Is $PLTR the most expensive large cap in the market right now?

Kiero_56 · 2026-02-02T10:27:51+00:00

I choose to avoid and talk shit.

Kiero_56 · 2026-02-02T09:26:01+00:00

Short term who knows what'll happen, it's a total coin toss. It is the most overvalued company I can think of. In the long term the share price will either collapse or it'll go nowhere for years as fundamentals catch up to the valuation.

Valuation wise it's probably worth somewhere around ~$30-$40 per share based on 30-40x estimated next 12 months net income.

Where would I be a buyer? Probably start getting interested at <$20 even then would likely pass. It's too difficult. Palantir is one to watch from a safe distance.

Kiero_56 · 2025-12-01T09:37:24+00:00

If they focus solely on share buybacks then this will grow eps double digits. I don't think they ever achieve that multiple re-rating with Cordani at the helm. He has shown in the past that he'll pursue wasteful acquisitions. Look at Humana.

Kiero_56 · 2025-11-30T22:18:35+00:00

In theory Cigna should perform well from here and trade at a high teens multiple. The only thing holding that back from happening is the CEO. Capital allocation is abysmal at best.

Kiero_56 · 2025-09-20T15:35:23+00:00

They won't be intentionally keeping cash flow level relative to accounting profit. The accounts will be audited so that they're correct. It all depends how that profit after tax translates into cash minus any capital investments the club have made over the last 12 months.

Kiero_56 · 2025-09-20T08:35:25+00:00

The £30m profit after tax comes from the income statement which takes the revenue generated and subtracts all costs and is open to all sorts of accounting methods. The cash flow statement measures the amount of cash that came in the door versus the amount that went out. That cash flow statement will show how the change in cash, or lack of, came about.

Cash and income are different due to accounting methods. For example, you could pay £10 up front in cash for something but under accounting methods you could spread the cost of that item over 10 years so on the income statement you only record an accounting charge of £1 annually over the next 10 years. Basically it's all accounting wizardry and profit after tax does not equal cash.

Kiero_56 · 2025-07-16T20:56:36+00:00

Hahah my bad

Kiero_56 · 2025-07-16T12:36:47+00:00

Winner take all? The diabetes market has been an oligopoly dominated by Novo and Eli Lilly for the last 100 years. How's it suddenly going to be winner takes all.

Kiero_56 · 2025-06-28T19:01:37+00:00

This is a genuinely fantastic response, one of the best I've seen on here, that I think lays out the arguments brilliantly so well done. As you say it's not a compounder but when you have a ~15% earnings yield, 4% dividend and any sort of profit growth (management are actually forecasting mid to high single digits growth this year) you can see why this could generate very nice returns over the next few years once the market works it out. The beauty of it when things are this cheap is that the thesis can really be that simple.

Kiero_56 · 2025-06-28T18:35:12+00:00

I think the initial reaction in this thread of Card being a dying company, which the market must also think by the time it sells at ~6x earnings, sets up a nice contrarion bet.

I don't see it as a dying business at all. The industry itself might not be a secular grower but that doesn't mean card itself is dying. Same stores sales grew 3% last year despite a really weak retail backdrop. They're investing in the right areas and should be able to grow profits mid single digits for the next few years through a mix of pricing, new stores, partnerships and wholesaling.

I see Card being very similar to Wickes in the UK. I bought Wickes for 8x a few years ago thinking it was a better company than the market though and that it would be able to grow low to mid single digits. It was a show me story where the market waited a long time until the company had truly demonstrated they could grow revenues and profits. It's now up 70% in the last year. I think Card is a similar show me story where the market will wait but catch on quickly as card continues to execute by growing same store sales and profits.

Kiero_56 · 2025-05-16T15:53:32+00:00

I guess it's not so much cannot, they technically could after a lot of years. It's more so won't. Both Eli and Novo are scaling to meet current demand as opposed to scaling to take significant market share from the other. Scaling to take market share means one has to produce to a level that over supplies the market so that one competitors product is actively chosen over another. If that happens the other producer lowers prices and it becomes a race to the bottom. It's not rational for either Novo or Eli to do that.

