Your guys thoughts on valuationHoward Marks says if you own a companies stock it should be based on a conviction of where you feel that company will be in a minimum of two years up to five years and what YOU BELIEVE the intrinsic value of that company will THEN be, AND that that value should be substantively greater than it is today. He says if you can’t form such an opinion on a company you should not own it.
Two years from now if we accept Northstar managements development guidelines they should have three plants in operation (so 30 Mil rev run rate, plant ebitda after CVW royalty of 12.2 Mil), another three under construction and another three in the location identification/permitting stage.
If the plants don’t work “within a reasonable range” of spec. both operationally AND financially then obviously any valuation is thrown out the window, but if they do, what do you guys see as being the best valuation model (dcf? net ebitda multiple meaning after a central corporate expense allocation is deducted?? or a multiple of gross sales still given they will have so much growth potential remaining??) for the company and at what kind of discount rate for the dcf model and multiple for the ebitda and/or sales valuation methods?
Just trying to get a few others thoughts/perspectives.
Valuation almost never equates to actual price, but that is effectively Howard Marks point. Were trying to determine if a company is undervalued, fair valued or over valued at a given point. That’s my aim here with Northstar.
Any thoughts will be appreciated.