If you make purchase decisions based on price targets, youre likely to get slaughtered. That said, I am long SCTY
Theyve been doubling volume, expanding centers, massive hiring etc. but G&A has only gone up by less than 25%. Yes theyre making very large investments in sales but this is very smart as returns on investment are still strong and ultimately sales costs come down as these new customers turn into referrals.
Yes this is definitely not the old berkshire, but if it can still do 7% real thats not bad at all. Thats doubling or money every 10 years and would almost certainky be more than what the index can do. If i retire in 40 years, then every dollar i put in now becomes $16, thats a decent result
don't make the mistake of thinking stock compensation isn't real expense, its probably the worst kind of expense if you think the stock is underpriced. That said, their expense management is actually pretty good with G&A only increasing from 38 to 50 mil despite the ramp up. The rest is sales and sales costs will come down as the industry matures, its the right move to invest heavily while growth is high and before the ITC step down
At least its not yielding zero indefiinitely :). I think the policy changes when management changes, and I think Howard is pretty open to a dividend
I also dont think its a coincidence that this shying away happened as valuations went up fairly significantly.
I suppose you'd have to say the 2nd and 3rd quarter of 2011. IBM was a huge purchase was well over $10 billion by the time it was reported and Berkshire's cost is approaching $14 billion now, by far the biggest investment Berkshire's made in the common stock of any company. But yes, Berkshire's largely shied away from common stocks since the early 90s with American Express in 94-95, IBM and Wells fargo (after selling of in 97-99) being the exceptions. Yes theres a definite focus on acquisitions and thats not necessarily a bad thing, there are great advantages to holding businesses outright and thats what berkshire will continue to aim to do.
yeah I dont think he's added in about a year, but when he did last it was a fairly large move to bring holdings above 60 million shares, the price at the time was about $75 so it will be interesting to see if he thinks the story has changed for WMT. I'm not a shareholder currently but have been in the past.
well he would never consider it on an EBITDA basis, but I do think he'll have continued to add WMT here but I dont think he'll make a huge bet.
Well the increased income may be somewhat negligible, income is only increased by the amount that earnings are retained. Its indeed possible that not much earnings will be retained if at all, especially with the dividend staying at 2.20 and the near term restructuring.
As far as following that course thats the proper accounting if they are deemed to have a "significant influence" over the company. Now they have 3 of 11 board seats, including buffetts. Is that enough? I think it might be but we'll find out soon
Yeah it would indeed. If they are using the equity method, sometimes its up in the air for companies controlling 20-50%, depending on if they influence "significant control", but I think Buffett being on KHC's board makes it somewhat likely that they will use the equity method.
If the Equity method is used it will increase reported income, but would not show greater book value. In fact, would show substantially lower book value as the investment would be recorded at cost and only increased by undistributed earnings.
all about BNSF, pretty weak quarter with carloads down 3.19%. Combined with lower revenue intermodal was down 0.14%. Revenues per carload probably up in the 5% range so there will be a slight increase in revenue. Oil prices stayed low so while you maybe wont have a result quite as strong comparably as the first quarter, earnings should remain pretty strong
He backed Hillary well before she talked about 40% capital gains on short-term investments. Attaching him to that is brutally unfair. Regardless, none of the things mentioned prevent anyone from following in Buffett's path, but yes the biggest hurdle would be higher capital gains taxes. However, those things wont be easy to implement even if Hillary is president.
That may have been the sauce that built berkshire but berkshire hasnt acted that way for many years. Current float is $83.5 billion. Current cash is $58.2 billion in insurance subsidiaries and a little over $27 billion in fixed maturity securities with fairly low duration so combined a bit over $85 billion. This doesnt include any of berkshires many billions of preferred stock
his track record is very good but hes made some poor investments too. IBM is below the buy-in price of 4 years ago, even if its a decent value now it would seem to me that it was a pretty poor investment in 2011, especially given the market then. You can properly evaluate a company, do a great analysis and circumstances can still change enough to make it a poor investment. He said that the 2015 roadmap was a big part of the decision to buy the company and that earnings over the next 5 years are of enormous importance to berkshire. Well 2015 earnings will come in a full 20% below the roadmap, thats significant. I think IBM may very well be a good investment, but not in the third quarter of 2011.
they may be bagholders if they bought at 200+ but maybe not if they're buying now. IBM still trades at 10x this years earnings and theres not much reason to think earnings will decline further.