Monday, January 31, 2011

Meeting #33

The meeting was to present our further analysis of JBHIFI
It was a very interesting meeting thanks to Roy , Justin and Mark for coming. A few items were discussed that I found very interesting

  • How significant the stock options value are
  • Margin of Safety
  • Using 6 monthly financial reports

Stock options can cost 50% of the Annual Gross profit
If you look at a companies annual share volume and it steadily increases by a small number each year then the directors are probably giving themselves stock options. The value of these options is often significant. In JBHIFI it was worth about 10% of the revenue. The value is often between 10 to 20% of the gross profit.

Margin of Safety (10-17%)
To calculate the return I was looking to calculate  price for JBHIFI I used 10%. This resulted in a price of around $25 for JB. Mark used a figure of 17% which together with a discount for the value of the stock options resulted in a value of around $12.

We also discussed the benefit of using the 6 month data instead of just the 12 months data

Our Analysis of JBHIFI can be found here 

For Next Meeting

  • We will tidy up our analysis for JBHIFI  can be found here 
  • We will start analysis of a new company 1300 SMILES
  • We present our analysis at our next meetup