“Valuation is determined by the relation between a stock price and the present value of the free cash the business will generate over one’s forecast time horizon. The problem comes with assessing the future free cash flow. It is a highly subjective and uncertain exercise.”
Category
Cash Flow
10 quotes from 8 investors
“Value investing is not about cheap stocks — it’s about cheap cash flows”
“Our accounting is set to maximize cash flow, not reported earnings. Smoothing reported earnings just has to take a backseat.”
“Our attitude toward cash generation and asset management came out of our own thought process. It is not copied. After we acquired a number of businesses we reflected on aspects of business. Our own conclusion was that the key was cash flow.”
“In the short run, narratives dominate; in the long run, cash flows do”
“Cash flow was diverging dramatically from reported earnings.”
“The line I draw in the sand is that if an asset has cash flow or the likelihood of cash flow in the near term and is not purely dependent on what a future buyer might pay, then it’s an investment. If an asset’s value is totally dependent on the amount a future buyer might pay, then its purchase is speculation.”
“Value to some extent is in the eye of the beholder. It is very hard to pin down what the value of a future set of cash flows from a business, be it cable TV or biotechnology, is going to be.”
“What publicly-traded companies are worth is roughly 90% dominated by the cash flows they produce over time and 10% by what the market will pay for these types of companies at any given time.”
“As an investor in businesses, which generate enormous cash flows, my single most important issue to get right is what management will do with cash flow through reinvestment. Do they care about the owner, or do they care about themselves?”