Economic Rigor

Been looking at the technical indicators of cab Charge after my ROC checker identified it as possible buy. It has certainly dropped a lot of value so quite a few technical indicators are pointing that it might be undervalued. Firstly, the Bollinger bands...the price is cutting through the bottom band which is usually a buy signal. Then there is the MACD. I have calculated that when the MACD goes through the signal line on the up at any level below -0.2, that is a buy signal. Not quite there, but close. Definitely a watch this space...

Been reading in the press about Freelancer, the short term project resourcing site owned by Matt Barrie. Apparently there is talk that he turned down a $400 million dollar offer to sell from a " Japanese recruitment company". Somehow, I find that hard to believe. Lets look at it from a valuation model. According to the Afr today, the site has turned over $1.2 billion in project costs from 2004. So that is roughly $133 million a year. But the site only sees around 3% of that figure, so revenue per year of the site is actually $4 million a year. Now if we assume the same Ebitda margin as a comparable site, say carsales.com.au of 56%, that leaves us with an ebitda per year of around $2.2 million. Now car sales has a market capitalization of around $2.7 billion, so is trading at a multiple of around 22 times ebitda. If we assume the same multiple, that takes us to a valuation of $50 million, a lot smaller than that $400 million figure that was bandied about. Even if we as...