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11/22/2020

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Michael Milburn

Enjoyed reading your modeling process on this.

You've probably already seen this, but Michael Mauboussin posted a study where they looked at ROIC and Operating Profit growth that reminded of some of the modeling you did above. It helped me better understand high valuation ratios. It's a hard hurdle to get over for those that come up from a value background.
https://www.morganstanley.com/im/publication/insights/articles/article_themathofvalueandgrowth_us.pdf?1591814348662

Both ABC and CAH are companies that I've owned off and on and seem quite undervalued when I look at the financials. The sentiment keeps crushing those companies, with the opoid shadows over them, and even if that works out there seems other liability risks keep popping up. They're also a political target for drug pricing due to the opaque way they do kickbacks/discounts. Wish they'd eliminate that practice. Valuation does look quite attractive though.

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