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  • WY: Lumber Isn’t Going Anywhere  [View instapost]
    It is not going anywhere now but it does when it does. For fools buying gold and putting it in a vault, WY maybe a good alternative. At present price per share it might take 100 shares to buy 1 acre of their fee simple land and to get a typical urban lot of 5000 ft it costs you only $345 equivalent and it pays a dividend because it is managed land and not just an alligator as realtors tend to call bare land that produces nothing and just eats. If I were Larry Elison I might wait till the price falls and try buying it all for a few billion dollars. Right now its spendy at around17 billion dollars if you bought it all with no added buyers premium. It may or may not be over fair value but when it comes to fair value I would say gold is way out of line now when the intrinsic cost of mining new gold is less than $400. WY land fee simple and leased has significant product value including fracking gas that is not something that is factored in the price.....
    Mar 21, 2013. 01:32 AM | Likes Like |Link to Comment
  • Weyerhaeuser Sitting Pretty in Pacific Northwest  [View article]
    Depending on how you calculate the number of "owned acres" it now takes between 80 and 100 shares to buy an acre of land. If you are buying land to hold something of intrinsic value like a gold bar or a silver bar, WY shares are a better alternative and they pay a variable dividend. Land with harvestable timber can be worth far more than $3000 an acre. WY land includes some of that, land for re-growing cut forests and probably fracking gas, oil and more that has not been discovered yet. WY is also in the business of selling property for "homesteading". You can look up the cost of forested buildable lots online. The company has other assets including the right kind of trees they developed. It is kind of nice to get a dividend for owning what is basically raw land. I wish I could find a map showing exactly where the properties are all located. I found one once or twice but may not be up to date now.
    Mar 21, 2013. 01:21 AM | Likes Like |Link to Comment
  • Damn Right! From Chris DeMuth Jr's Library  [View article]
    The next Warren Buffet , Charlie Munger, John D. Rockafeller , Andrew Carnegie are completely invisible to most people when it is the best time to start following what they are up to -to take advantage of the same opportunities. Berkshire Hathaway is a very mature conglomerate/ investment bank with soon might seem worth more broken into pieces than the whole no matter how well managed it is. Learning from the past also tells you that the great financial empires have to morph over time. Although Warren Buffet built things differently with contemporary tax advantages other banking houses don't have it may still all prove to be a dinosaur at some point or just so ripe it could be liquidated for twice as much per share instead of plodding along with zero immediate dividend returns and moderate appreciation. I think the low tax advantages could just go away if the US decided to drop the present tax statutes for a much simpler plan. Berkshire would grow with that but everyone might have the same low tax advantages all of a sudden if the government did it right. Soon a new unknown generation of managers will take over. I like the idea of the farmer son taking control and leaving the family name on the enterprise and I like the attitude of farmers who plant seeds and let them grow and then wait paitently to harvest them. I see an inevitable harvesting of the values at Berkshire Hathaway by all new people . Fortunately the value is going to be there in whole or parts. It is possible that some future trillion dollar cap company of the future will come and start hoarding the shares before their market value falls when they cyclical nature kicks in. Apple Inc could have preserved a lot of it's frothy stock value by buying brk.b shares in exchange for over valued apple shares when they were 700 dollars a share. The would not have had to take control of a controling interest to get that value but just came in incrementally. Warren buffet giving means sales in the future of shares that all could change with his family not having a controlling interest and the bill and malinda gates trusts having controlling interests. It has to morph .
    Mar 3, 2013. 03:16 PM | Likes Like |Link to Comment
  • Buffett Defends Investments, No-Dividend Policy, Chastises CEOs  [View article]
    I think Buffet might look at ABT after it's spin off for an at least modest size elephant with apparent cash flow that is pretty substantial as a reason to go private with no dividend policy.
    Mar 3, 2013. 04:11 AM | Likes Like |Link to Comment
  • Read This Before You Invest In Chesapeake Energy  [View article]
    something seems wrong there. Not sure i would believe their stats now . It maybe their extraction costs don't cover the new low market prices and they are covering over or glossing over or ignoring the inevitable.
