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Mycroft  

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  • The Oil Sector Stock I Dream About Owning One Day [View article]
    Debt is the cancer of this current market and the debt tumor is only growing. Having said that if a company can generate the amount of free cash flow that CLB does it can easily meet its interest payments. REITS and Utilities on the other hand can not and those are the ones that need to issue new shares in order to cover their dividends. But if Debt becomes more than 200% of market cap like it did with WTW, then there is no way that any FROIC will help.

    Debt will eventually sink this market and will destroy solid companies like it did with Radio Shack and eventually Caesars Entertainment.

    Investors must understand that debt must eventually be paid back otherwise we will all end up like the Federal Government and its $19 trillion in debt.

    A basic rule is to always check the company's FROIC. If it is over 20%+ then there is little need to worry. Companies like CLB and OUTR for example can borrow so much as their free cash flow is just off the charts. Apple is doing the same thing and soon will be probably be offering debt with negative interest rates because they can get away with it, like Nestle recently did.

    Mycroft
    Feb 28, 2015. 09:15 AM | Likes Like |Link to Comment
  • Buffett Increases Berkshire Hathaway's Investment In Deere By 125%: Let's Analyze It [View article]
    Thank You JLH64,

    Sorry but I don't watch CNBC, but please feel free to ask it on my behalf.

    Mycroft
    Feb 26, 2015. 10:19 PM | 1 Like Like |Link to Comment
  • Buffett Increases Berkshire Hathaway's Investment In Deere By 125%: Let's Analyze It [View article]
    Thanks Mark,

    I did not go as deep as you have when I wrote the article but you bring up an interesting point. Securitization is a double edge sword and just the word itself sends off red flags in my book as securitization of subprime loans is what got us into the financial crisis of 2008-2009.

    I basically try to keep things simple in my work as I analyze 7000 companies every quarter and when I find one that is awesome in their TTM numbers, I then go back to 1990 and do a 25 year analysis. This allows me to view the company through various managements and see if the company has a strong corporate culture. I never go as deep as you obviously did with your analysis of the recent 10-Q, but your discovery is quite impressive and thank you for sharing it.

    Mycroft
    Feb 26, 2015. 05:53 PM | 1 Like Like |Link to Comment
  • Buffett Increases Berkshire Hathaway's Investment In Deere By 125%: Let's Analyze It [View article]
    Hi Gregg,

    The reason I put in the management revenue forecast in the article was to show a possible reason why Mr. Buffett bought the stock. But as I answered wdchill, so far we are looking at mostly maintenance capex. If that changes then that is the answer as to why Mr. Buffett bought it as he sees very strong revenue growth going forward.

    Mycroft
    Feb 26, 2015. 05:35 PM | 2 Likes Like |Link to Comment
  • Buffett Increases Berkshire Hathaway's Investment In Deere By 125%: Let's Analyze It [View article]
    Hi wdchill,

    By looking at several years of data, a capex number that is stable yet does not lead to increased revenues is a sign that it is mostly maintenance capex.

    Deere Revenue 2012 = 36,157
    Deere Revenue 2013 = 37,795
    Deere Revenue 2014 = 36,067

    Mycroft
    Feb 26, 2015. 05:29 PM | 4 Likes Like |Link to Comment
  • Seeking Alpha Expands Its Coverage To Mutual Funds [View article]
    Congratulations Eli,

    I am looking forward to writing articles on Mutual Funds.

    Mycroft
    Feb 26, 2015. 03:45 PM | 1 Like Like |Link to Comment
  • Warren Buffett Sells Berkshire Hathaway's Entire Stake In Exxon Mobil: Let's Analyze What Happened [View article]
    Hello essielajmiri,

    I never invest in bank stocks as you can't really generate a free cash flow for them.

    When analyzing banks I would use this.

    http://bit.ly/1wrDLXj

    I introduced this on the Motley Fool boards in 1999 and in my opinion is the best way to analyze banks.

    Good Luck,

    Mycroft
    Feb 26, 2015. 09:23 AM | Likes Like |Link to Comment
  • Warren Buffett Sells Berkshire Hathaway's Entire Stake In Exxon Mobil: Let's Analyze What Happened [View article]
    Hi Shane,

    I took whatever companies were selling for 15 or less P/FCF.

    Sorry it was not clear. Very simple on January 1st you buy all stocks in the Dow that have a p/fcf of 15 or less and hold them until December 31st and then sell them. Then start the process again.

