In this exercise they make an internal projection of a company's free cash flow over a ten-year period.
Most mid-sized firms (excluding startups) have proven that they are able to consistently produce free cash flow over time.
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Some of these companies will generate 80-90% of their enterprise value in free cash flow over the next five years, according to Mark Holowesko of Holowesko Partners.
The average growth of its free cash flow per share over the past 10 years was 11%.
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The California-based Internet giant says that barriers to the free flow of information over the Web restrict commerce and economic development, and should therefore be considered barriers to free trade as well.
Naturally, it is important that such steps do not smack of "capital controls" or other draconian measures that could cast a shadow over our common desire to preserve the free flow of private capital into and out of the United States.
Over the past year or so, portfolios of companies that are using free cash flow to shrink the float have not only significantly outperformed all dividend ETFs, but also the overall market.
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Management shoulda said that dividends would keep pace with earnings now growing over 20 percent and that a stock buyback program with the rest of free cash flow was under consideration, barring acquisitions.
An interesting viewpoint from Sergey Brin over on The Guardian today on the changing internet and what it means for the free flow of information and how it is used online.
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Over the last two years, he notes, Microsoft has barely been using 10% of free cash flow for buybacks.
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We recommend that HP explicitly state that it will focus on smaller acquisitions over the next 1-2 years, and that it target returning 50% of its free cash flow in FY12 to shareholders in the form of dividends and share repurchases.
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