FWLT

Valuentum Economic Castleâ„¢ Rating Update

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Read: Keeping the Horse Before the Cart: Valuentum’s Economic Castle™ Rating The Economic Castle Focuses on the Magnitude of Economic Value Creation The Valuentum Economic Castle™ rating is an enhancement of the competitive advantage framework (commonly known as economic moat analysis) that has become widespread and ubiquitous within the investing world. Whereas an economic moat framework evaluates a firm on the basis of the sustainability and durability of its competitive advantages, Valuentum’s Economic Castle™ rating evaluates a firm on the basis of the firm’s future economic profit spread (return on invested capital less its weighted average cost of capital). The companies with the strongest Valuentum Economic Castle™ ratings are poised to generate the most economic value for shareholders in the … Read more

M&A Heating Up

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When money is cheap (i.e. when interest rates are low) and equity price euphoria is running wild, deals will happen. Last Wednesday, activist hedge fund Elliot Management launched an opportunistic bid to acquire all of the outstanding shares of Riverbed (RVBD) for $19 per share in cash. We think the offer is too low on the basis of our fair value estimate, and we don’t think Riverbed will accept terms as they currently stand (the board is still evaluating); it remains uncertain whether a higher offer from Elliot is an eventuality. We think a fair price for Riverbed is $22 per share (our fair value), and we’re reiterating this opinion. Before the bid, we believed Riverbed was undervalued on both a … Read more