Ebos Limited EBO

[ratkin]

http://www.sharetrader.co.nz/showthr...X-would-he-buy

[Snoopy]

As with a lot of valuation methods is rather subjective .... like how much is EBO going to make in the future ..... what WACC do you use .... for EBO on reflection I maybe should use a lower number than I have used because debt is such a greater proportion of capital used ..... how fast will they reduce debt etc etc

I think you are saying Winner that debt has a cheaper cost of capital than equity. That means when you are doing your WACC calculation and a company increases its debt then that in turn reduces the overall WACC for calculation purposes.

However, I have theory that the real cost of capital for EBOS is even lower than that. WACC is of necessity an historical calculation. Often in there are assumptions on long term funding costs. As long term debt rolls over and in the big picture long term interest rates plummet to all time lows, that means the WACC for bonds that you can look up will be overstated. In turn that means the earnings projections for EBOS in particular, given the context of this thread are worth more in present day terms than you think they are.

Comments?

SNOOPY

[Halebop]

I think you are saying Winner that debt has a cheaper cost of capital than equity. That means when you are doing your WACC calculation and a company increases its debt then that in turn reduces the overall WACC for calculation purposes.

However, I have theory that the real cost of capital for EBOS is even lower than that. WACC is of necessity an historical calculation. Often in there are assumptions on long term funding costs. As long term debt rolls over and in the big picture long term interest rates plummet to all time lows, that means the WACC for bonds that you can look up will be overstated. In turn that means the earnings projections for EBOS in particular, given the context of this thread are worth more in present day terms than you think they are.

Comments?

SNOOPY

I think you are correct Snoopy. I'm not especially a fan of WACC and measures that rely on it. Historically sharemarkets react (albeit in a laggy and/or untidy knee jerk way) to bond yields. This suggests cost of capital must change, and probably more regularly than most models would allow for. But if markets were efficient (Again not a theory I'm a fan of) it would attempt to explain market volatility too. But oh brother volatility and various forms of arbitrage sit awkwardly with efficient market theory.

[winner69]

One component of WACC is the equity premium which is rather subjective and dependent on a few inputs (as you guys point most of the inputs are historical).

I tend to use an equity or market risk premium more aligned to my expectations (rather than the traditional calculation) .... I see this approach rather akin to Buffett saying he likes to earn 15% pa on his investments ..... and as such come up with a share price 'target' which would give one superior future returns .... not an 'intrinsic value' calculation per se

Using this mark risk premium and the companies cost of debt is the cost of capital figure I generally use .... but of course reserve the analysts right to use whatever he wants

[winner69]

http://www.stuff.co.nz/dominion-post...mpany-for-Ebos

[percy]

http://www.stuff.co.nz/dominion-post...mpany-for-Ebos

Good article.Never thought about animal pharmaceuticals.Should have as my old cat was on half a heart pill a day for the last 18 months before he died,and that was $38 or more a month.

[winner69]

Shareprice on fire .... up up and away

Prob that article in the paper the other day saying the share market is a safe place now and seeing you can't get enough to live on with term deposits and things you may as well buy high yielding shares like EBO .... safe as was the implication

No percy ... I don't have any bit you must be happy as eh

[percy]

Shareprice on fire .... up up and away

Prob that article in the paper the other day saying the share market is a safe place now and seeing you can't get enough to live on with term deposits and things you may as well buy high yielding shares like EBO .... safe as was the implication

No percy ... I don't have any bit you must be happy as eh

Very happy.!!! Bit surprised . Wish you had some too.

[Silverlight]

Mark Stewart just sold his 5 million odd shares @ $7, he bought in between 2007 -08 at $4 to $5.

Increase in liquidity if not to one owner is a positive, negative is that he is a director, and know way more about the business that we do, and that he doesn't like the risk reward profile of Ebos now with the new acquisition.

[percy]

Mark Stewart just sold his 5 million odd shares @ $7, he bought in between 2007 -08 at $4 to $5.

Increase in liquidity if not to one owner is a positive, negative is that he is a director, and know way more about the business that we do, and that he doesn't like the risk reward profile of Ebos now with the new acquisition.

Very sorry to see Mark stewart sell.He is a very astute investor,and has been a very capable director.
Will be interesting to see where he invests next.
I have held my EBO shares since well before Stewart brought in.I am happy with the Masterpet buy,so will continue to hold.