Professor Glen Arnold

Before writing a newsletter on the recent tripling of my old favourite Caledonian Trust, and before writing a report on Connect’s AGM (I’m going down to Swindon on Tuesday), I thought I’d give you some more on share valuation methods. Last week I discussed dividend valuation methods, so that area is covered.  In many previous […]

When using dividend valuation models the most influential variable, and the one subject to most uncertainty, on the value of shares is the growth rate expected in dividends. Accuracy here is a much sought-after virtue. While I cannot provide subscribers with perfect crystal balls for seeing future dividend growth rates, I can provide a few […]

The dividend valuation models, as discussed in the last two newsletters, must be used thoughtfully, making sure each input number can be defended.  Today we’ll think about some of the key issues. What is a normal growth rate? Growth rates will be different for each company but for corporations taken as a whole dividend growth […]

Yesterday we looked at the simplest dividend valuation model, DVM, one where the future dividends are expected to be constant.  In contrast to that assumption, for most companies dividends are expected to grow from one year to the next. To make DVM analysis manageable simplifying assumptions are usually made about the patterns of growth in […]

I thought it might be worth going through the basics of share valuation, focusing on a class of techniques based on dividends, taught to professional analysts. Dividend valuation models (DVMs) are based on the premise that the market value of ordinary shares represents the sum of the expected future dividend flows, to infinity, discounted to […]

Yesterday’s Newsletter used the owner earnings method to value shares in Dewhurst. The estimates ranged from £7.22 to £11.33, compared with the current share price of £5.60. Today we’ll look at return on net tangible assets, and approach the valuation issue from this angle. Profits, assets and liabilities £’000s  Year end September 2017   2016 […]

Yesterday’s Newsletter outlined Dewhurst’s (LSE:DWHA) businesses. Today I will use Warren Buffett’s method of owner earning analysis, a more sophisticated form of a cash flow analysis. (This will repeat much of the Newsletter posted on 21st November, but with the 2017 annual numbers added). Firstly, a slightly different share structure The Dewhurst family raised money years ago without...

The Dewhurst (LSE:DWHA) analysis I posted in November was based on a somewhat crude method of simply doubling the numbers reported for the half year to March 2017. Last month the full year’s results were published, so I can now use proper numbers. This family dominated (three generations) engineering company supplies lift components, push-buttons for […]

Happy New Year. They say it is not a good time for value investors because the glamour shares and new concept stocks are racing away in a bull market.  But I’m not disappointed with my companies.  They are generally performing well, much better than Mr Market thought they would when I bought them.  Also, when […]

Last week I bought put options on the Dow Jones Industrial Average to protect my portfolio against a worldwide slip in equities. I bought options giving me the right but not the obligation to sell the Dow at an index level of 17,500.  With the Dow currently over 24,700 this instrument is an extreme form […]