Recent Buys Based on DCF & Margin of Safety (ADBE, HRB, PYPL, MSFT, META, HPQ)

I’ve been gradually building positions in a few names based primarily on discounted cash flow (DCF), intrinsic value, and margin of safety. I try to stay disciplined around buying quality businesses when they trade at a discount to reasonable long-term assumptions.

Here’s what I’ve been buying recently and why:

Adobe Inc. (ADBE) – High Quality at a Discount

This is one of my more aggressive adds right now.

Strong pricing power and entrenched ecosystem (Photoshop, Acrobat, etc.)

High margins, recurring revenue, and excellent FCF generation

Market seems concerned about AI disruption, but I think it’s being underestimated how well Adobe can integrate AI into its existing moat

DCF View:

Assuming moderate revenue growth (~8–10%) and slight margin compression

Discount rate ~10%

I still get a valuation above current price → margin of safety in the 15–25% range

To me, this looks like a temporary multiple compression on a high-quality compounder

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H&R Block (HRB) – Undervalued Cash Machine

Another aggressive position.

Boring business, but extremely strong cash flow

Consistent buybacks + dividend yield

Tax prep is not going away, even with automation

DCF View:

Low growth assumptions (~2–4%)

High FCF yield

Intrinsic value meaningfully above current price

Feels like a classic value play with a built-in shareholder return engine

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PayPal Holdings (PYPL) – Turnaround / Speculative Value

More speculative, but I think the market may be overly pessimistic.

Sentiment is extremely negative

Still a massive user base and strong brand in digital payments

Margin pressure + competition priced in heavily

DCF View:

Conservative growth assumptions

Slight margin recovery over time

If execution stabilizes, there’s upside optionality

This is less “pure value” and more mean reversion + sentiment reversal

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Microsoft Corporation (MSFT) – Quality Anchor

I added roughly the same amount here as PYPL.

Not “cheap” on traditional multiples

But one of the highest-quality businesses in the world

Azure + AI integration (OpenAI partnership) adds long-term tailwinds

DCF View:

Requires lower margin of safety due to quality

Durable growth + strong reinvestment opportunities

This is more of a “pay a fair price for a great business” position

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HP Inc. (HPQ) – Stable + Income

Smaller position.

Low growth, but very predictable cash flow

Solid dividend and ongoing buybacks

Trades at low multiples

DCF View:

Minimal growth assumptions

Value mostly comes from cash return to shareholders

This is more of a defensive/value income play

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Meta Platforms (META) – Letting Winners Run

This is already my largest position (~9%).

Initial buys around ~$140 → up over 300%

Recently started adding small amounts again on pullbacks

DCF View:

Strong revenue growth + massive margins

Continued monetization + AI + ads dominance

Not adding aggressively due to position size, but still see long-term upside.

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Portfolio Philosophy

Focus on intrinsic value via DCF, not short-term price action

Require a margin of safety, but adjust it based on business quality

Blend of:

High-quality compounders (ADBE, MSFT, META)

Deep value / cash flow plays (HRB, HPQ)

Turnaround/speculative (PYPL)

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What I’m Looking For Next

I’m currently searching for:

High FCF yield businesses temporarily mispriced

Companies with durable moats but short-term narrative risk

Opportunities where the market is overly focused on near-term headwinds

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Question for the Community

What are some names you’re currently finding attractive from a DCF / intrinsic value perspective?

Especially interested in:

Underfollowed mid-caps

Out-of-favor compounders

Cash flow machines trading at a discount

Would love to see what you guys are buying