If you are a hedge fund manager, who solely believes the value of forms should be from profitability which statement is

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If You Are A Hedge Fund Manager Who Solely Believes The Value Of Forms Should Be From Profitability Which Statement Is 1 (45 KiB) Viewed 35 times

If You Are A Hedge Fund Manager Who Solely Believes The Value Of Forms Should Be From Profitability Which Statement Is 2 (58.63 KiB) Viewed 35 times

If you are a hedge fund manager, who solely believes the value of forms should be from profitability which statement is correct? Assume the market is efficient, what should he do? Hint: Market efficient means that eventually the price will be adjusted from the traded price (market price) to the price derived from the Comparable Approach or any valuation method. Again, all numbers you should use to derive estimated stock prices should be forecasted numbers which are forward looking; hedge fund managers would want to use profit that has strongest correlation with stock returns. That is, operating profit should be based on Ball et al (2015), which is sales -CGS-SG&A. Ball et al (2015) find this operating profit is the most correlated with future returns relative to other types of profits. Since sales - COGS - operating expense is negative, we should use sales divided by COGS plus SG&A. Use all forecasted numbers. Use below information in thousands) to answer the questions. Forecasted numbers are the numbers that are based on analyst's forecasts. That is, T-Mobile's forecasted revenue of $600,000 is the revenue analysts forecasted in 2019 T-Mobile will have in 2020.

T-Mobile AT&T 2019 2019 650,000 30% 350,000 300,000 240,000 forecasted number 600,000 25% 400,500 199,500 300,000 2,500,000 125% 2,900,000 400,000 1,000,000 forecasted number 4,500,000 70% 3,000,505 1,499,495 1,500,000 Sales revenue Sales growth Cost of goods sold Gross profit Research and development expense R&D growth Selling, general and administrative expense Interest expense Net profits before taxes Net profits after taxes Stock price per share Number of employees in thousands 110% 110,000 150% 150,000 150% 1,200,000 150% 1,500,000 35,000 -85,000 -65,000 $85 4 30,000 -280,500 -200,000 26,000 -2,626,000 -1,508,178 $38 9 20,000 -1,520,505 -939,221 6 15 The stock price of T-Mobile using AT&T as a comparable is $20.93, suggesting T-Mobile is overpriced no and we should short sell it. The stock price of AT&T using T-Mobile as a comparable is $70.72, suggesting AT&T is underpriced and should buy AT&T now. The stock price of T-Mobile using AT&T as a comparable is $41.79, suggesting T-Mobile is overpriced ar we should sell T-Mobile now. The stock price of AT&T using T-Mobile as a comparable is $77.55, suggesting AT&T is overpriced and should sell AT&T now.