Let's hope so, @Andrewf69. Shifting blame for one's own investing decisions, or trying to knock someone when they are down, highlights a flaw in one's character.
I certainly make my fair share of mistakes as an investor and will likely continue to.
My only competitive advantage is patience, a longer investment horizon than most people, emotional stability, and slightly higher-quality analytics and work ethic on the same information that everyone else receives. So far that’s worked out ok and I think it will work out ok in the future as well.
As to whether HLF is a mistake, I think the jury is still out.
I posted the following quote on Twitter today: “The number 1 idea is to view stock as ownership of the business. Judge the quality of the business in terms of its competitive advantage. Look for more value in terms of discounted future cash-flow than you are paying for. Move only when you have an advantage.” — Charlie Munger
At 8.9c, we now have a market cap of $34m and net debt of $13m, so an EV of $47m.* That's for a business with pro forma financial impact (full-year basis) of $84m revenue and $6.5m synergy-adjusted EBITDA and that has a material runway ahead of it with a moderate level of competitive advantage.
I'm going to be very conservative and say that HLF may only report pro-forma EBITDA of $4m, initially (30% less than claimed in the investor materials). Let's consider this a discount to account for a lack of investor confidence in the management team (personally, I have a lot of faith in Jourdan, but for the sake of the exercise, let's run with those numbers).
8.9c thus equates to an EV/EBITDA multiple of 11.75x, on this conservative (discounted EBITDA) estimate ($47m/$4m). If you use official numbers, the ratio drops to 7.2x EV/EBITDA ($47/$6.5).
I'll let everyone come to their own conclusions on whether they think that shows some resemblance of value. My investment horizon/timeline on this stock has not changed. What this acquisition has done however, is change the investment timeline of VC & JG, they now have less than 9m shares remaining, having sold another 3.7m on the day of the acquistion annoucement (Tuesday this week).
The situation has however provided an opportunity to buy at 8.9c, which is at a circa 32% discount to the share price prior to the acquisition being annouced. I took that opportunity today.
"We remain humbled by the day-to-day vagaries of our capital markets, and how little control we ultimately have over our investment fortunes in the short term." — Tweedy Browne Co
* Note: EV/EBITDA accounts for the debt profile of the business, unlike MC/EBITDA.
