Intrinsic value of Oaktree Capital Group - OAK

Previous Close

$46.60

  Intrinsic Value

$1.32

stock screener

  Rating & Target

str. sell

-97%

  Value-price divergence*

+49%

Previous close

$46.60

 
Intrinsic value

$1.32

 
Up/down potential

-97%

 
Rating

str. sell

 
Value-price divergence*

+49%

Our model is not good at valuating stocks of financial companies, such as OAK.

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of OAK stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 7.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  457.43
  14.20
  13.28
  12.45
  11.71
  11.04
  10.43
  9.89
  9.40
  8.96
  8.56
  8.21
  7.89
  7.60
  7.34
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.91
  5.82
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
Revenue, $m
  1,126
  1,286
  1,457
  1,638
  1,830
  2,032
  2,244
  2,466
  2,697
  2,939
  3,191
  3,453
  3,725
  4,008
  4,302
  4,608
  4,925
  5,256
  5,599
  5,956
  6,328
  6,715
  7,119
  7,539
  7,978
  8,435
  8,913
  9,411
  9,932
  10,477
  11,046
Variable operating expenses, $m
 
  5,990
  6,785
  7,630
  8,523
  9,464
  10,451
  11,485
  12,564
  13,690
  14,863
  16,082
  17,351
  18,669
  20,039
  21,463
  22,943
  24,481
  26,081
  27,745
  29,477
  31,280
  33,159
  35,118
  37,160
  39,291
  41,515
  43,837
  46,264
  48,800
  51,451
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  789
  5,990
  6,785
  7,630
  8,523
  9,464
  10,451
  11,485
  12,564
  13,690
  14,863
  16,082
  17,351
  18,669
  20,039
  21,463
  22,943
  24,481
  26,081
  27,745
  29,477
  31,280
  33,159
  35,118
  37,160
  39,291
  41,515
  43,837
  46,264
  48,800
  51,451
Operating income, $m
  336
  -4,704
  -5,328
  -5,992
  -6,693
  -7,432
  -8,207
  -9,019
  -9,867
  -10,751
  -11,672
  -12,630
  -13,626
  -14,661
  -15,737
  -16,855
  -18,017
  -19,225
  -20,482
  -21,788
  -23,149
  -24,565
  -26,041
  -27,579
  -29,182
  -30,856
  -32,602
  -34,426
  -36,332
  -38,323
  -40,405
EBITDA, $m
  352
  -4,704
  -5,328
  -5,992
  -6,693
  -7,432
  -8,207
  -9,019
  -9,867
  -10,751
  -11,672
  -12,630
  -13,626
  -14,661
  -15,737
  -16,855
  -18,017
  -19,225
  -20,482
  -21,788
  -23,149
  -24,565
  -26,041
  -27,579
  -29,182
  -30,856
  -32,602
  -34,426
  -36,332
  -38,323
  -40,405
Interest expense (income), $m
  100
  43
  68
  103
  141
  180
  222
  265
  311
  359
  409
  460
  514
  570
  629
  689
  752
  818
  886
  956
  1,030
  1,106
  1,186
  1,269
  1,356
  1,446
  1,540
  1,638
  1,741
  1,848
  1,960
Earnings before tax, $m
  609
  -4,747
  -5,397
  -6,095
  -6,834
  -7,612
  -8,429
  -9,285
  -10,178
  -11,110
  -12,080
  -13,090
  -14,140
  -15,232
  -16,366
  -17,545
  -18,770
  -20,043
  -21,367
  -22,745
  -24,179
  -25,671
  -27,227
  -28,848
  -30,538
  -32,302
  -34,142
  -36,065
  -38,073
  -40,171
  -42,366
Tax expense, $m
  43
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  195
  -4,747
  -5,397
  -6,095
  -6,834
  -7,612
  -8,429
  -9,285
  -10,178
  -11,110
  -12,080
  -13,090
  -14,140
  -15,232
  -16,366
  -17,545
  -18,770
  -20,043
  -21,367
  -22,745
  -24,179
  -25,671
  -27,227
  -28,848
  -30,538
  -32,302
  -34,142
  -36,065
  -38,073
  -40,171
  -42,366