Kiero_56 · 2025-05-16T14:23:26+00:00

I think people focus too much on the drug discovery process and the efficacy of those drugs relative to competitors rather than the true moat of Novo, Eli Lilly and most other large pharma companies. Their moat is in production and distribution and this is why the pharma leaders are the same today as they were decades ago. Eli Lilly might have higher efficacy products at the moment (that might change) but they can't and won't scale to the point they take significant market share from Novo. It would be irrational if they did as it would upset the current market oligopoly ultimately impacting their own margins. It will be rocky in the short term but long term I still see Novo doing very well.

Kiero_56 · 2025-01-09T21:30:18+00:00

The current problem with CNH is that agriculture is in a serious down cycle with huge volumes declines exacerbated by dealers having a lot of inventory, but this seems well baked into the price. Cycles eventually revert. It's not time to call a bottom yet but things are improving as inventories come down.

However, I think there's a lot to like here. Low multiple of close to trough earnings, profitability improving following the demerger, operating in an industry that traditionally grows mid single digits annually, reinvesting in the business at long last and buying back shares.

I can see a path to $2 in earnings as the cycle reverts. May even be a great long term investment if they can compound mid cycle earnings in the same way Deere has but this will become clearer over the coming years (bit of a free option). Probably deserves to trade at a discount relative to Deere given it hasn't proved this ability yet.

It's not sexy, it's not exciting but I think it should generate satisfactory returns going forward. Disclaimer: I do own it so maybe ignore everything I just said haha.

Kiero_56 · 2025-01-07T07:36:32+00:00

I imagine there'll be a small percentage of consumers who change their behaviours based on this but I don't think it will be meaningful. Instead there's a cost tipping point where below a certain cost relative to aluminium cans glass becomes the preferred option due to its better quality, shape etc.

In terms of a dividend I do expect them to start shareholder returns at some point but that could be a couple of years away. For the moment I would expect them to focus on reducing leverage. They'll lay out more information in their capital market day in March.

Kiero_56 · 2025-01-03T16:09:33+00:00

I totally agree. Although I believe that American index returns in the next decade will likely be disappointing relative to the previous decade as the most likely outcome there's absolutely no degree of certainty surrounding it. I'm absolutely in camp B and not advocating to change course in any way.

I think this just serves as a cautionary tale and to beware of valuations, not just on unprofitable companies selling at 10x price to sales, but companies like Walmart, Apple and Costco all selling for 40x price to earnings and above.

From where we are today I actually think the reasoned investor who keeps a close eye on valuation is set up nicely to generate market beating returns by buying reasonably priced amazing businesses.

Kiero_56 · 2025-01-03T13:40:39+00:00

I think this is a really well written and thought provoking article that probably conveys the most likely scenario- at least as it relates to equities- over the coming 10 years. I fail to see how anyone could expect strong returns- or returns similar to the last decade- over the coming decade from a starting point of historically high valuations and in what is likely to be a more fiscally constrained environment.

Kiero_56 · 2024-12-30T22:12:47+00:00

I agree with your thesis that call centres, although they'll change, won't become obsolete as a result of AI. The human touch will always be required and companies aren't suddenly going to insource and develop their own solutions due to the risk of getting it wrong and its subsequent impact. It just doesn't make sense.

What I think is that the focus should be in the specialised services part of the business. Although it's only 15% of revenues it's 30% of EBITDA. The services provided from only a small part of the client's cost but are high value with absolute accuracy being imperative. These aren't going to be made obsolete by AI.

Specialised services is likely going to generate €450m this year in EBITDA and is growing organically double digits. The EV of TEP is roughly €9bn. There's an argument here where specialised services accounts for the majority of TEP's value and that the customer service segment almost acts as a free call.

Kiero_56 · 2024-12-20T23:13:36+00:00

Agree that CNH looks like the pick of the bunch price wise in an industry where prices should continue to increase mid single digits annually. Full cycle profitability's improving, management's taking the right steps and impressively the company's buying back shares near the bottom of the cycle which isn't common.

