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  • Clouds Over Omaha - Time To Sell Berkshire Hathaway [View article]
    Sounds like bad advise and poor analysis. What concerns me is that crowd in the photo filling the sports arena in Omaha. Too many people depending on a sure thing. Go back 30-40 years when Buffet/ Berkshire Hathaway was a mostly unknown investment prospect or extremely "contrarian" When Buffet purchased coke shares in the first place it was not the most popular thing on the market.
    May 6, 2014. 06:55 AM | 1 Like Like |Link to Comment
  • What Buffett Premium? [View article]
    I discovered something interesting about Warren Buffet few people consider. I was looking at an old investment book on the shelf here called something like "How to Invest in Stocks to Make Money " dated 1988 . I looked in the index to see the stocks and names of investors mentioned in the book and realized there was no mention of Berkshire Hathaway , No mention of Warren Buffet , No mention of Bill Gates either for that matter. Remember Wang Computers? It was a hot stock back then and is in the book. So I started thinking about seeing when Warren Buffet started appearing in investment guides as an example of this that or the other thing. It sure was not in this book from 1988. I looked quickly to see if KO was mentioned in the book and it appears to be non existing too in the index. I save old investment guild publications for this purpose actually. I did find a listing for Microsoft at an early date in its history after going public when it was between a dollar going to 15 dollars a share before many splits probably. That was back when it was a growth stock with a PE listed at 32 I think I recall. That was found in an old issue of world investing magazine. So now I am curious just how much or little financial reporting was done on Berkshire Hathaway or Warren Buffet in it's / his earlier years. Buffet really exploded on the investment bookshelves after his success was certain and not before some point.
    Aug 9, 2013. 01:12 AM | 3 Likes Like |Link to Comment
  • Berkshire Hathaway Intrinsic Value Pie Chart [View article]
    looking at those charts you can see that Warren Buffet wished he had bought a controlling interest in Coke when he could have. Had he purchased 10 percent of Wal-mart back when he first considered it it might have been a large part of the pie. Rail and oil are not bad industries to be in except when they are. They are good ballast for a diversified portfolio. Hybrid gas/ electric trucks are coming but the rails still are cheaper just slower.
    May 13, 2013. 05:05 PM | Likes Like |Link to Comment
  • What Berkshire's 'Elephant Gun' Means To Investors [View article]
    Heinz might not be too over priced . I practically flipped when I found out that the French have adopted Heinz Ketchup. McDonald's presence there helped. You may have noticed that pickles you buy in jars at the supermarket are actually prepared and bottled in India. I have not seen Heinz products made in India and sold in the USA yet but I can tell you that if Vlasic does it , not sure who owns that brand, Heinz can do it too. That means the brand is even more valuable with lower production costs and low affordable shipping surcharges. I bought India pickles at krogers or safeway. Heinz has watched food processing grow into big business in Thailand and no doubt Heinz will be a big Chinese brand if not already. Heinz does have Chinese brands already but nothing like they might in the future. They purchased Yoshida's special sauce company in Portland so they already understand soy sauce. There are several Chinese soy sauce brands that have as high quality as Kikoman. You can see how Heinz can go shopping for brand in China and everywhere else and be a monolithic company still 500 years from now.
    May 7, 2013. 07:08 AM | Likes Like |Link to Comment
  • Warren Buffett Violates His 'Ham Sandwich' Principle With Goldman Deal [View article]
    You can't predict how long Berkshire will own the Goldman common shares. Goldman is in a business that is rather in dispensable to the economy contrary to ideas that investment banking is a sleazy profession. Goldman Sachs is a window on all sorts of opportunities. Some day some independent firm like Goldman will break up the Berkshire Hathaway conglomerate into bits and pieces. Seems to happen all the time. If Warren Buffet is looking for other conglomerates being sliced and diced having friends at a place like Goldman can get you leads on what private companies maybe coming up for sale . It might be Europe having the next fire sale and getting a whim of something like that in a timely manner can get research done before other potential bidders can figure out what the various business elements involved might be worth. Goldman has some expertise in being able to evaluate such things and Buffet does too. Being in Business with Goldman Sachs and partnering with them could be pretty lucrative if you stay away from the next sub prime mortgage derivatives mess?
    Mar 26, 2013. 11:44 PM | 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
  • 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
  • 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 you too can win.
    Jan 7, 2013. 05:55 AM | 25 Likes Like |Link to Comment
  • Notes On The 2011 Berkshire Hathaway Annual Report, Part 3 (On Acquisitions) [View article]
    There are TV commercials on the financial news channels that use the word "Aquire" and the the word "Gold". Think of how that compares with aquiring Lubrizol, IBM, or Burlington Northern Santa Fe. The aquiring gold commercial really bothers me because they should be saying purchasing or buying not aquiring. When Carlos Slim purcahse millions of onces of silver maybe that was an aquisition?
    May 6, 2012. 05:46 AM | Likes Like |Link to Comment
  • Berkshire Hathaway Is Not Mispriced [View article]
    It may not be mispriced for today but it could be for tomorrow. Cash Flow is something that evolves over time. Estimates out in the future can give you a range of prices with a range of returns on the purchase of shares. Mispriced buying is in relationship to alternative investments available at the same time.