    Feb 28, 2013. 01:26 AM | Likes Like |Link to Comment
  • Natural Gas: Transport Or Export?  [View article]
    This public policy attitude is completely stupid. You let the markets decide. The fact that someone, anyone is willing to invest significant private capital to an expensive long distance pipeline building program is a tiny little clue that the free market is trying to work out the problem without any need for government interference. Supposing the investors in this pipeline are completely wrong well then they lose their money and we call the whole thing a great folly. It may turn out to be just that a giant folly but right now with the money trying to get out of a lot of pockets and running to get this pipeline built it looks to be amazingly better bet than what the government did with subsidies and tax breaks for wind energy or solyndra and similar failing solar power companies. The whole idea that the government has any purpose at all being involved tells you that there maybe something disingenuous in their complaints and concerns. It is not their money. Yes I do have a problem with the use of eminent domain to get access for the pipeline . I believe that should be negotiated between all concerned. If we go back to the Alaska Pipeline we find that it made low cost gasoline and diesel to the west coast for a lot of years.
    Feb 24, 2013. 03:23 AM | 2 Likes Like |Link to Comment
  • 5 Thoughts On The Berkshire/3G - Heinz Deal  [View article]
    It looks more like a finacial banking deal for Berkshire Hathaway considering it's mix of perfered and common shares with what are variable coupons essentially. I would not be sure which party, Berkshire or the Brazilian counterpart would end up the long term sole owner of Heinz. It looks like Berkshire is taking less risk and both firms are betting on converting debt to higher leverage once interest rates gear up and inflation does too. Heinz is big enough to split into a number of different companies. It is a great vechicle for financing debt because it actually is a growing company still.
    Feb 17, 2013. 12:37 AM | 1 Like Like |Link to Comment
  • Buffett's Heinz Deal: Buffett Gets Best Of Both Worlds With Common, Preferred  [View article]
    There are some savings to start with dividends no longer needing to be paid out to shareholders and money is saved in complying with sec rules where millions of trees get turned into paper reports every quarter. Buffet does look like he got a free ride with the high pay out perferred shares. It eliminates risk. The debt is also extremely important. Heinz is a solid property that can raise prices in an inflationary environment. Debt is very much worthwhile with inevitable inflation because it is all positive leverage. Heinz also has a chart that shows it can grow sales faster than the rate of inflation to expand. It looks like a good deal especially for Berkshire Hathaway. At worst it could be Warren Buffet paid for it in 20 years corrected for inflation but with some of the debt paid down and of less potency with probably higher interest rates and a depreciated dollar and other currencies Heinz deals in. I had no idea what a great company it is. Heinz was actually able to make Ketchup their number one product in France! ketchup you know what French waiters thought of Ketchup when they made the joke that you wanted it with your french fries in that five star restaurant. Thanks to the popularity of McDonalds and Burger King Ketchup is king in france and Heinz is a desired brand.
    Feb 15, 2013. 03:29 AM | Likes Like |Link to Comment
  • What To Do With Intel's Stock  [View article]
    Intel has the problem of being a capital intensive enterprise. When you see how many new multi-billion dollar plants they are building beware it is an expense considerably more than the company was worth being invested going back not too many years. Few companies on earth can afford to this. In Oregon that built one plant that will cost 4-8 billion dollars and then embarked on doubling the size. Those kinds of expenses and not just in oregon but world wide would weigh down any company even as large as Intel is and it does not make the company a great long term investment in the way something like an auto parts distributor is because they have no big necessary capital expenditures and they can buy their competitors to expand and they have no great future capital expenditures. So why hold intel? In the history of the world there has never been growth like Intel , Microsoft, Cisco, (AOL before it sold to time warner) You can compare the south seas bubble to these charts and the percentage gains now are closer to geometric ptrogressions in the main up phases than even the market build up before the 1930s crash. This compuoter driven economic reality we have is really unprecedented. When the ancient Romans conquored their competitors and took spoils there was no geometric progression and even the growth of Philip Moris before it became Altria and other spin offs does not look like intel's original upside charted geometric progression. Then they had tiny capital investment to begin with maybe with the share price under a dollar per share. Now if we end up with self driving automobiles and self controlled robotic machines of all sorts there are going to be more than just two computers in each car. Every car will become a cell phone tower to relate to each other car on the road with or with out a human driver and computers will monotor the road conditions ahead of all traffic and computer chips are going to be more compon place than today. Intel has way too much competition but that does not mean that we won't need their output. Computers don't last more than 5 years on average so an other buying cyucle will come. I don't know how long cell phones last before needing to be replaced. Demand is worldwide and it is going to grow. We are now in an era where it is like the last days when just a few people in rural areas did not have land line telephones. My assessment is that Intel's capital investment could pay off and it could even result in a new geometric progression of growth just more unlikely than the first one and the concern is that in 20 years a single chip with have super computer capacity and a longer life span than chips to day and that the cost will fall to pennies for the very best from the high margin prices intel gets today. Do you have a super computer in your smart phone now? No so chances are after they come out most people on earth will pay an excessively high profit margin to get one of the new phones with the chips in it. The last time my computer broke down it was just about five yeasr old like the one that died before it. So don't count on HP going out of buisiness either.
