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Scott Thompson

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  • Warren Buffett's 2-Column Valuation Method [View article]
    @cledrag: Warren Buffett explains his "Two-Column Valuation Method" investment process publicly on page 6 of his Berkshire Hathaway's (BRK.A, BRK.B) 2010 Annual Report. Buffett later republished his "Two-Column Method" on page 99 of his 2011 Annual Report, and on page 104 of his 2012 Annual Report.
    Aug 18 10:06 AM | Likes Like |Link to Comment
  • Warren Buffett's 2-Column Valuation Method [View article]
    Thanks for your comments.

    @ Listner: Thank you for your kind feedback.

    @ Brian Grosso: Great points. The strength of Buffett's "Two-Column Method" is that there are NO assumptions. Whereas, a DCF analysis consists of many assumptions. Buffett's "Two-Column Valuation Method" is a rather tangible way to value a business, since is uses only existing data, and zero assumptions.

    I agree with you about incorporating debt into the valuation. Why do you think Buffett leaves it out of his "Two-Column Method?" It's obviously working well for him! :)

    Your question about debt is a good one. I'd add that "capital expenditures" on the cash flow statement should also be considered, as Buffett usually does not prefer high capital-intensive businesses (nor high-debt businesses). Thank you for your informed post!

    Scott Thompson
    Jun 14 04:46 PM | 1 Like Like |Link to Comment
  • Warren Buffett's 2-Column Valuation Method [View article]
    Thanks everyone for your valuable comments!

    @Buyandhold 2012: Agreed. Warren has mastered these abilities over time. At 82yrs young, with all his experience, he's at the top of his game!

    @Hewitt Heiserman: Great point. Just to kindly clarify, it's Buffett's model (not mine) that Warren published on page 6 of his 2010 BRK annual report. Yes, you're right, there's no doubt Berkshire's insurance float has definitely fueled Berkshire's success, with a very low cost (practically free?) source of investment capital.

    @Mercury Value: Thank you. I appreciate your encouragement.

    @sengle: Buffett said that if Berkshire can no longer earn greater than its cost of capital, only then would he consider Berkshire paying a dividend. However, according to Warren, Berkshire is still a growth company!

    Thanks everyone for your comments. Back to work.
    Jun 13 02:45 PM | 4 Likes Like |Link to Comment
  • Excel Maritime Carriers: Trading Below Liquidation Value [View article]
    I've been stating EXM has been trading below liquidation value for several months. Since I'm more conservative in my analysis, my analysis shows EXM's tangible liquidation value to be: $262m divided by 84m shares outstanding = $3.16/shr liquidation value. Therefore, EXM's market price today of only $1.88/shr appears to be 40% less than its liquidation value! Scott Thompson
    Sep 10 08:54 AM | Likes Like |Link to Comment