Wide Moat Investing

Lockheed Martin Focuses on Shareholder Value, Boosts Dividend

Isn't their pension and retirement benefits shortfall about 4x FCF?

Lockheed Looks Like a Smart Buy After Dividend and Buyback Increase

Pension liabilities and current shortfall?

Uggs for Christmas?

Hi Jeff--thanks for your work.

You say: "With 84% of 2008 sales coming from UGG, the obvious concern is that either a) the retail environment will be so harsh for the next few years that UGG will stagnate, or b) UGG is a fad that’s run it’s course."

Either of those seems like a big risk for 10% earnings yield. Let's say it's 20% likely retail stagnates for the next few years, with DECK's earnings falling 10-15% over that time; what's a fair multiple if investment grade 10-year bonds are at 7%, 10xlowered earnings, or 10-15% less than today?

Let's say it's 20% likely UGG is a fad, and sales fall by half and earnings commensurately. Put a 8x on 50% of today's earnings, and that's a long way down (say 60% from here).

Given those risks, there has to be a very strong likelihood of earnings doubling in the next few years (say 50%), and the earnings multiple keeping up, in order for the risk/reward to look favorable.

Exiting Facet Biotech on Biogen's Offer

Well done; looks like you may even get a higher offer.

What FDIC Auctions and Loss Sharing Deals Don’t Tell Us

"Based on BB&T’s incentives, I think we can conclude that just as the 30% discount bidders received in the recent FDIC auction discussed above does not necessarily reflect fair value, neither does the 37% discount that BB&T took on Colonial’s book."

I'm not as sanguine as you. I agree--BBT has an incentive to be conservative. Yet, if they bid too low (by being too conservative), then another bidder would have won the assets. If there were other bidders for Colonial, then BBT's markdowns are probably very close to a rational, 'fair' price. To conclude as you do assumes that BBT was a lone bidder and could throw up a lowball bid.

Great investigative work; I'd be interested in any more work you have on the troubled banks.

12 Ready-to-Rally Stocks - Barron's

How convenient that every target price is about 20% higher than the present. Sounds like 2007 again.

TTM Technologies: Close to Target, Taking Profits

Looks like solid outperformance--well done.

You bought at a P/E of 4.7, and it doubles. What do you estimate its returns will be going forward, if you find the s&p a better deal? S&P looks to me to return about 6-9% per year from here, assuming low interest rates.

Treasury’s Bank TARP Warrants: Why Jamie Dimon is Right.

Very solid analysis--seems to imply the JPM will be restoring the dividends before any buybacks. Of course, restoring a 7% yield would likely push the stock price much higher.

I'll be eager to see if Dimon hums the same tune a year from now. My money is that they'll be repurchased in 24 months. He's just talking them down in price.

GEICO vs. Progressive: Selected 10 Year Metrics

Thanks Ravi--an interesting comparison.

Both GEICO and Progressive more than doubled their premiums in a decade. That suggests to me that some companies are losing a lot of business--who are they? State Farm, Allstate? Small and medium sized underwriters?

MarineMax: Boating Liquidation Sale of a Lifetime?

I like the contrarian bent here. But it just seems that there are too many boats in the market already. Some have resulted from loan defaults; some from last year's production; some from general economic hardship.

Loans will be hard to get, so you'll have to put down a lot of cash. Are those who are working feeling confident enough to do so? Some sure, but enough to keep them afloat?

Macro concerns predominate for me, I guess--concerning jobs, credit, and confidence.

Ending the Dumpster Dive at Office Depot

Looks like you did better than I. I sold at 2. Hard to believe you could buy it below .60 just a few months ago. The efficient markets must have gotten a bunch of good news lately.

FortuNet Makes a Fortunate Decision on Dividends

Between the ex-date and the pay date, if you sold, you sold "with due bills," which means you sold it along with the right to the dividend. If you held since before the ex-date and through the pay date, the company paid you the cash; if you sold between the ex-date and pay date, the dividend was 'received' by you but automatically transferred to the buyer.

There are special rules for special dividends, but FNET followed standard procedure.


On May 08 06:40 PM User 410453 wrote:

> I owned this stock until 4/24, received my dividend on 5/3 and had
> it taken away 5/8. Does anyone have any information on what went
> on? Did we have to own the stock until 5/5 or 5/7? How would we
> know this? I see the ex-date listed as 4/24. Did everyone else
> receive their dividend?
> Thanks.

Caliber of Management Offers the Widest Economic Moat of All

Sorry for the confusion... Most simply, higher net worth individuals are constantly assessing their tax situations throughout the year, and the two weeks preceding April 15th are not more likely to have sales for tax reasons than other weeks. The last week of the year maybe, but not April.


On Apr 28 11:23 AM nukldrager wrote:

> Please clarify ... " higher net worth individuals, a group that regularly
> files for tax extensions, so as to not pay until at least October."
>
>
> Filing time can be extended until October, but estimated taxes are
> due April 15th, with underpayment penalties and interest beginning
> at that point.

Caliber of Management Offers the Widest Economic Moat of All

Buffett wants both--an excellent business with superb management. As stated, the trade-off looks to be a no-brainer, but his broader point seems to be that it is easier to better management than the basic economics of a business. I don't disagree.

However, even in a commodity business, excellent management can widen a moat if they are the best in the industry at cutting excess costs and passing some of those savings to customers.

On Apr 28 09:59 AM logicalthought wrote:

> >>For Warren Buffett, strong management...<<
>
> It's interesting that you quote Buffett in an article entitled "Caliber
> of Management Offers the Widest Economic Moat of All" when Buffett
> has said many, many times something to the effect of "I'd much rather
> own a great business with a mediocre management team than a lousy
> business with a great management team."

Rocky Mountain Chocolate Factory: Rocky Mountain Cash Factory?

Disgruntled employee, Jumpin?

Earnings per diluted share were down about 30% in Q3 YOY; revenues were down also. If their franchise system is decaying, I'd be eager to hear more.

The buybacks were successful, retiring about 15% of outstanding shares in three years. That was the best use for the cash, since they aren't expanding into new markets.

And Directors Fred Trainor and Lee Mortenson have been big sellers, though not the CEO Crail, at least since 2005. Crail still owns over 5% of the company. The rational thing for management to do is to sell when the stock is overpriced; few are selling now.