Bud Labitan

Value, special situations, hedge fund manager, author
Bud Labitan
Value, special situations, hedge fund manager, author
Contributor since: 2008
Company: Bud Labitan
BRK may get to $1 Trillion dollars before Apple. Here is a look at BRK.A with an assumed growth rate of 15 percent; performed on the simplified 2-stage DCF model. Does BRK.A make for an intelligent investment or intelligent speculation today? Starting with a base estimate of annual Free Cash Flow at a value of approximately $33,000,000,000 and the number of shares outstanding at 824,811 shares; I used an assumed FCF annual growth of 15 percent for the first 10 years and assume zero growth from years 11 to 15.
The resulting estimated intrinsic value per share (discounted back to the present) is approximately $1,003,720.01.
Market Price = $219,000
Intrinsic Value = $1,003,720.01 (estimated)
Debt/Equity ratio = .347
Price To Value (P/V) ratio = .22 and the estimated bargain = 78. percent.
BRK may get to $1 Trillion dollars before Apple. Here is a look at BRK.A with an assumed growth rate of 15 percent; performed on the simplified 2-stage DCF model. Does BRK.A make for an intelligent investment or intelligent speculation today?
1. Understand the economics of this business.
2. Are there Sustainable Competitive Adantages?
3. Are there Able and Trustworthy Managers?
4. Is there a Margin of Safety from a bargain price
Starting with a base estimate of annual Free Cash Flow at a value of approximately $33,000,000,000 and the number of shares outstanding at 824,811 shares; I used an assumed FCF annual growth of 15 percent for the first 10 years and assume zero growth from years 11 to 15.
The resulting estimated intrinsic value per share (discounted back to the present) is approximately $1,003,720.01.
Market Price = $219,000
Intrinsic Value = $1,003,720.01 (estimated)
Debt/Equity ratio = .347
Price To Value (P/V) ratio = .22 and the estimated bargain = 78. percent.
Berkshire Hathaway Inc is more valuable than Apple Inc. I know that sounds like a controversial statement. However, allow me to walk you thru my logic. I read this morning that "In An Open Letter To CEO Tim Cook, Investor Carl Icahn Detailed His $240 Per Share Value Estimate For Apple." While Mr. Icahn may be correct about the "per share number", as a whole business entity, Berkshire Hathaway Inc is more valuable than Apple Inc. Why? If we moved Samsung's headquarters to the USA, put me in charge of consumer products, we could more easily compete with Apple's products and take away market share. Apple is partnering with IBM, and I could get a US based Samsung to partner with Microsoft. We can't say the same for Berkshire Hathaway. Trying to replicate Berkshire Hathaway's BNSF, Insurance Operations, Marmon Group, Berkshire Energy Group, and stock holdings, would be nearly impossible. While I do not advocate breaking up BRK, try valuing each component of BRK with the proper private market value plus terminal value or its "long tail." I think your estimate will reveal that Berkshire Hathaway is now the most valuable business in the world.
The second edition is out on Lulu.com
http://bit.ly/1l01syL
Thanks for your comments and the correction of the typo. Yes, it should read valuepro.net
Time is the friend of the wonderful business and the enemy of the mediocre. Berkshire Hathaway is a collection of wonderful businesses with moats (brands, sustainable competitive advantage).
Furthermore, when the next wave of inflation arrives, only those with "pricing power" can keep up with inflation. See the 1981 shareholder letter.
I would love to work for any of Berkshire Hathaway's businesses, and to prove it, here is my cv: http://bit.ly/VYfgwg
The 30 sec radio ad for MOATS is here: http://bit.ly/xOFB7z
I agree. Also, note that the new MOATS book is finally on Amazon.com !
Moats : The Competitive Advantages Of 70 Buffett And Munger Businesses http://amzn.to/yLQDI0
This may be the best business book that describes the competitive advantages of profitable businesses. MOATS describes the nature of 70 selected businesses purchased by Buffett and Munger for Berkshire Hathaway Inc. MOATS is a very useful resource for investors, managers, students of business. Since its subject matter has proven success, MOATS may become a useful practical text in businesses schools around the world. MOATS also looks at the sustainability of these competitive advantages in each of the 70 chapters.
