The Making of an American Capitalist.

Mariusz Skonieczny: Classic Value Investors: What made you want to pick up a book about value investing? Was it because you were dissatisfied with your financial advisor or was there another reason?

Bud Labitan, Investor and Author: I was searching for a better and more rational lifestyle. I was instantly hooked to wanting to learn more about this style of rational decision making.

Mariusz Skonieczny: Classic Value Investors: You are not only reading and practicing, but you are also writing about investing. You published three books, The Four Filters Invention of Warren Buffett and Charlie Munger, Price To Value, and your most recent one, Valuations - 30 Intrinsic Value Estimations in the Style of Warren Buffett and Charlie Munger. I would like to ask you about your newest book, but, before I do that, tell me about your first two books and why you wrote them.

Bud Labitan, Investor and Author: , The Four Filters Invention of Warren Buffett and Charlie Munger is about their method of decision framing and decision making. I think they developed a special process that is not yet fully appreciated by academic finance and behavioral finance. Price To Value is a look into intelligent versus unintelligent speculation. First, the Price To Value book presents the four investing decision filters in simplified terms. Then, it extends these ideas by looking into the intelligent speculation ideal described by Benjamin Graham in his tenth lecture of 1946.

Mariusz Skonieczny: Classic Value Investors: Recently, I was talking with a friend who told me that he wished that there was a book with case studies, and then I meet you and learned that you had published a book, Valuations, that features 30 intrinsic value estimations in the style of Warren Buffett and Charlie Munger. What motivated you to write this type of book?

Bud Labitan, Investor and Author: A few years ago, I was talking with the writer and investor Charles Mizrahi about my desire for a book with several case studies with real valuation examples. I first suggested to Charles that he do such a book because I like the way Charles writes in a clear and easy to understand style.

As a book, Valuations, came about in my mind after I had posted a few example valuations at [...]. I wanted a book that showed cases on how to sensibly value a business. Previously, I had designed software for myself that captures data and generates a template report that reads like a conservatively written document. The reports are full of warnings.

Mariusz Skonieczny: Classic Value Investors: What companies are featured in this book?

Bud Labitan, Investor and Author: Here is a list:

Chapter 1 : AAPL, An estimated valuation of Apple Inc.
Chapter 2 : ABC, AmerisourceBergen Corp
Chapter 3 : APOL, Apollo Group Inc.
Chapter 4 : BDX, Becton Dickinson & Co.
Chapter 5 : BUD, Anheuser Busch Inbev ADR
Chapter 6 : CMCSA, Comcast Corp.
Chapter 7 : CSCO, Systems Inc.
Chapter 8 : CX, of Cemex ADR
Chapter 9 : DIS, Walt Disney Co.
Chapter 10 : DOW, Dow Chemical.
Chapter 11 : EBAY, eBay Inc.
Chapter 12 : FO, Fortune Brands Inc.
Chapter 13 : GCI, Gannett Co Inc.
Chapter 14 : GD, General Dynamics Corp.
Chapter 15 : GE, General Electric Co.
Chapter 16 : HD, Home Depot Inc.
Chapter 17 : INTC, Intel Corp.
Chapter 18 : IRM, Iron Mountain Inc.
Chapter 19 : JEC, Jacobs Engineering Group Inc.
Chapter 20 : JNJ, Johnson & Johnson
Chapter 21 : KO, Coca-Cola Co.
Chapter 22 : LOW, Lowe's Companies Inc.
Chapter 23 : MCK, McKesson Corp.
Chapter 24 : MMM, 3M Co.
Chapter 25 : MSFT, Microsoft
Chapter 26 : PEP, Pepsico Inc.
Chapter 27 : PG, Procter & Gamble Co.
Chapter 28 : TAP, Molson Coors Brewing Co.
Chapter 29 : UNH, UnitedHealth Group Inc.
Chapter 30 : YUM, YUM! BRANDS INC.

Mariusz Skonieczny: Classic Value Investors: This book seems to focus on estimating intrinsic values using a two-stage DCF valuation.

Bud Labitan, Investor and Author: You are right. First, I applied the basic focus of the Buffett and Munger valuation style on to Free Cash Flow and Shares Outstanding. Then I added commentary on the other qualitative aspects of each business. As you know, Buffett and Munger state that before we make a purchase decision, we must decide if XYZ business is a high quality business with good economics. The case samples used in this book all produce free cash flow.

Mariusz Skonieczny: Classic Value Investors: How do you define free cash flow?

