How Little Champs Become Cash Generation Machines: from BloombergQuint. “A basic takeaway of cashflow based valuation is that the longer a company generates healthy free cash flow growth, the higher its intrinsic value. Our longevity framework helps in assessing, using objective parameters, how long a company is likely to sustain healthy growth in free cash flow. For younger, smaller companies (aka the Little Champs), after a particular size and scale is attained, incremental growth in operating profits and improvement in capital efficiency results in much higher growth in free cash flow. This is also corroborated by strong free cash flow growth generated by companies like Astral Ltd. and Relaxo Footwears Ltd. in recent years. Given this non-linearity, free cash flow, rather than measures like earnings, should be the primary input for determining the intrinsic valuation for high-quality small-caps.”
Donald Boudreaux: “The advance of modernity can be described very accurately as the march toward ever more simplicity. Compared to the lives of our pre-industrial ancestors – and, in fact, compared even to the lives of our literal grandparents – each of our lives today is simple beyond the imagination of those who lived a few generations or more ago. Compared to in the past, feeding ourselves is much simpler – as is hydrating ourselves, clothing ourselves, housing ourselves, cleansing ourselves, curing ourselves of illnesses and injuries, keeping ourselves comfortable and safe and informed and amused, and transporting ourselves hither and yon. Simply put, if you’re reading these words, your way of life is the simplest that humans have ever lived.”
Henry Thoreau: “What you get by achieving your goals is not as important as what you become by achieving your goals.” [via The Curiosity Angel]
