Sum of the Parts at News Corporation is Only Part of the Sum

Daniel Mueller

Forager Funds

In philosophy, “the whole is greater than the sum of its parts,” according to Aristotle. Mathematics tells us this cannot be true. But what about investing? In investing, a common way to value a large conglomerate is to use a sum-of-the-parts analysis. Put simply, this method values each division then adds them up. It is often used to highlight hidden value in conglomerates; perhaps an asset or division whose full worth might not be appreciated by the market. But it can also be misleading as a tool for valuing companies. Sum-of-the-parts analysis is often applied to value News Corporation. This is because it has dozens of well-known assets, including a 50% stake in Foxtel and a 61.6% stake in REA Group, owner of realestate.com.au. Many analysts use it to determine their valuations, which tend to be well above the share price. The median of analysts’ share price targets is $22.66, which values News at $13 billion, some 30% above the $10 billion valuation implied by the current share price. How do they derive such lofty valuations? Read full blogpost (VIEW LINK)


Daniel Mueller
Daniel Mueller
Senior Analyst/Portfolio Manager
Forager Funds

Daniel joined Forager in April 2016 as a senior analyst / portfolio manager for the Australian Fund. He is an avid value investor having previously worked at Investors Mutual and MMC Asset Management. He has a Bachelor of Commerce degree...

Expertise

No areas of expertise

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.