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Intrinsic Value
how much is the business selling for?”
The more meticulous they are, the more concerned you should be.
Private Market Value (PMV) is the value an informed industrialist would pay to purchase assets with similar characteristics. We measure PMV by scrutinizing on- and off-balance-sheet assets and liabilities and free cash flow. As a reference check, we examine valuations and transactions in the public domain. Our investment objective is to achieve an annual return of 10% above inflation for our clients.7
Second Principle: Buy at a Significant Discount to Intrinsic Value to Create a Margin of Safety
Third Principle: Make “Mr. Market” Your Servant Rather Than Your Master
There are essentially three steps in the process: analyze the business to determine intrinsic value, buy the assets at a significant bargain, and wait.
Fourth Principle: Be Rational, Objective, and Dispassionate
