Focus on the Cash - RIO, BHP, FMG

Some quotes to think about when valuing FMG v Peers

FMG: FCF $3.5b, Enterprise Value c$13.0b ($10.9b mkt cap - $2.3b cash + $4.4b debt)
... yield x3.71
RIO: FCF $9.2b, Enterprise Value c$30.2b ($22.6b mkt cap - $8.0b cash + $15.6b debt)
... yield x3.28

converted to LFL $usd, taken at last published value
.... BHP is sitting on Gross Debt of $30.5b!

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"Remember cash is a fact, profit is an opinion" Al Rappaport

"Cash flow, not reported earnings, is what determines long-term value" William Thorndike

"Great fundamental investors focus on understanding the magnitude and sustainability of free cash flow"  Michael Mauboussin

“If you don‘t have the free cash flow, you don‘t have anything.” Leon Cooperman

"To us an asset is only an asset if it generates free cash flow." Jeffrey Ubben

“The nature of the business and its ability to generate reasonable amounts of free cash flow – even in stressful environments – in relationship to price paid is the most important factor” Bruce Berkowitz

“The most important metric we look at is probably Enterprise Value to free cash flow” Eric Rosenfeld

"We use many different valuation methodologies, but the most common at Maverick is to compare sustainable free cash flow to enterprise value." Lee Ainslee

“How do I determine the discount? I usually focus on free cash flow and enterprise value (market capitalization less cash plus debt). I will screen through large numbers of companies by looking at the enterprise value/EBITDA ratio, though the ratio I am willing to accept tends to vary with the industry and its position in the economic cycle." Michael Burry