Boykin Curry: Why Goldman is Worth $150 Per Share

Boykin Curry of Eagle Capital is speaking at the Value Investing Congress and he is talking about time arbitrage. Curry is addressing the fact that analysts have been inaccurate with price targets when they have lowered price targets on companies without looking at long term cash flows. Instead they have done back of the napkin valuations, especially on companies like American Express

during the financial crisis. Price targets of American Express were cut sharply during the financial crisis, yet there was little long term basis for the price target cuts. He said that funds with longer term horizons have been able to outperform shorter-term funds with time horizons. Eagle has outperformed the S&P 500 by 5% per year in recent years. Curry says that tweeting and social media have increased humanity's needs for vindication, as has compensation when it comes to year end performance. Curry recommended AON

, as it one of the largest insurance companies in the world. AON has a free cash flow yield of 10%. Curry said that over the next few years, Aon will not have any revenue growth, but it has an excellent management team and global duoploy on the increase in insurance policies around the world. Aon's new GRIP system allows them to capture pricing throughout the world, and could potentially sell new analytical tools to its clients. He talked about the GRIP system as a "free call option." Increasing insurance bankruptcies and global volatility will eventually cause the insurance cycle to turn, and Aon will benefit. Moving onto Goldman Sachs

, Curry said that 95% of candidates who receive job offers from the New York-based company accept their job offers. That allows Goldman to win in every market and will eventually prosper once the capital markets come back to a sense of normalcy. Curry does believe that capital market activity has not stepped forever. His "free call option" on Goldman is that Goldman has reinvented itself and may be poised to take advantage of trading opportunities. Curry believes Goldman's current asset value is $82 billion, or $150 per share. Shares are currently trading around $95, implying Curry thinks there is 58% upside in shares. If Goldman were to do a 30% buyback over the next few years at 10% per year, Goldman could be worth $172 per share, in addition to whatever earnings Goldman has in profits over the next three years.