Mill Street’s knowledge base includes our insights, essays and recommended resources related to SMART Capital and the value of disciplined, intelligent investment and business management.
Assessing our own financial risk tolerance is extremely difficult to do. It not only requires an understanding of our own personal financial picture, but also a deeper understanding of our own psychology. At the very least, we need to have the ability to predict how we will behave in the future, based on the forecasted outcomes of certain investment scenarios. We also need to be able to vaguely predict how our financial and personal circumstances will change over time, whether this is something as simple as a career change and its effect on income, or having children. The fifth instalment of Perspectives explores how financial and investment institutions have developed necessary efficiencies to be able to handle the democratization of personal investing and the effectiveness of the risk safeguards and profiles that have resulted as a requirement of client processing requirements.
The private equity, venture capital and the investment industry in general have adopted “earnings multiples” as the de facto valuation method for making a capital investment in businesses, weather public traded on the stock market, or privately owned family businesses. The Canadian Economy thrives on the constant flow of capital being invested into companies as the driver of value creation. In this fourth instalment of the Perspectives series, we explore and question the validity of the earnings multiples concept as an accurate method for evaluating the the financial worth of a company, and what an investor should be willing to pay to acquire all or part of it. In particular, we look to answer three questions surrounding the earnings multiples method:
- Why are businesses valued at multiples of their earnings and what relevance is it to whether or not you, in reality, paid a good price for the company, or conversely, whether you sold at a good price?;
- Why are some businesses valued at three times earnings and some at 10 times? and
- Why are businesses valued on multiples of EBITDA in some cases and multiples of net income in others?
A timeless poem that illustrates the dangers of mistaking size and volume for the real return from one’s investment tactics. SMART by Shel Silverstein (Where the Sidewalk Ends) My dad gave me one dollar bill 'Cause I'm his smartest son, And I swapped it for two shiny...read more
One of our core business principles is that we believe our existence is only justified if we can achieve a return on invested capital which exceeds mutual funds, major indices and alternative investments. There would be no purpose in going through all of this effort...read more
A fascinating article that explores the transition of institutional investing from being a “Winner’s” game to becoming a “Loser’s” game. How can institutional investors beat the market when they have become the market?
One of the three most profitable multibillion-dollar companies in the U.S., and a brilliant performer in a dull stock market, Teledyne, Inc. is a unique company. In no way more than in the style and contrary thinking of the man who runs it.