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AlbyVA

AlbyVA
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  • Warren Buffett's Railroad Vs. The Other Monopoly Board Pieces [View article]
    Railroads are pretty simple to understand. They are the most efficient means of long distance transportation to move goods from A to B. As the US economy grows, so will the need for moving more and more goods around. This concept is no different than needing more internet bandwidth to transport an ever growing amount of data as the internet expands. In any case, the net result is that more stuff needs to flow over rail and given the looming labor shortage in the Trucking industry, even more stuff will start finding it's way onto railroads.

    The only places I wouldn't invest in railroads would be Russia, Italy, Japan, China, and Europe. All places with declining populations and thus declining GDP over the coming decades. Japan's population will fall from 120 million to 80 million by 2050. If China sticks to it's 1 child policy, it's population will fall from 1.3/billion to 200 million by the end of the century. Whereas the United States will grow from 315 million today to around 450 million by 2050. And since 150 million more Americans will need "stuff", all that stuff will likely be transported on railroads.
    Sep 5, 2015. 07:44 AM | Likes Like |Link to Comment
  • Warren Buffett's Railroad Vs. The Other Monopoly Board Pieces [View article]
    I suppose the question is if all the infrastructure spending gives it a competitive advantage over the competition or expands it's market share or revenue in some measurable way.
    Sep 5, 2015. 07:36 AM | Likes Like |Link to Comment
  • Berkshire Hathaway Nears Buyback Levels [View article]
    The facts are that Berkshire grows book value at the rate of 10% a year historically. If BRK.B's book is around $98 today, it'll be $108 in 2016, $118 in 2017, and $130 in 2018.

    So 3 years from now if the stock doesn't move an inch, you'll be looking at 1x book. The historical average is around 1.5x book, so assuming the market returns to it's normal track, BRK.B in 2018 will be $195/sh. If you don't like a 50% increase in 3 years, you've got to be crazy.

    Personally with the PCP and PSX deals recently, I would expect BRK to be worth even more within 3yrs. I seriously doubt BRK.B will see sub $120/sh price unless there is a serious market crash, which I doubt will happen because the fundamental underlying economy is functioning and growing just fine. Mr. Market has been drunk the last few weeks, but he'll sober up pretty soon and those who didn't buy now will be singing the blues.
    Sep 3, 2015. 06:58 AM | 5 Likes Like |Link to Comment
  • Berkshire Hathaway Nears Buyback Levels [View article]
    The correct spelling would be: moot not mute

    Mute is a button you push to silence your TV.
    Moot is subject to debate, dispute, or uncertainty.
    Sep 3, 2015. 06:48 AM | 3 Likes Like |Link to Comment
  • Berkshire Hathaway Nears Buyback Levels [View article]
    It's not like his $37.2 billion when into the toilet. He will own PCP which generates $1.5/billion in cash flow a year. That alone is a 4% yoy ROI.
    Sep 2, 2015. 11:59 PM | 1 Like Like |Link to Comment
  • Berkshire Hathaway Nears Buyback Levels [View article]
    Who cares about the names? All I know is the Alphabet soup of companies puts $20/billion a year into the coffers of the company.
    Sep 2, 2015. 07:41 PM | 3 Likes Like |Link to Comment
  • Berkshire returns to energy sector with $4.5B stake in Phillips 66 [View news story]
    "bricks and mortar is being replaced by the cloud, mobile"


    So where is the cloud and mobile when it comes to transporting goods and people on airplanes that use engines with parts made by Precision Cast Parts that BRK owns?

    Where is the cloud and mobile when it comes to moving freight on BNSF from West Coast Ports to East Coast merchants that BRK owns?

    Where is the cloud and mobile when it comes to filling up your car with gasoline (or plane with jet fuel or train/truck with diesel) that was refined by Phillips 66 that BRK owns 10% of?

    Where is the cloud and mobile when it comes to over a trillion being deposited into Wells Fargo that BRK owns a piece of?

    Where is the cloud and mobile when it comes to insuring your vehicle with GEICO in which more money comes in than goes out in a legal ponsi scheme? lol

    Where is the cloud and mobile when summer BBQs all across the nation of 315/million people are pouring Kraft/Heinz products on their burgers and dogs? hheehehe


    You can chase that low barrier to entry/cutthroat competition cloud and mobile and end up suffering in the long run. BRK is steady money you can depend on and sleep on without worrying about the latest hype on CNBC. ;-)
    Sep 2, 2015. 06:48 PM | Likes Like |Link to Comment
  • Warren Buffett Bets Big On Phillips 66 - Will This Be Another 'Big Mistake'? [View article]
    Warren Buffett is making a smart play with PSX, because PSX isn't really leveraged to swings in the price of commodities.

