Esh correctly believes that the most important factor is free...

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24/03/19

14:20

Post #: 37866256
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Originally posted by kgtom: ↑

I haven't read anything on HC about RMS since I sold out earlier. I've just read all this thread .Esh's fixation on PE worries me. Whilst PE is an important part of a companies SP and thus it's MC, it's not the only one, not even the most important. Management, jurisdiction, assets and others, are all equally so. One thing the distorts PE is cash. And RMS has $100m.

Give an (extreme) example, past, but real, where PE is distorted by cash. Company had $11m cash, (sold asset), and deciding what to do with it. Three savvy directors and minimal expenses. This went on for over two years. Interest was $750k. Costs were $600k. Gross profit $150k. Net profit $100k. (All figure approximate). Thus if realistic MC of say $10m, net profit $100k PE is 100.

Say that again. Net profit $100k, PE =100, and still a bargain, ie.below cash assets.

Esh, stop being fixated on PE. Oh BTW, I know you like checking things, the company concerned was CPC (Carpenter Pacific), after it sold it Mt Kare deposits in about 1999.

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Esh correctly believes that the most important factor is free cash flow not the accounting profit. How do I know this? Because he posted to that effect previously.

Also EV is also very important because some of these gold shares having hundreds of millions in debt rather than $100m in the bank.

RMS Price at posting: 85.5¢ Sentiment: Buy Disclosure: Held
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