In “Security Analysis by Benjamin Graham” we can all read about the general rules when it comes to valuation and the impact of intrinsic value. The question is, how do you extract intrinsic value as guidance, for a valuation, if you are not able to quantify hidden values in the balance sheet? This is the real question.
We all know how to discount future cash flows and how to analyze P(A) of defaults and draw conclusions related to stipulated values, but it really does not matter what kind of analytical approach you take unless you are able to quantify the real hidden value in the balance sheet. It must be something that the public has not identified, otherwise, it would already be priced in.
As an example, our company TiksPac has a solid business with a strong income statement and balance sheet. The equity mainly consists of current assets with a solidity of approximately 85%. By using known input values, it is quite easy to conclude stipulated valuation, but when adding the fact that the company hands out almost 30 Million trash bags each year, the intrinsic value becomes something completely different, especially when benchmarked against cost per click.
This is something that the public missed in the market, but it was identified by few. You see, the trash bags are a marketable asset since they carry a space that could be used for marketing purposes and by promoting their own brands and businesses. By that, the intrinsic value is a value beyond initial stipulated valuation, and this is really the “Mother of all company valuations.” Being able to see and quantify angles, perspectives, and hidden values is the reason why we differ as analysts and the reason why the few consistently beat the markets by “Getting out of the Box”.
For more information, please refer to the contact details below to get in touch with TiksPac.
Contact: Dejan Shabacker
Address: Kanslistvägen 12 B, 311 39 Falkenberg Sweden
Phone: +46 346-734 700
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