    Mycroft
    Feb 24, 2015. 09:12 PM | Likes Like |Link to Comment
  • Warren Buffett's Berkshire Hathaway Portfolio: A Free Cash Flow Scorecard Analysis [View article]
    Thanks adriboti,

    I don't know why he bought DE;

    Deere Q1 net EPS $1.12 vs. $1.81 a year ago
    Deere Q1 revenue $6.38 bln vs. $7.65 bln
    Deere Q1 equipment sales $5.61 bln vs. $6.95 bln
    Deere sees 2015 equipment sales down 17% vs. previous forecast down 15%
    For the quarter ended Jan. 31, Deere said equipment sales fell 19%, with sales dropping 14% in the U.S. and Canada and 28% abroad. The agriculture and turf segment's sales declined 27% to $4.08 billion

    CAPFLOW = 70%
    FROIC = 2.5%
    FREE CASH FLOW YIELD = 3.6%

    Still scratching my head on that one.

    Enjoy the ratios,

    Mycroft
    Feb 24, 2015. 01:49 PM | Likes Like |Link to Comment
  • Warren Buffett Sells Berkshire Hathaway's Entire Stake In Exxon Mobil: Let's Analyze What Happened [View article]
    No ratio or system is perfect and it is the responsibility of the analyst to dive a little deeper into the numbers like you did. FROIC and CapFlow are just the first steps to identify where to look. Everyone should then do what you did and ask questions. Warren Buffett and Walter Schloss ,when they worked for Ben Graham, used to bring him tons of ideas, but he only picked a handful and rejected the rest. I recently went through 7500 companies and only found six or seven that passed my test. In 2009 I found a boatload.

    Mycroft
    Feb 23, 2015. 04:47 PM | 2 Likes Like |Link to Comment
  • Warren Buffett Sells Berkshire Hathaway's Entire Stake In Exxon Mobil: Let's Analyze What Happened [View article]
    Hi Chris,

    You maybe right in your analysis and in the end Mr. Buffett made a profit on his investment in XOM and just probably decided to book it and may come back in later and buy it again.

    I hope you enjoy my CapFlow and FROIC ratios as they have really worked well for me over the years.

    Mycroft
    Feb 23, 2015. 09:37 AM | Likes Like |Link to Comment
  • Warren Buffett Sells Berkshire Hathaway's Entire Stake In Exxon Mobil: Let's Analyze What Happened [View article]
    Hi Kathy,

    You maybe correct on that.

    For those interested.

    Suncor has a:

    CapFlow of 78%
    FROIC of 3.8%
    Free Cash Flow Yield of 4.1%

    For those intested COP has a:

    CAPFLOW = 102%
    FROIC = -0.5%
    Free Cash Flow Yield = -.4
    Feb 23, 2015. 09:25 AM | 1 Like Like |Link to Comment
  • Warren Buffett Sells Berkshire Hathaway's Entire Stake In Exxon Mobil: Let's Analyze What Happened [View article]
    Hi Buyandhold 2012,

    Last quarter Berkshire Hathaway had $62.8 billion in cash and this recent quarter he sold $650 million more than he bought. I would estimate with the quarterly infusion of cash from Berkshire Hathaway's other businesses, we can do a back of the envelope estimate of $65 billion in cash right now. That's about $20 billion more than he had at the market top in 2007.

    Mycroft
    Feb 23, 2015. 09:06 AM | 2 Likes Like |Link to Comment
  • Warren Buffett Sells Berkshire Hathaway's Entire Stake In Exxon Mobil: Let's Analyze What Happened [View article]
    Hi John,

    The Central Bankers of the world have caused this problem. It could go to $30 as this statement says it all.

    "Its not clear that they fully appreciate the business risks that arise from competitors who will over-produce and keep prices low as long as an undisciplined capital market continues to provide them with money."

    Mycroft
    Feb 23, 2015. 08:31 AM | 2 Likes Like |Link to Comment
  • Warren Buffett Sells Berkshire Hathaway's Entire Stake In Exxon Mobil: Let's Analyze What Happened [View article]
    You are right Tom,

    He has struggled with Oil and Retail over the years. It is interesting that in 1984 Warren Buffett bought 3,895,710 shares of Exxon and then sold it the following year. I guess he has been trying to buy and hold it for years but it just has not worked out for him.

    Mycroft
    Feb 23, 2015. 08:27 AM | 1 Like Like |Link to Comment
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