    Jan 17, 2013. 05:58 PM | 1 Like Like |Link to Comment
  • Time For Rail Consolidation  [View article]
    It would be quite a super monopoly to combine Burlington Northern Santa Fe and Union Pacific....the anti trust people would only let it happen if Obama got ten percent of the shares. A East to West coast to coast rail road? Might make sense but probably does not because the panama canal just became a big Chinese shipping highway. So maybe watch for one of the big shipping companies or container port companies to buy Union Pacific....Unlikely with the renewed invorated value of these rails. One that could be interesting though is a Canadian US non duplication agreement....or shared tracks for one way rail highways. We have Burlington Norther and Union Pac on either side of the Columbia river in Oregon and Washington. If they had an agreement to use both sides of the tracks the system could go one way with loops on the bridges making transportation faster though the columbia gorge bottle neck and maybe further east and west too.
    Jan 16, 2013. 04:03 PM | Likes Like |Link to Comment
  • The Real Secret Of Warren Buffett's Performance  [View article]
    Yes if the efficent market hypothesis is correct the way to beat Warren Buffet by being Warren Buffet would be to create a Warren Buffet Index? You can often purchase shares Buffet owns at lower prices tha Buffet pays realizing that what he does pick is his investment screen and to suplement that you can buy Berkshire Shares when they are at low end of the price range and put them in the index as a key component. What you won't likely get is the upper level statistical outliers in your portfolio which are smaller cap stocks than Buffet is generally interested in in new unproven industries. You won't have apple in your portfolio from five to ten years ago and you won't have google in your portfolio or a company that does all new genetic drug testing/ genome screening which might or might not prove to be a crucial part of the medical health care system as time goes on. You could have added IBM long before Buffet added it. If you were to have a personal or private index fund or Buffet ETF my guess is that it would be best to have something like 30 percent berkshire shares purchased at the lower range of trading, 50 percent buffet shares either with a buffet premium paid because he picked them first or after they correct in price once the correction comes and then add smaller cap stocks that buffet won't buy that come close to having the buffet screening characteristics that he won't be competing with you to buy. You can find those stocks by those smaller companies with increasing revenues but investor disapointment because higher revenues don't translate to higher earnings per share. Occasionally you find the market selling Amgen type stocks when they are younger and having difficulty keeping up with demand because they have insufficent factory space and systems to churn out the demand the market wants. Or you can find stocks like philips petroleum just spun out of a company break up where no one seems to know how to price it at a 30 percent discount. That maybe where ABT is now having spun out of Abott Labs? If not that there are companies just waiting for larger companies to buy them up. It was hard to guess that BUD was a buy out target. Not so hard to imagine the Kraft spin outs being buy out bait. There are companies waiting for Philip Morris International to buy them out at higher prices and you can kind of guess that because Philip Morris might be dependent on buying from them. CRDN was an obvious sweet morcel for a buyout . MMM a great suiter and parent company now but it could have also been Honeywell. MMM is better because it keeps CRDN as a basic materials provider in a a sense. MMM may not be at a price Buffet would buy it at at the moment. for the 20 percent look for companies that the giants would like to add to their industrial ownership portfolios and look for companies that might look to have owners interested in selling out eventually.
    Jan 15, 2013. 11:00 PM | 1 Like Like |Link to Comment
  • 5 Stocks Billionaires Are Crazy About  [View article]
    The price levels/ price range already reflects this sentiment. Billionaires are a component of the market that can move it by a few percentage points on low volume days unless they have a controlling interest or some possition they have to report to the sec about.