The new MOATS book is finally on Amazon.com ! Moats : The Competitive Advantages Of 70 Buffett And Munger Businesses
http://amzn.to/yLQDI0
This may be the best business book that describes the competitive advantages of profitable businesses. MOATS describes the nature of 70 selected businesses purchased by Buffett and Munger for Berkshire Hathaway Inc. MOATS is a very useful resource for investors, managers, students of business. Since its subject matter has proven success, MOATS may become a useful practical text in businesses schools around the world. MOATS also looks at the sustainability of these competitive advantages in each of the 70 chapters.
The MOATS book is finally on Amazon.com !
Moats : The Competitive Advantages Of 70 Buffett And Munger Businesses http://amzn.to/yLQDI0
This may be the best business book that describes the competitive advantages of profitable businesses. MOATS describes the nature of 70 selected businesses purchased by Buffett and Munger for Berkshire Hathaway Inc. It is a useful resource for investors, managers, students of business.
Since its subject matter has proven success, MOATS may become a useful practical text in businesses schools around the world. It also looks at the sustainability of these competitive advantages in each of the 70 chapters.
Saj, The MOATS book is finally on Amazon.com !
Moats : The Competitive Advantages Of 70 Buffett And Munger Businesses http://amzn.to/yLQDI0
This may be the best business book that describes the competitive advantages of profitable businesses. MOATS describes the nature of 70 selected businesses purchased by Buffett and Munger for Berkshire Hathaway Inc. It is a useful resource for investors, managers, students of business.
Since its subject matter has proven success, MOATS may become a useful practical text in businesses schools around the world. It also looks at the sustainability of these competitive advantages in each of the 70 chapters.
Let us do a rough estimated intrinsic value estimation on DIRECTV, a provider of digital television entertainment.
The Company operates two direct-to-home (DTH), operating segments: DIRECTV U.S. and DIRECTV Latin America (DTVLA), which are engaged in acquiring, promoting, selling and/or distributing digital entertainment programming primarily via satellite to residential and commercial subscribers.
It also operates three regional sports networks (RSNs) and owns a 65% interest in Game Show Network, LLC (GSN), a television network for game-related programming and Internet interactive game playing. DIRECTV Holdings LLC and its subsidiaries (referred to as DIRECTV U.S.) is a provider of DTH digital television services.
DTVLA is a provider of DTH digital television services throughout Latin America. DIRECTV Sports Networks LLC and its subsidiaries (DSN) consist of three RSNs based in Seattle, Washington, Denver, Colorado and Pittsburgh, Pennsylvania, FSN Northwest, FSN Rocky Mountain and FSN Pittsburgh.
STOCK ACTIVITY
Last Price 44.66
Does DTV make for an intelligent investment or intelligent speculation today?
Starting with a base estimate of annual Free Cash Flow at a value of approximately $2,500,000,000 and the number of shares outstanding at 705,600,000 shares; we used an assumed FCF annual growth of 9 percent for the first 10 years and assume zero growth from years 11 to 15. Review the Free Cash Flow record here:
http://bit.ly/Avwc8E
The resulting estimated intrinsic value per share (discounted back to the present) is approximately $60.03.
Market Price = $44.66
Intrinsic Value = $60.03 (estimated)
Debt/Equity ratio = 0
Price To Value (P/V) ratio = .74 and the estimated bargain = 26. percent.
Before we make a purchase, we must decide ( filter #1 ) if DTV is a high quality business with good economics. Does DTV have ( filter #2 ) enduring competitive advantages, and does DTV have ( filter #3 ) honest and able management.
The current price/earnings ratio = 14.5 and It 's current return on capital = 12.
