Giverny Capital - Owner Earnings
Saw this post by @invesquotes on Giverny Letters. I really liked the owner earnings part of these letters, to that end decided to take a stab at replicating it myself for my own portfolio as shown below

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Unsurprisingly massively skewed to multiple expansion at the moment. Note: Using Aus Fin. yr

2020, just started and nothing reported.

2021, ZIGExN & AFL saw earnings declines more than offset KPG, market return driven by ~3.5x in KPG where it was a very large weighting

Value 2022, Everythng did great on earnings, market contracted on me

Value 2023, Nothing has reported yet, just divs

Some stocks i own have negative WC cycles and/or reinvesting a lot into deductible expenses so the use of EPS may be a short term detractor on longer term value potential. But still use stat EPS just to keep things simple and clean, also don't want to adjust things to fool myself

Longer term I expect these to converge a bit, but I am privy to expecting aggressive multiple expansion and am not by any means a never sell investor, so I expect a gap to persist, and ideally a fairly large positive gap as there is currently as i purchase at steep discounts to intrinsic value and sell beyond it.
Nathan Worden's avatar
Great exercise to do— wow the dividend yield + earnings growth in 2022 was strong… incredible that multiple contraction more than wiped that out.
Tristan Waine's avatar

2022 breakdown.

KPG went from 30x to 28x on 26% value growth

DVR went from 15x to 9x on 37% value growth

3679 went from 18x to 13x on 17% value growth

AFL was loss making but saw a large improvement of the statutory loss.

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