Interview With Bill Miller

Here are some interesting insights from an interview with Bill Miller:

But here is a topical example: Hewlett Packard has $15bn of cash on its balance sheet. It will generate $10bn of free cash this year and is probably overpaying this $3bn for 3PAR and ArcSight for $1.5. But even so, it will not make much of a dent in its free cashflow for this year alone.
So HP could take 100% of its free cashflow and pay it out as dividends. While they would never do that, if they did the stock would have a 10% yield on it. Can you think of any companies out there with a 10% yield and can grow? So where would it trade? It might trade to a 5% yield.
It would probably go up 50% immediately and many people would be wondering whether what was going on was secure. But eventually it would be capitalised at a rate higher than a utility or a Reit because it can grow faster. That is the opportunity we currently have in the market.

Posted by on September 16th, 2010 at 9:34 am


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