OTCPK:SWSH - Post by User
Post by
OptsyEagleon Apr 23, 2011 8:32am
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Post# 18476879
Article in the Globe & Mail
Article in the Globe & MailThis article articulates the strategy. The stock has to stay over-valued for this model to work. My problem is I don't like buying over-valued stocks. I should disclose that currently Swisher is very, very, very over-valued, so currently their model is working just fine.
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https://www.theglobeandmail.com/globe-investor/investment-ideas/behind-the-numbers/can-swisher-hygiene-continue-to-clean-up/article1995235/
"The math of such acquisitions is enticing, especially if, like Swisher, the acquirer can use its own stock as the primary currency in doing the deals. Assuming the market values the acquirer’s stock at, say, 10 times earnings and the acquirer is buying private firms for, say, five times earnings, every purchase drives the share price higher, creating even more high-powered fuel for additional acquisitions.
The problem is that roll-ups only look good until they don’t."