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  291
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  7,649
  8,405
  9,521
  10,706
  11,960
  13,279
  14,665
  16,115
  17,630
  19,210
  20,855
  22,566
  24,346
  26,196
  28,119
  30,116
  32,193
  34,351
  36,596
  38,931
  41,361
  43,892
  46,528
  49,276
  52,142
  55,131
  58,252
  61,511
  64,916
  68,474
  72,194
Adjusted assets (=assets-cash), $m
  7,358
  8,405
  9,521
  10,706
  11,960
  13,279
  14,665
  16,115
  17,630
  19,210
  20,855
  22,566
  24,346
  26,196
  28,119
  30,116
  32,193
  34,351
  36,596
  38,931
  41,361
  43,892
  46,528
  49,276
  52,142
  55,131
  58,252
  61,511
  64,916
  68,474
  72,194
Revenue / Adjusted assets
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
Average production assets, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Working capital, $m
  0
  -129
  -146
  -164
  -183
  -203
  -224
  -247
  -270
  -294
  -319
  -345
  -372
  -401
  -430
  -461
  -493
  -526
  -560
  -596
  -633
  -672
  -712
  -754
  -798
  -844
  -891
  -941
  -993
  -1,048
  -1,105
Total debt, $m
  1,230
  1,951
  2,956
  4,023
  5,151
  6,338
  7,585
  8,890
  10,254
  11,676
  13,156
  14,697
  16,299
  17,964
  19,694
  21,492
  23,360
  25,303
  27,323
  29,425
  31,612
  33,890
  36,262
  38,735
  41,315
  44,005
  46,814
  49,747
  52,811
  56,014
  59,362
Total liabilities, $m
  6,843
  7,564
  8,569
  9,636
  10,764
  11,951
  13,198
  14,503
  15,867
  17,289
  18,769
  20,310
  21,912
  23,577
  25,307
  27,105
  28,973
  30,916
  32,936
  35,038
  37,225
  39,503
  41,875
  44,348
  46,928
  49,618
  52,427
  55,360
  58,424
  61,627
  64,975
Total equity, $m
  806
  840
  952
  1,071
  1,196
  1,328
  1,466
  1,611
  1,763
  1,921
  2,085
  2,257
  2,435
  2,620
  2,812
  3,012
  3,219
  3,435
  3,660
  3,893
  4,136
  4,389
  4,653
  4,928
  5,214
  5,513
  5,825
  6,151
  6,492
  6,847
  7,219
Total liabilities and equity, $m
  7,649
  8,404
  9,521
  10,707
  11,960
  13,279
  14,664
  16,114
  17,630
  19,210
  20,854
  22,567
  24,347
  26,197
  28,119
  30,117
  32,192
  34,351
  36,596
  38,931
  41,361
  43,892
  46,528
  49,276
  52,142
  55,131
  58,252
  61,511
  64,916
  68,474
  72,194
Debt-to-equity ratio
  1.526
  2.320
  3.100
  3.760
  4.310
  4.770
  5.170
  5.520
  5.820
  6.080
  6.310
  6.510
  6.690
  6.860
  7.000
  7.140
  7.260
  7.370
  7.470
  7.560
  7.640
  7.720
  7.790
  7.860
  7.920
  7.980
  8.040
  8.090
  8.140
  8.180
  8.220
Adjusted equity ratio
  0.070
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  195
  -4,747
  -5,397
  -6,095
  -6,834
  -7,612
  -8,429
  -9,285
  -10,178
  -11,110
  -12,080
  -13,090
  -14,140
  -15,232
  -16,366
  -17,545
  -18,770
  -20,043
  -21,367
  -22,745
  -24,179
  -25,671
  -27,227
  -28,848
  -30,538
  -32,302
  -34,142
  -36,065
  -38,073
  -40,171
  -42,366
Depreciation, amort., depletion, $m
  16
