Congratulations on the depth of research here, very insightful. But if I may, somewhat technical and just falling short of delivering the killer blows of compelling facts which give the average reader your summations on a plate. Some suggestions: provide an explanation of terms - for example ‘lock up’. Even your use of ‘gross margins’. What about including a summary of the key instrument gauges one needs for this industry - no of staff, rev per staff member, gross & net margins, avg collection time etc etc - and if possible, cross referenced to the industry norm
Finally, as a shareholder, I am vitally interested in the DCF calcs referring to the YoY in terms of eps, divs and your actual DCF figure per share. Otherwise excellent. Be interested to see your thoughts on a few of the competitors like SEQ and DVR.
Firstly, thanks for subscribing to Hurdle Rate, and secondly for reading the PFG deep dive.
Regarding the definitions, I do think this is necessary albeit I do ponder how many times I need to reiterate them as I have done so many times in prior write ups, which gives me pause when putting them into new write ups. Other than that I totally agree that these figures are crucial. In future write ups I will be looking to formalise a bit better, until which I ask will say I am still thinking about structure and content in the form of a write up.
On the DCF, this is equivalent although rather than a per share figure I prefer to look at things in rates of return (IRR) as it is more tangible to me. It is an equivalent to a implied discount rate, which is immensely more flexible than a per share figure, which relies on a discount rate assumption. I am modelling out FCF inclusive of SBC in the margins which is in lieu of the EPS and have a payout ratio assumption which gives "equity cash flows" which are dividends. Lastly, the IRR is a rate expression of the intrinsic value, you can solve back for any discount rate you want to for a per share figure. For example, If I were to use a 10% pre-tax discount rate as a proxy for market returns the above model would imply an intrinsic value per share of $0.65, offering a 65% margin of safety as a result.
Congratulations on the depth of research here, very insightful. But if I may, somewhat technical and just falling short of delivering the killer blows of compelling facts which give the average reader your summations on a plate. Some suggestions: provide an explanation of terms - for example ‘lock up’. Even your use of ‘gross margins’. What about including a summary of the key instrument gauges one needs for this industry - no of staff, rev per staff member, gross & net margins, avg collection time etc etc - and if possible, cross referenced to the industry norm
Finally, as a shareholder, I am vitally interested in the DCF calcs referring to the YoY in terms of eps, divs and your actual DCF figure per share. Otherwise excellent. Be interested to see your thoughts on a few of the competitors like SEQ and DVR.
On Diverger and Sequoia, I own both as you probably know.
You can find some older posts I did on Diverger below:
https://hurdlerate.substack.com/p/diverger-asxdvr
https://hurdlerate.substack.com/p/diverger-asxdvr-management-call-1
https://hurdlerate.substack.com/p/diverger-asxdvr-management-call-2
https://hurdlerate.substack.com/p/diverger-asxdvr-management-call-3
https://hurdlerate.substack.com/p/diverger-asxdvr-management-call-4
And I have yet to do a write up on Sequoia in particular, but I do have notes from a call below:
https://hurdlerate.substack.com/p/sequioa-financial-asxseq-management
Hi Damien,
Firstly, thanks for subscribing to Hurdle Rate, and secondly for reading the PFG deep dive.
Regarding the definitions, I do think this is necessary albeit I do ponder how many times I need to reiterate them as I have done so many times in prior write ups, which gives me pause when putting them into new write ups. Other than that I totally agree that these figures are crucial. In future write ups I will be looking to formalise a bit better, until which I ask will say I am still thinking about structure and content in the form of a write up.
On the DCF, this is equivalent although rather than a per share figure I prefer to look at things in rates of return (IRR) as it is more tangible to me. It is an equivalent to a implied discount rate, which is immensely more flexible than a per share figure, which relies on a discount rate assumption. I am modelling out FCF inclusive of SBC in the margins which is in lieu of the EPS and have a payout ratio assumption which gives "equity cash flows" which are dividends. Lastly, the IRR is a rate expression of the intrinsic value, you can solve back for any discount rate you want to for a per share figure. For example, If I were to use a 10% pre-tax discount rate as a proxy for market returns the above model would imply an intrinsic value per share of $0.65, offering a 65% margin of safety as a result.