Metrics Used to Determine Value

The metrics we use to determine value are pretty much what you’d expect. We do private-market-value analysis using discounted future cash flows and by looking at breakup values. At the same time we like stocks that are statistically cheap on a traditional price/earnings basis. We focus on companies trading at a 40% or greater discount to our private market value or no more than 13x our estimate of next year’s earnings. We have to have one or the other to buy.