This website summarizes our principles for calculating intrinsic or fundamental equity value of companies that operate in the financial industry, in particular banks and insurance companies.
Thinking in potential alternatives: In essence, based on a company's historical and current performance we use a set of different performance patterns as potential alternatives for projected future performance.
Business cycles: In particular we assume that future performance will likely be impacted by business cycles and therefore be cyclical itself, within normal cyclical patterns or historical extremes.
Equilibrium seeking: We also take into account that reasonable expectations should include an assumption that future performance could approach an equilibrium level.
Probabilistic analysis of alternatives: We value potential performance alternatives and compare the results to current and past market prices. A qualitative and probabilistic overall assessment of the different results completes the analysis and arrives at an answer to the question “What would corporate value be under realistic scenarios?”
Margin of safety: This all taken together provides a margin of safety at times of peak or optimal performance, and on the other hand a more optimistic or realistic perspective in the event of atypically depressed performance in the near term.
More on this under Main Principles and the other areas of this site.
Nothing on this website is for purchase or sale, we like to use it as a reference. We and this website do not provide financial, tax or other advice, and do not provide recommendations to buy or sell shares, bonds or other securities or interests in any bank or other (financial) company. If you have any comments about this web page, please e-mail us at info@bankvalueobserver.com. However, we have very limited resources, and as a result may be unable to respond in a timely manner.