Bud Labitan, Investor and Author: Free Cash Flow or FCF is calculated as operating cash flow minus capital expenditures. Free cash flow (FCF) represents the cash that a company is able to generate after spending the money required to maintain or expand its asset base.

Mariusz Skonieczny: Classic Value Investors: How do you perform qualitative valuations of intrinsic value?

Bud Labitan, Investor and Author: As you know, Buffett and Munger state that before we make a purchase decision, we must decide ( filter #1 ) if XYZ business is a high quality business with good economics. Does XYZ business have ( filter #2 ) enduring competitive advantages, and does XYZ business have ( filter #3 ) honest and able management.

For the quantitative valuations of intrinsic value, I focus on FCF and Shares. For example, in the case of Apple Computer, starting with a base estimate of annual Free Cash Flow at a value of approximately $9,500,000,000 and the number of shares outstanding at 909,900,000 shares, I used an assumed FCF annual growth of 13 percent for the first 10 years and assume zero growth from years 11 to 15. Review the Free Cash Flow record here, and think about its sustainability:
[...]

The resulting estimated intrinsic value per share (discounted back to the present) is approximately $243.12. On the date it was performed, the Market Price = $255.9 Intrinsic Value = $243.12 (estimated). Therefore, while Apple is a great company with great products, on that day, it was not a super bargain.

Mariusz Skonieczny: Classic Value Investors: How did you go about your research?

Bud Labitan, Investor and Author: I read a lot. I read their letters to shareholders. So, a lot of the research was already done for my first book, The Four Filters Invention of Warren Buffett and Charlie Munger: Two Friends Transformed Behavioral Finance. The big challenge was to take what they said and imagine a reasonable estimating method based on my assumptions of the individual business's growth potential. I tried to lean on the conservative side.

Mariusz Skonieczny: Classic Value Investors: What is the most important concept that you want readers to take from your book?

Bud Labitan, Investor and Author: Combine the best of qualitative thinking and quantitative estimation. Acquiring this ability can raise your attitude and thinking effectiveness. Before running your valuation estimations, decide ( filter #1 ) if XYZ business is a high quality business with good economics. Does XYZ business have ( filter #2 ) enduring competitive advantages, and does XYZ business have ( filter #3 ) honest and able management.

Mariusz Skonieczny: Classic Value Investors: Who is your newest book targeted towards?

Bud Labitan, Investor and Author: Readers interested in valuation case samples and intrinsic value estimations. Valuations also repeats the mental "decision framing" steps discussed in Four Filters.

Mariusz Skonieczny: Classic Value Investors: Do you have a website or blog that readers can follow?

Bud Labitan, Investor and Author: I have a few articles at [...] and [...] and my articles can be found via a Google or Bing search on my name.

Mariusz Skonieczny: Classic Value Investors: Where can readers find your books?

Bud Labitan, Investor and Author: Amazon.com and [...] and [...]

Mariusz Skonieczny: Classic Value Investors: Bud, thank you for taking the time to answer my questions. Do you have any final thoughts for our readers?

Bud Labitan, Investor and Author: My pleasure, Mariusz. Thanks for having me. These valuation cases are estimations written in a style that emphasizes a focus on free cash flow and the number of shares outstanding. In reality, these businesses may outperform or they may underperform any of my projections. I hope that my Valuations book may be considered as a supplementary text for college classes in business and business valuation.
Bladebringer
"Valuations" by Bud Labitan is a concise, direct approach to determine whether a certain company's stock price would be considered a bargain at its current market price. The case studies in this book examine the intrinsic values per share of the most important businesses that govern our economic lives today. These companies are all commonly known by the average investor. It is intriguing to decide if a specific company for which the investor consumes their products and services are worth your investment dollars. The author emphasizes Free Cash Flow in his estimates to calculate "intrinsic value". By using the examples and formula the author provides, the reader can easily calculate "intrinsic" value for any other company he or she chooses to research and then determine if that company's stock is a bargain or not. Overall I would consider "Valuations" a must read for all students studying behavioral finance simply for its case studies alone. For the average investor, this book can help you justify your purchase for a certain stock.
I learned a lot from this book!
Arashilkis
This is an excellent book for those desiring to hone their business valuation skills, using Discounted Cash Flow (DCF) model analysis of Free Cash Flows. Bud Labitan offers a rare glimpse into his DCF analysis methodology, similar to that of Berkshire Hathaway's billionaire investors Warren Buffett & Charlie Munger. Warren Buffett said the best way to learn value investing is "case studies." Therefore, this golden book is an excellent opportunity to be guided through 30 intrinsic valuation case studies. Excellent book Bud.