Thanks Jakub. The intrinsic value needs to keep growing for the buybacks to work though. No pricing power though. If they can't find a way to go beyond GM, multiple is likely to stay low. Holding on to a small position.
At this price, if you believe that most of their expenses are for growth and not for maintenance you need a very little growth to work this out. And if you believe so, the buybacks here are very valuable transfer of wealth - of course it depends also on GM extending the contract. I would encourage them to buy back as much as they can w/o compromiting spending on the growth and potentially getting new OEM. If they buy back 5% annually with 5% organic growth, that is 10% growth in intrinsic value for business trading at normalized multiple of 4? Game of probabilities kicks in here. We all know the bearish case, dont forget on normal case and bullish case warranted in the current share price.
Thanks Jakub. The intrinsic value needs to keep growing for the buybacks to work though. No pricing power though. If they can't find a way to go beyond GM, multiple is likely to stay low. Holding on to a small position.
At this price, if you believe that most of their expenses are for growth and not for maintenance you need a very little growth to work this out. And if you believe so, the buybacks here are very valuable transfer of wealth - of course it depends also on GM extending the contract. I would encourage them to buy back as much as they can w/o compromiting spending on the growth and potentially getting new OEM. If they buy back 5% annually with 5% organic growth, that is 10% growth in intrinsic value for business trading at normalized multiple of 4? Game of probabilities kicks in here. We all know the bearish case, dont forget on normal case and bullish case warranted in the current share price.