CorrectionSAVNG Research · September 10, 2026
Correction: we overvalued holding companies by up to six times
The claim. Plains GP Holdings consolidates all of Plains All American but its shareholders own a minority of it. We divided the whole enterprise's cash flow by the parent's share count and printed a $202 value on a $28 stock. Fixed 2026-09-08: cash flow is now allocated to the parent's owners before any per-share math, on every valuation route.
What happened and what changed
- Symptom: Plains GP Holdings (PAGP) showed a 36% normalized free-cash-flow yield and a $202 intrinsic value against a $28 price.
- Cause: PAGP consolidates Plains All American; the June 10-Q attributes about 69% of PAA plus 15% of AAP to outside owners. We divided consolidated cash flow by PAGP's 198 million shares.
- Fix: the valuation runner now reads the filing's own split (parent net income ÷ consolidated profit, and 1 − noncontrolling equity ÷ total equity) and scales every cash-flow input to the parent's share before any route runs. PAGP now: 15% share, owner-earnings yield 6.0%, value $16.56 at an 11% rate. The financial statements stay consolidated; the page says the inputs were scaled.
- Rule added: no per-share cash-flow figure is computed from consolidated cash flows when material noncontrolling interests exist. The audit prompt checks for it (invariant 20).
Where it does not apply
Any structure with large noncontrolling interests was affected. The allocation uses the filing's own split (parent net income ÷ consolidated profit, averaged with the equity split when both exist).
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