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Funds from operations, $m
  -6,636
  -4,747
  -5,397
  -6,095
  -6,834
  -7,612
  -8,429
  -9,285
  -10,178
  -11,110
  -12,080
  -13,090
  -14,140
  -15,232
  -16,366
  -17,545
  -18,770
  -20,043
  -21,367
  -22,745
  -24,179
  -25,671
  -27,227
  -28,848
  -30,538
  -32,302
  -34,142
  -36,065
  -38,073
  -40,171
  -42,366
Change in working capital, $m
  -3,606
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -34
  -36
  -37
  -39
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -57
Cash from operations, $m
  -3,030
  -4,731
  -5,380
  -6,077
  -6,815
  -7,592
  -8,408
  -9,262
  -10,155
  -11,086
  -12,055
  -13,064
  -14,113
  -15,203
  -16,337
  -17,514
  -18,738
  -20,010
  -21,333
  -22,709
  -24,141
  -25,633
  -27,186
  -28,806
  -30,494
  -32,256
  -34,095
  -36,015
  -38,021
  -40,117
  -42,309
Maintenance CAPEX, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
New CAPEX, $m
  -70
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from investing activities, $m
  -99
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Free cash flow, $m
  -3,129
  -4,731
  -5,380
  -6,077
  -6,815
  -7,592
  -8,408
  -9,262
  -10,155
  -11,086
  -12,055
  -13,064
  -14,113
  -15,203
  -16,337
  -17,514
  -18,738
  -20,010
  -21,333
  -22,709
  -24,141
  -25,633
  -27,186
  -28,806
  -30,494
  -32,256
  -34,095
  -36,015
  -38,021
  -40,117
  -42,309
Issuance/(repayment) of debt, $m
  1,094
  721
  1,005
  1,067
  1,128
  1,188
  1,247
  1,305
  1,363
  1,422
  1,481
  1,541
  1,602
  1,665
  1,730
  1,798
  1,869
  1,943
  2,020
  2,102
  2,187
  2,278
  2,373
  2,473
  2,579
  2,691
  2,809
  2,933
  3,064
  3,203
  3,348
Issuance/(repurchase) of shares, $m
  -13
  5,072
  5,508
  6,214
  6,960
  7,744
  8,568
  9,430
  10,330
  11,268
  12,245
  13,261
  14,318
  15,417
  16,558
  17,744
  18,977
  20,259
  21,592
  22,978
  24,422
  25,925
  27,490
  29,123
  30,825
  32,601
  34,454
  36,390
  38,413
  40,527
  42,738
Cash from financing (excl. dividends), $m  
  905
  5,793
  6,513
  7,281
  8,088
  8,932
  9,815
  10,735
  11,693
  12,690
  13,726
  14,802
  15,920
  17,082
  18,288
  19,542
  20,846
  22,202
  23,612
  25,080
  26,609
  28,203
  29,863
  31,596
  33,404
  35,292
  37,263
  39,323
  41,477
  43,730
  46,086
Total cash flow (excl. dividends), $m
  -2,230
  1,063
  1,133
  1,204
  1,273
  1,340
  1,407
  1,472
  1,538
  1,604
  1,670
  1,738
  1,807
  1,878
  1,952
  2,028
  2,108
  2,191
  2,279
  2,371
  2,468
  2,569
  2,677
  2,790
  2,909
  3,035
  3,168
  3,309
  3,457
  3,613
  3,777
Retained Cash Flow (-), $m
  -72
  -5,072
  -5,508
  -6,214
  -6,960
  -7,744
  -8,568
  -9,430
  -10,330
  -11,268
  -12,245
  -13,261
  -14,318
  -15,417
  -16,558
  -17,744
  -18,977
  -20,259
  -21,592
  -22,978
  -24,422
  -25,925
  -27,490
  -29,123
  -30,825
  -32,601
  -34,454
  -36,390
  -38,413
  -40,527
  -42,738
Prev. year cash balance distribution, $m
 