Using a debt to equity ratio of 0, DTV shows a 5-year average return on equity = 30.8
William, The Moats book about Buffett and Munger's businesses will be out on Amazon.com in mid to late February, 2012. It is currently available on Lulu.com here: http://bit.ly/AbFnMh
Here are the major points of interest:
1. MOATS discusses 70 historically profitable businesses worthy of study.
2. MOATS examines the competitive advantages and sustainability of each business.
3. Each MOATS chapter has both a Warren Buffett and a Charlie Munger quote or idea weaved into the discussion.
4. The MOATS chapter on Lubrizol includes an estimated valuation based on Free Cash Flows.
5. Each MOATS chapter was checked by two people.
6. Even if you buy the MOATS hardcover edition, 50/70 is $0.72 value per business or chapter.
7. If you liked "Good To Great" by Jim Collins, you will enjoy 70 GREAT Berkshire Hathaway Businesses.
The Moats book about Buffett and Munger's businesses will be out on Amazon.com in mid to late February, 2012. It is currently available on Lulu.com here: http://bit.ly/AbFnMh
Here are the major points of interest:
1. MOATS discusses 70 historically profitable businesses worthy of study.
2. MOATS examines the competitive advantages and sustainability of each business.
3. Each MOATS chapter has both a Warren Buffett and a Charlie Munger quote or idea weaved into the discussion.
4. The MOATS chapter on Lubrizol includes an estimated valuation based on Free Cash Flows.
5. Each MOATS chapter was checked by two people.
6. Even if you buy the MOATS hardcover edition, 50/70 is $0.72 value per business or chapter.
7. If you liked "Good To Great" by Jim Collins, you will enjoy 70 GREAT Berkshire Hathaway Businesses.
The MOATS book (about the Competitive Advantages of 70 Buffett and Munger Businesses) will be on Amazon.com in mid to late February, 2012. It is currently available on Lulu.com here:
http://bit.ly/AbFnMh
Major points of interest:
1. MOATS discusses 70 historically profitable businesses worthy of study.
2. MOATS examines the competitive advantages and sustainability of each business.
3. Each MOATS chapter has both a Warren Buffett and a Charlie Munger quote or idea weaved into the discussion.
4. The MOATS chapter on Lubrizol includes an estimated valuation based on Free Cash Flows.
5. Each MOATS chapter was checked by two people.
6. Even if you buy the MOATS hardcover edition, 50/70 is $0.72 value per business or chapter.
7. If you liked "Good To Great" by Jim Collins, you will enjoy 70 GREAT Berkshire Hathaway Businesses.
Here is an audio file of the WFC chapter from the MOATS book:
http://bit.ly/AvCKLr
MOATS : The Competitive Advantages of Buffett and Munger Businesses explains the competitive nature of 70 selected businesses purchased by Warren Buffett and Charlie Munger for Berkshire Hathaway Incorporated. This is a useful resource for investors, managers, students of business around the world. It also looks at the sustainability of these competitive advantages in each of the 70 chapters.
Here is an audio file of the IBM chapter from the MOATS book:
http://bit.ly/AEv6dw
MOATS : The Competitive Advantages of Buffett and Munger Businesses explains the competitive nature of 70 selected businesses purchased by Warren Buffett and Charlie Munger for Berkshire Hathaway Incorporated. This is a useful resource for investors, managers, students of business around the world. It also looks at the sustainability of these competitive advantages in each of the 70 chapters.
Thanks. I agree... The HPQ BOD and the past CEO seem to have hurt the company in the last few years. HPQ slashed its R&D to take EPS up and also bought stock back .
0.0625

6 minute summary on YouTube.
www.youtube.com/watch?...

I read that Berkshire would use its Class B stock to pay Wesco shareholders who elect to take Berkshire stock. In my view, since Berkshire is offering "undervalued" BRK-B shares to pay for Wesco's stock at "a price around book value per share" this might be a more valuable deal than it looks on the surface.
Yes, "a deal more valuable than it first appears."
Thinking of "intrinsic value," It is my opinion that BRK shares ( my estimate of Intrinsic value for A shares is around 180K/brk-a ) are more undervalued than WSC shares; therefore, in reality WSC shareholders would be receiving around $353 + $116 in value ( think 33% discount or premium ) for a total of around $468 in value per share. In my view, those who take the deal will be rewarded and those who cash out will receive book value.