    May 6, 2012. 05:41 AM | Likes Like |Link to Comment
  • Berkshire Hathaway Is Not Mispriced [View article]
    It may not be mispriced as you say for today but it maybe for tomorrow.
    May 6, 2012. 05:36 AM | Likes Like |Link to Comment
  • Warren Buffett: Out Of Proportion To Reality? [View article]
    The reason why Buffet brings up gold in his analysis is because gold is competing with stocks for capital. He does not bring up the illequitity of gold in terms of the spread between ask and buy even on the spot market. There certainly is a cult of buffet and now a cult of Donald Trump and Oprah too if that makes any sense at all. Maybe we need a Warren Buffet Financial Channel on cable with Buffet 24/7 broadcasting from Omaha., the navel of the earth studios, Ever owned gold when the price crashes? It does not look so good then and gold mines stop mining at some point because they lose money doing it. There is a lot of gold out there more than anyone needs especially as the price is strastospheric. There are lots of substitutes like copper as a conductor. gold may be better and non corrosive but the trade off for copper is way worthwhile. Now if you wanted to pave the path to your home with gold bricks there are also great alternatives like concrete blocks or flag stone and those alternative cost so much less there is no demand for gold bricks not even in hollywood where when they need gold bricks they spray paint strofoam. There was a time when Platinum cost less than gold like 1/10 less than gold and then came the california requirment for catalytic converters in cars. One of those ruined my car at the time, That changed the whole market dynamic for platinum until soon when the corning ceramic catalytic converter comes out and then industrial uses for platinum may not be the greatest. The dream of gold bugs is for gold to be re-monitized because there can't be enough just for the US Federal Government to do business alone let alone the rest of the world. If governments had to buy gold to do that the price could skyrocket not to 5000 dollars an once but 40,000 dollars an once before governments just started confiscating the stuff FDR style. Gold could become so expensive that just looking at it would be worth $1. People could go to gold parlors and pay to look at the serentity gold chamber in Los Angeles , a solid gold think tank , that costs $400 an hour to mediate in side. Thankfully it is shaped like an egyptian pyramid so there is also free pyramid power included in the price. Right now a lot of gold nuts would pay as much as people pay to go up in space with the Russians to the space station just to get a look inside fort Knox. That would be a great way for the US government to make money honestly with $50,000 tours of Fort Knox. Buffet is telling people or at least hinting unlike george soros, that gold is in a super bubble at the moment. An indian temple was recently discovered to have billions of dollars worth of gold oranments burried in vaults there. If India put that gold on the market or monitized it would would affect mining companies and world gold prices. There is some trip line price where most of the nible holders of gold are prepared to sell in advance which means the bubble will pop instantly. You are not going to see anything like that with PG or IBM or Coke or Burlington Northern. Book value at Berkshire Hathaway is an indicator that only applies to berkshire hathway and is not quoted by valueline or s&p in the same way. It is not a subjective measurement but probably is an estimation like a lot of other things in life. There is always the chance that buffet could be an even bigger version of Bernie Madoff but not likely. The US congress certainly is savvy financially in a Bernie Madoff way and people still vote for them. The problem with gold is that it has to revert to the mean like everything else does and it does not reproduce or have growth like better companies do. It sits there and looks pretty. Maybe it even looks devine to a lot of people. What gold really does as it reverts to the mean over time is maintain a realtively constant value . This could really change if there were some new industrial use. It is possible in the future that a lot of gold might be needed for solar collectors that will make a moon base or mars base functional and then all that gold would be exported from the planet and people would be screaming that the aliens were getting away with our gold. Aliens may actually come to earth and steal all the gold and then whats left in the ground will be worht billions per once.
    Feb 27, 2012. 08:43 PM | 1 Like Like |Link to Comment
  • Is Buffett Serious About Liberty And Justice For All? [View article]
    I thought those two securities were a bit mysterious too for the Berkshire Hathaway Portfolio. We assume thoseo possitions are attributed to Berkshire Hathaway and not one of the subsidiaries and there are new investment managers at Berkshire that have not been there before with new ideas. Maybe Carlos Slim is becoming a bit of a role model with telecommunications entering the picture? DTV appeared on value screens for some time. It does have a nitch and satalite assets. Maybe the liberty media spin off does too especially if it owns sirus. So it could even be just something Buffet learned he is forced to pay for owning Burlington Northern. He learned about Hydrolic fluid and lubrizol probably from owning large industrial companies that have to buy what ever that is seeing it on the cost accounting data time period after time period. It could be that the railroad could use a satalite chanel of it's own at transponders across the system, do you know how big burlington northern is? Its not as big as the Chinese rail system or even Union pacific but in real terms its bigger than all the main line east coast rails put together and bigger than the european system for freight. That is a lot of communications that is necessary and if ADT can monitor home alarms with cable well something quite similar goes on with DTV and liberty. by the way living on the union pacific tracks i saw cable fiber optics go in along the tracks some time ago.
    Feb 22, 2012. 03:39 PM | 1 Like Like |Link to Comment
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