  291
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -3,719
  -4,375
  -5,010
  -5,687
  -6,404
  -7,161
  -7,957
  -8,792
  -9,664
  -10,575
  -11,524
  -12,511
  -13,539
  -14,606
  -15,716
  -16,869
  -18,067
  -19,313
  -20,607
  -21,954
  -23,355
  -24,814
  -26,333
  -27,915
  -29,565
  -31,286
  -33,082
  -34,956
  -36,915
  -38,960
Discount rate, %
 
  5.10
  5.36
  5.62
  5.90
  6.20
  6.51
  6.83
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.27
  12.89
  13.53
  14.21
  14.92
  15.66
  16.45
  17.27
  18.13
  19.04
  19.99
  20.99
PV of cash for distribution, $m
 
  -3,538
  -3,942
  -4,252
  -4,521
  -4,741
  -4,905
  -5,009
  -5,050
  -5,026
  -4,938
  -4,790
  -4,586
  -4,333
  -4,039
  -3,713
  -3,364
  -3,003
  -2,640
  -2,284
  -1,944
  -1,625
  -1,335
  -1,075
  -849
  -657
  -497
  -368
  -265
  -187
  -128
Current shareholders' claim on cash, %
  100
  47.3
  27.1
  15.6
  9.0
  5.2
  3.0
  1.7
  1.0
  0.6
  0.3
  0.2
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Oaktree Capital Group, LLC operates as a global investment management firm that focuses on alternative markets. It manage investments in a number of strategies within six asset classes, including distressed debt; corporate debt, including high yield debt and senior loans; control investing; convertible securities; real estate; and listed equities. The company pursues these strategies through closed-end, open-end, and evergreen funds. Oaktree Capital Group, LLC was founded in 1995 and is headquartered in Los Angeles, California.

FINANCIAL RATIOS  of  Oaktree Capital Group (OAK)

Valuation Ratios
P/E Ratio 37
Price to Sales 6.4
Price to Book 8.9
Price to Tangible Book
Price to Cash Flow -2.4
Price to Free Cash Flow -2.3
Growth Rates
Sales Growth Rate 457.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 191.7%
Cap. Spend. - 3 Yr. Gr. Rate 69.5%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 152.6%
Total Debt to Equity 152.6%
Interest Coverage 7
Management Effectiveness
Return On Assets 1%
Ret/ On Assets - 3 Yr. Avg. 0.6%
Return On Total Capital 3.9%
Ret/ On T. Cap. - 3 Yr. Avg. 2.5%
Return On Equity 25.3%
Return On Equity - 3 Yr. Avg. 20.4%
Asset Turnover 0
Profitability Ratios
Gross Margin 85%
Gross Margin - 3 Yr. Avg. 30.5%
EBITDA Margin 64.4%
EBITDA Margin - 3 Yr. Avg. 191.9%
Operating Margin 29.9%
Oper. Margin - 3 Yr. Avg. -241.4%
Pre-Tax Margin 54.1%
Pre-Tax Margin - 3 Yr. Avg. 145%
Net Profit Margin 17.3%
Net Profit Margin - 3 Yr. Avg. 39.1%
Effective Tax Rate 7.1%
Eff/ Tax Rate - 3 Yr. Avg. 2.2%
Payout Ratio 72.8%

OAK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the OAK stock intrinsic value calculation we used $1126 million for the last fiscal year's total revenue generated by Oaktree Capital Group. The default revenue input number comes from 2016 income statement of Oaktree Capital Group. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our OAK stock valuation model: a) initial revenue growth rate of 14.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.1%, whose default value for OAK is calculated based on our internal credit rating of Oaktree Capital Group, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Oaktree Capital Group.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of OAK stock the variable cost ratio is equal to 465.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for OAK stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Oaktree Capital Group.

