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Good question Frank. To the extent that I use multiples as a roadblock / entry point, I do so on what I believe to be a reasonably conservative estimate of EPS / FCF five years out (with those multiples then considered on a relative basis to other portfolio positions / watchlist names).
So, that would inform whether any given number - 15x, 20x, 25x, 30x - was deemed worthy of action. To today's article, I'd then make some consideration around the continued leadership of a one-of-a-kind CEO like Nadella, especially if I was confident he would be around for another 5-10 years. I hope that helps to explain my thought process - thanks for the question!
Good question Frank. To the extent that I use multiples as a roadblock / entry point, I do so on what I believe to be a reasonably conservative estimate of EPS / FCF five years out (with those multiples then considered on a relative basis to other portfolio positions / watchlist names).
So, that would inform whether any given number - 15x, 20x, 25x, 30x - was deemed worthy of action. To today's article, I'd then make some consideration around the continued leadership of a one-of-a-kind CEO like Nadella, especially if I was confident he would be around for another 5-10 years. I hope that helps to explain my thought process - thanks for the question!
- Alex