    Upstream: Owns the Wellhead (Highly Susceptible to the Price of Oil)
    Midstream: Shipping/Storage (Collects Fees off the Producers up/down stream)
    Downstream: Refining/Distribution (Highly Susceptible to Cutthroat Competition)

    Both upstream and downstream are sensitive to prices on the CME or NYMEX. Since you cannot control the price, you go through booms and busts over and over again. I'm sure the upstream producers in Williston, ND are singing the blues right now.

    In any case, Midstream companies don't care about the price of oil or refined products like gasoline. Regardless of price, those upstream/downstream still need to move and/or store their products and they receive a bill from midstream middlemen. Midstream is really only susceptible to declines in consumption, which doesn't appear to be occurring any time soon. In short, Buffett bought himself a boring tollroad in the energy business. One that is growing to dominate the midstream sector. Not just in Oil but also in NatGas, thanks to the NatGas revolution in the US which has only existed for about 10 years. It might also scale to the point that integrated oil companies might find it cheaper to use PSX's services and unload their midstream assets to PSX or shut them down completely. Thus only adding to PSX's marketshare.

    In any case, I'm pretty certain that $4.5/billion spent today on PSX will more than pay for itself over the coming decade and Berkshire will receive $127/million a year from simply holding PSX.
    Sep 1, 2015. 08:00 AM | Likes Like |Link to Comment
  • Warren Buffett Bets Big On Phillips 66 - Will This Be Another 'Big Mistake'? [View article]
    The problem with CVX and XOM is they are slaves to the price of oil, whereas PSX isn't.
    Sep 1, 2015. 07:44 AM | Likes Like |Link to Comment
  • Berkshire returns to energy sector with $4.5B stake in Phillips 66 [View news story]
    The oil business isn't going anywhere. New drilling suffers the most from cheap oil, but consumption doesn't decline, it only increases as oil gets cheaper. That means more refining is needed and guess which field PSX is in?

    The best place to be to weather the storm of boom/bust oil is in refining. That's why JD Rockefeller was in the refining business and left the wildcatting to the suckers.
    Aug 31, 2015. 08:28 AM | 4 Likes Like |Link to Comment
  • Wall Street Breakfast: To Hike Or Not To Hike? [View article]


    Rates WILL be hiked a quarter point to 0.25 - 0.50.
    The Fed has to get off zero and a quarter point won't wreck the economy.
    Plus the hoopla in the market is secondary to the data about the economy.

    Expect a rate hike.
    Aug 31, 2015. 08:24 AM | 5 Likes Like |Link to Comment
  • Berkshire returns to energy sector with $4.5B stake in Phillips 66 [View news story]
    ...because Tesla is OVERVALUED like a !@#$$%%%

    Tesla's Price to Book is 44x and it's P/E is 100x

    Only a sucker would own Tesla.
    Aug 30, 2015. 11:43 PM | 2 Likes Like |Link to Comment
  • Buffett Goes Big With Latest Acquisition: Further Upside Ahead, Following Dip In Price [View article]
    Correction: Banks "DO NOT" borrow from the Fed (except during an emergency when the Fed becomes the lender of last resort).

    Banks borrow from "each other" at the going rate the Fed has forced by it's open market operations.

    That said, what typically happens is ABC Bank borrows money from Bank of America and then turns around and buy's US Treasuries or lends it out to consumers/businesses for homes, cars, corporate financing, etc.

    The Bank to Bank lending is: 0.00 - 0.25% (Enforced through Open Market Operations)

    Discount Window lending is: 0.75% (The Fed's lender of last resort window)

    Guess which path banks choose? ;-)
    Aug 29, 2015. 08:35 AM | Likes Like |Link to Comment
  • Buffett Goes Big With Latest Acquisition: Further Upside Ahead, Following Dip In Price [View article]
    Berkshire Hathaway isn't the type of company that sells a stock because it gained a few nickels. BAC's book value is $12-$14/share and the stock is at $16/sh. I assure you, if BAC falls below book, Berkshire will be acquiring more shares, not selling it.
    Aug 27, 2015. 10:50 PM | Likes Like |Link to Comment
  • Buffett Goes Big With Latest Acquisition: Further Upside Ahead, Following Dip In Price [View article]
    Don pretty much outed himself on his profile. He says, "Long/short equity, special situations, momentum, event-driven".

    In other words, a Day Trader looking for the quick buck based on baseless fluff in the market price with zero focus on the fundamentals.
    Aug 27, 2015. 10:34 PM | 3 Likes Like |Link to Comment
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