Corporate tax rate of 27% is the nominal tax rate for Oaktree Capital Group. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the OAK stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for OAK are equal to 0%.

Life of production assets of 10 years is the average useful life of capital assets used in Oaktree Capital Group operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for OAK is equal to -10%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $806 million for Oaktree Capital Group - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 152.614 million for Oaktree Capital Group is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Oaktree Capital Group at the current share price and the inputted number of shares is $7.1 billion.

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COMPANY NEWS

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▶ Oaktree's Howard Marks on Market Warning, Risks, FAANGs   [Aug-01-17 10:35AM  Bloomberg Video]
▶ Oaktree Capital Keeps Gaining From Strong Markets   [Jul-27-17 06:19PM  Motley Fool]
▶ Oaktree: Is There Much Upside Left?   [10:59AM  Barrons.com]
▶ [$$] Oaktree Is Backing Tembec Deal After Rayonier Ups Offer   [Jul-24-17 03:22PM  The Wall Street Journal]
▶ [$$] Oaktree Buys Out Fifth Street Lending Entities   [12:17PM  The Wall Street Journal]
▶ [$$] Njord Partners Seals Third Deal in Four Months   [Jul-13-17 11:42AM  The Wall Street Journal]
▶ [$$] Oaktree Nears Buyout of Fifth Street Asset Management   [12:46PM  The Wall Street Journal]
▶ [$$] CST Industries Sues Backer Oaktree Capital in Bankruptcy   [Jun-21-17 05:20PM  The Wall Street Journal]
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▶ 3 Stocks on the Motley Fool Money Radar This Week   [May-17-17 11:08AM  Motley Fool]
▶ [$$] Brickley's Take: JHL, QVT Steal a March on Mine   [03:06PM  The Wall Street Journal]
▶ Alternative Asset Managers: Would We Buy?   [Apr-30-17 03:16PM  Motley Fool]
▶ Making Sense of Fund Managers' Earnings   [Apr-29-17 12:42PM  Motley Fool]
▶ Demystifying Alternative Asset Managers   [08:47AM  Motley Fool]
▶ Oaktree Announces First Quarter 2017 Financial Results   [Apr-27-17 08:30AM  Business Wire]
▶ [$$] Tronc/Oaktree: Follow the buyout money   [Mar-27-17 03:46PM  Financial Times]
▶ [$$] Exco Resources Nears Deal to Stave Off Bankruptcy   [Mar-15-17 03:00PM  at The Wall Street Journal]
▶ Alaska Airlines announces new nonstop service between KC and SF   [Mar-09-17 01:35PM  at bizjournals.com]
▶ Alaska Airlines announces new nonstop service between KC and SF   [01:35PM  American City Business Journals]
▶ The Most Undervalued Sector in the Stock Market Today   [Feb-26-17 08:35AM  Motley Fool]
▶ Oaktree, Radian, DuPont: Doug Kass' Views   [Feb-20-17 01:00AM  TheStreet.com]
▶ 6 Surprising Income Investments Yielding 5% or More   [Feb-16-17 11:10AM  Kiplinger]
▶ [$$] International Game Technology Is Paying Off   [Feb-11-17 12:01AM  at Barrons.com]
▶ Oaktree Capital Finishes 2016 Strong   [10:30AM  at Motley Fool]
▶ [$$] Insurer Reliance ends 100 years of mutual ownership   [Feb-06-17 12:01PM  at Financial Times]
▶ [$$] Comings & Goings   [Feb-01-17 10:26AM  at The Wall Street Journal]
▶ [$$] Njord Partners Targets 250 Million for Second Fund   [Jan-30-17 07:57AM  at The Wall Street Journal]
▶ [$$] Palank's Take: Judge Upholds Narrow Cap on Molycorp Creditor Fees   [Jan-11-17 04:02PM  at The Wall Street Journal]
▶ Financials: What Will Really Drive Interest Rates?   [Dec-28-16 07:00AM  at Morningstar]
Stock chart of OAK Financial statements of OAK
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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