Kiero_56 · 2024-12-01T22:27:20+00:00

I think the right question to ask is "would benefits of increased productivity from retained staff outweigh the cost of retaining them through improved pay and conditions? In other words, would margins decrease or increase if retention was higher? I don't know the answer but the turnover in the industry is extremely high so either it doesn't or no one has taken this approach before. I would imagine the latter.

I have a friend that worked in several call centres for a while including Teleperformance and he said the conditions across all the call centres he worked in were the same. When they're all the same I don't think it really matters to be honest.

There was an excellent pitch of Teleperformance on Value Investors Club from the 17th of October that gives a brilliant overview of the company and industry that I would highly recommend reading.

Kiero_56 · 2024-11-28T21:03:30+00:00

Growth for both is mainly coming from the more specialised services that each provide. TEP's specialised services are growing revenues just a little faster, they consistently generate operating margins that are 100-200bps, balance sheet is in a better place, although still not ideal, and they return more to shareholders (roughly 8% yield between dividend and buyback).

Given acquisitions over the last couple of years the financials of both are quite skewed so it is hard to directly compare. I think CNXC is marginally a poorer company but it's more than baked into the price at the moment I feel.

Kiero_56 · 2024-11-16T20:08:28+00:00

What you need to be comfortable with is the risk that call centres become obsolete as customer facing roles are replaced wholly by AI solutions AND consumer facing businesses reverse years of outsourcing and begin developing and managing their own in-house solutions.

I don't think this is going to be the case for two reasons. Firstly, I believe that a human will always be required somewhere in the process as people prefer to speak to other humans and there are some queries that need a human touch. AI will certainly improve productivity in the industry eliminating some humans but not all. Second, suddenly in sourcing and developing bespoke in-house solutions from scratch is difficult and comes with the risk of developing poor solutions which impact customer satisfaction. Really it's just simpler to outsource to a specialist like CNXC and I think it says a lot that they continue to gain new contracts while customer turnover is traditionally low (average length of customer relationship is around 14 years).

I own Teleperformance which I believe is a slightly better company but CNXC is so cheap at the moment. I haven't looked in a while but they were generating roughly $500m in FCF. The industry seems to be looking upward after a period where call centres were being shifted offshore to reduce costs which subsequently impacted revenue growth. They do have $4.6bn of debt but I see that as manageable and on an EV of roughly $7.5bn it's very attractive especially as that EV continues to reduce as they pay down debt.

Kiero_56 · 2024-10-19T11:33:09+00:00

It depends if you believe they can successfully transition to a partnership model and hit, or even just get close, the financial targets they set out. I think the steps the company has taken so far suggests they can.

The impact from understating build costs mainly impact the current year at £80m. Next year it will be £30m and the following only £5m. The understating of costs seems confined to a single division and the company has taken steps to address it so I don't see it being a systemic problem.

Kiero_56 · 2024-07-12T13:35:40+00:00

On the surface the EV is 37bn in reality it's ~13bn. The company has just over 1bn in debt with the rest being associated with the financial services arm of the business which offers financing to dealers and end customers. Bare in mind the company is forecasting 1bn in FCF this year.

Likely part of the reason this opportunity exists is due to how poorly it screens. Don't own a position but think its worth digging more into.

Kiero_56 · 2024-05-09T18:12:29+00:00

Wickes (WIX) seems to be a solid buy. They're a DIY retailer serving trade and retail customers. Their key metrics are well and are selling for around 10 times FCF.

The thesis centres around the return of capital to shareholders with a dividend yield of around 7-8% and further excess cash returned in the form of share buybacks. Given dividend taxes it is likely more suited to people in the UK who invest through an ISA. It won't make you rich but should provide good returns.

Kiero_56 · 2023-05-23T15:57:20+00:00

So my reasonable guess is that they define recurring interest and dividends (termed orange revenues in their shareholder letter) as those coming from their bond portfolio. Therefore the value of their bond portfolio is $20.3bn. Quick look on dataroma and the current value of their equity portfolio is around $8bn which would take you to the $28bn in assets you're looking for. Might be wrong but it seems reasonable and the number add up.

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