Hi Aniket,
Thanks for pointing me to that wonderful article. I read it for the first time when Mr Khandelwal posted it and I’m still in awe after reading it for the second time.
Now, allow me to point out few things hiding in plain sight (at least that’s what I believe).
This, I believe, applies to anyone looking to invest in Page at current price.
The professor says –
“Now, all that one has to do is to figure out it makes sense to buy the stock or not by calculating the expected return and comparing it to other opportunities available to you at that time.”
In one of my previous posts I tried to arrive at a conservative eps after 10 years for page, which came out to be Rs 1140/share. For the sake of convenience, let’s consider it to be Rs.1200/share.
The prof. mentions that he uses exit multiple of well below 20x. For Page, let’s say it is 30x.
So we arrive at a conservative(?) price of
rs. 36000/ share. That’s a 2.5x from current position. That’s approximately a CAGR of 10% for next 10 years.
I believe, a new investor certainly has better opportunities available in the market.
Now, for those who hold from lower levels (I know you savvy folks have made great returns).
The professor says –
“One last point: If something is working for you, and you don’t have cash and if something else turns up and you like it a lot, then you should sell what’s working for you only when what you want to buy will give you a significantly higher expected return. Otherwise, just hold on to your great businesses and let them compound your capital for you.”
Now, I agree that I don’t hold page so it’s really not my stock to worry about. But for the sake of learning, pray tell me folks, do you see any opportunities in the market that can provide significantly better returns than a 2.5x in next 10 years?
P.S. – Aniket and other boarders, I hope I’m not being over-persistent with my point. I just want to learn and improve myself.
Santosh, apologies for diverting from the main topic consistently.
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