The real value of Merrill Lynch

Merrill Lynch, trading at about $30 a share, has a market cap of about $30 billion. Breakingviews argues that Mr. Market has woefully undervalued the firm, discounting it way too much for the ongoing turmoil. Here's the case: The firm's marquee retail brokerage would be worth about $30 billion alone at a multiple of 14, which is what retail brokerage peers trade at. Then there's the stake in BlackRock, which is worth somewhere between $5 and $10 billion. Then there are private equity investments of $4 billion. Its mergers advisory unit may be worth $3 billion at a multiple of 12. You end up with a value of around $50 billion. I doubt anyone will start calling for a break up of Merrill Lynch. Hopefully, CEO John Thain will find a way to unlock that pent-up value in other ways.  

For more:
- here's the Breakingviews article

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