Ann: HY21 Investor Presentation, page-16

"Thanks for your views/analysis Adam - always an interesting read. Do you think the move in the US 10 year bond rate is also a reason for the fall in BRG and ARB SPs and could be factored into the REH price going forwards?"

Short answer: YES.

It was the spectacular fall in bond yields over the past few years that took earnings yields down with them, i.e., drove up Price-to-Earnings multiples.

And the valuations that benefited most from the reduction in interest rates were those of "growth" companies.

Because for the same reductions in discount rates (which are derived from interest rates), the Net Present Values, of cash flow streams that are growing over time, increase disproportionately faster than the NPV's of static cash flows.

This somewhat arcane - but relevant - dynamic was discussed some time back under the CSL thread (which, lke ARB, BRG and REH is also a high-quality, growing business):

https://hotcopper.com.au/posts/50137901/single

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