    Jan 15, 2013. 01:00 AM | Likes Like |Link to Comment
  • The Secret Of Warren Buffett's Alpha  [View article]
    I found a book a long time ago talking about why insurance stocks could outpace the general market given tax advantages and their float of insurance policy money. Yes that is some of Buffet's source of leverage and of course leverage is essential in times of inflation. Pretty much everyone who joins the Forbes 400 and 500 in real estate gets there because of the coupling of leverage and inflation . Warren Buffet could have done what Sam Zell did on steroids with insurance float and a number of insurance companies do put their investment float into real estate. Insurance companies that make mistakes with their float can pay dearly for those mistakes. Buffet seeks companies with monopolistic power whether he owns them as whole entities or in shares of publicly traded stocks. Making less mistakes with capital and avoiding companies with high present and future re-capitalization needs he gets more than a leg up on his competition. If you visit most Dairy Queen restaurants, unlike McDonalds where everything is new, the equipment and interiors tend to date back 20 years or more with very few new capital investments. Buffet also reduces the universe of stocks that are viable for holding to a hand full of stocks. When he says he missed the walmart opportunity in the beginning he means he definately considered ownership early in the major growth phase but all things being limited he chose to invest what always is limited capital in to something that seemed better. His investments in walmart came much later and a at time where the dynamics of the company were much more mature and much more predictable but only at that point a whole new international force in progress. Walmart is now still in that international push phase which promises a much larger company in the span of say 20 years. Imagine a trillion plus market cap company with over 12000 stores worldwide....hard to imagine. Then again it is hard to imagine the number of McDonalds outlets worldwise, subways worldwide and yum brand stores world wide. It is not impossible and more than propable. Buffet pretty much waited until one of the original heirs of Sam Walton died in a plane crash depressing the share value. Not sure that had everything to do with the new interest but there was a new potential large block of ownership that might materialize on markets at that point. Those are interesting percentile charts showing where Warren Buffet fits in. It is not an entirely new possition though. The Rothschilds occupied that zone in their market hayday so did JP Morgan. The interesting thing about the markets today is that companies have recently been exposed to some of the lowest interest rate cost leverage in memory. That leverage with possible inflation is going to drive this market to unseen levels almost regardless of stock quality or value. The ultra low interest rates may not be low considering possible deflation but there is strong evidence that deflation will not be allowed and inflation will be welcome. This time inflation will be different because computers can adjust for it second by second thoughout the entire economy and companies flush with really low cost debt for leverage will find their financial power increasing once inflation retires any cost to be paid for borrowing. A huge transfer of wealth from this pheneomenon has already started. Home prices are likely to surge because of 2-3 percent mortage rates. Evidence in some markets is already showing up. Oh by the way warren buffet has one more form of leverage which is tax planning leverage. It traditionally worked for real estate investors because government tended to exempt real estate loan interest from taxes ....game you too can win.
    Jan 7, 2013. 05:55 AM | 25 Likes Like |Link to Comment
  • Berkshire Hathaway's Headline Looks Great But Operating Earnings Down  [View article]
    Imagine Berkshire Hathaway as a take over target . At present it might be worth as much as 260 billion dollars. Kind of expensive to make an offer for all the shares until you realize the parts of the company might be worth over 300 billion dollars sold off in individual pieces. I would even advise a company like Apple computer to make such an offer if its market cap grew to be a trillion plus dollar company. The logic is exactly the same as what happened when AOL enticed Time Warner to buy it out except that BRK.A /B would be worth more than the company buying it , I expect Apple computers will come out with the I-care to compete with the Android self driving car. Still all apples businesses are cyclical. Berkshire Hathaway is like buying the land and never selling it realizing it will produce rental income forever more. It would take more than a few giant banks to pull that off. It would actually be an excellent investment for a very large sovereign wealth fund compared to US Treasuries except that keeping good management there is worth more than a break up and sale of the bits and pieces. I rather suspect a break up of the company during my life time. There are few businesses that have survived either anti trust or old age as giant conglomerates.
    Nov 12, 2012. 03:28 AM | 2 Likes Like |Link to Comment
  • Intel: Is The Magic Waning?  [View article]
    You can't go by the charts with intel. They are doubling the size of a huge new 3 billion dollar facility in Oregon. They are not making this investment just to lose money but because they know they have some pretty amazing prospects on the way. Expect in the future to a lot of interactive robots in your future including your self driving cars, taxis, cooks, house keepers, gardners all with intel inside. All computers over 5 years old are already obsolete and guess what? they tend to break at about 5 years so wait and see a huge new buying cycle especially after the recession totally subsides. Intel is building facilities all over the world some of which lower their cost and improve efficiency. They are not moving in the direction of having factories like these mothballed as obsolete facilities. The thing most interesting is the expansion of the market with another 4 billion people or more in Asia and there you are talking about x number of chips per person round the world. Oh and with all the Obama drone activity you can expect a lot more drones and other robotic soldures being manufactured for national defence in a variety of countries. There is going to be a prolfieration of micro electronics like few people have ever imagined. You see the drones even taking over for other weapons now wait till there are more drones than servicemen in the army, navy and airforce. Not they won't all fly but they will come packaged on racks the way they did in star wars ready to deploy instead of men and women on the front lines.
    Oct 29, 2012. 10:48 PM | 3 Likes Like |Link to Comment