I do not know if you guys have seen my books. My newest one, "Valuations" offers 30 sample "intrinsic value per share" business valuations in the style that Warren Buffett and Charlie Munger may use. In each case I tried to simulate an approach that they would take to valuing a business. My books are posted on amazon.com and at the self-publishing service Lulu here:
stores.lulu.com/4filters
.
See the book review by Bert Murillo
This review is from: Valuations - 30 Intrinsic Value Estimations in the style of Warren Buffett and Charlie Munger (Paperback)
"Valuations" by Bud Labitan is a concise, direct approach to determine whether a certain company's stock price would be considered a bargain at its current market price. The case studies in this book examine the intrinsic values per share of the most important businesses that govern our economic lives today. These companies are all commonly known by the average investor. It is intriguing to decide if a specific company for which the investor consumes their products and services are worth your investment dollars. The author emphasizes Free Cash Flow in his estimates to calculate "intrinsic value". By using the examples and formula the author provides, the reader can easily calculate "intrinsic" value for any other company he or she chooses to research and then determine if that company's stock is a bargain or not. Overall I would consider "Valuations" a must read for all students studying behavorial finance simply for its case studies alone. For the average investor, this book can help you justify your purchase for a certain stock. I learned a lot from this book!

Valuations is now on amazon.com !
Feel free to share this with your associates.
www.amazon.com/Valuati...
.
NOK has some good qualities as many of you have stated. I am still waiting to learn more about its competitive advantages and its management.
My new book Valuations is now on amazon.com !
It explores 30 companies in a bit more detail. So, feel free to share this information with your friends and associates.
www.amazon.com/Valuati...
Valuations - 30 Intrinsic Value Estimations in the style of Warren Buffett and Charlie Munger

By Bud Labitan
This book offers 30 sample “intrinsic value per share” business valuations in the style that Warren Buffett and Charlie Munger may use. In each case the author tried to simulate an approach that they would take to valuing a business, based on what they have written and talked about. However, all of the growth assumptions used are the author's own. No consultation nor endorsement was sought with Mr. Buffett or his business partner Mr. Munger. The examples given are chosen for educational and illustrative purposes only. The valuation cases are estimations written in a style that emphasizes a focus on free cash flow and the number of shares outstanding. Readers are also repeatedly encouraged to think about the business’ competitive position. In reality, these businesses may outperform or they may underperform any of the author's projections.
www.lulu.com/product/p...
Starting with a base estimate of annual Free Cash Flow at a value of approximately $2,500,000,000 and the number of shares outstanding at 385,730,000 shares; we used an assumed FCF annual growth of 6% for the first 10 years and assume zero growth from years 11 to 15. The resulting estimated intrinsic value per share (discounted back to the present) is approximately $94.86.
GD's competitive standing? Most of the sales are from the US govt.
Thanks for all the comments and perspectives. This event has certainly been an education for us all.
Caterpillar will purchase EMD from Berkshire Partners, a Boston-based firm unrelated to Buffett’s Berkshire Hathaway. Berkshire Partners and Greenbriar Capital, purchased EMD in 2005 when its long-time owner General Motors put the company up for sale. The firm had sales of $1.8 billion last year and has an installed base of 33,000 diesel-electric locomotives in the U.S. Go US Rail !
read a bit closer
Market Price = $60.76 while the
Intrinsic Value = $81.85 (estimated)
yes, parts of the articles are generated by software...
however, they are designed to make us think and dig deeper...
sort of like the way Buffett answers/asks questions.
You are partially correct. However, there are useful estimations and admonitions in each article. They make the reader think about what they are about to buy or sell.
Buffett sold 23% of his shares, but continues to hold 77% of his previous holdings in Kraft.
Berkshire owned 106.73 million Kraft shares worth $3.23 billion as of March 31, down 31.54 million shares from 138.27 million three months earlier.
The intrinsic value estimations are based on specific FCF numbers for each company. The growth assumptions are my own; and, I try to keep them a bit on the conservative side. Readers are also repeatedly encouraged to think about the business’ competitive position. In reality, these businesses may outperform or they may underperform any of the author's projections.