NPV and other criteria for Capital Budgeting

391 key results small stocks generate best long run

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: and other approaches Minimum multiple of investment (I want to get 10x or 5x if I invest in your company) corresponds to certain IRR, so 5x in 5 years 38% IRR, to get that, you will have some losers, need big winners to offset small losers Peter lynch approach to investing Goal of getting ’10 baggers’ Same as 10X but because he was a baseball fan. Warren Buffett approach – build intrinsic value of portfolio; effectively a modified IRR approach Never talked about 10X that much High intrinsic value companies that are constantly buying shares back. By shrinking shares base, it is the easiest way to drive up operating shares (how can I drive up EPS by shrinking capital base and building enterprise value) Historical Market Performance: Ibbotson/sinquefield data most comprehensive review of stocks, bonds, bills and inflation (see p. 391) Key results: Small stocks generate best long run...
View Full Document

Ask a homework question - tutors are online