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The $37B Roubini Forgot at Wells Fargo

Another point that Mr. Roubini seems to have forgotten is the banks underlying earnings. The pretax preprovision earnings of banks will offset most of the credit losses. Wells will likely earn $60B in the next 2 years!!!

Wells Fargo: A Growth Stock During the Great Depression?

Buffett mistakes have been small. WFC is a huge "bet" - I am sure he himself would rather refer to it as as a sure thing. Wells is now his 2nd largest holding:

www.dataroma.com/m/hol...

The chances are that with more additions and rising stock price, wfc may in fact surpass KO and become his largest holding. He actually spent more money buying WFC shares in 2007 than JNJ, and that's inspite of the fact that he already held a large chunk of wfc. This is buffetts proverbial fat-pitch, and of course other investors are completely oblivious to it. But that is what makes him great. He sees things before everyone else does. He saw the credit crunch comming, he saw the disaster waiting to happen with derivatives and the very likely real estate bust. And yet, he kept adding to his wfc position. He knew that wfc's earnings were not peak earnings - that if anything, the credit boom had intensified competition, thereby making life harder for conservative and well managed banks like wfc. Ironically, the credit crunch has now given wfc an opportunity to increase market share and benefit from rising margins while other banks are selling assets to shore up capital.

Buffett is a genius.

Wells Fargo: A Growth Stock During the Great Depression?

I have a feeling Buffett would have a very different view than some of the negative posts above, as he has been loading up on WFC shares both in 2007 and 2008. This is a very strong bank which will not only survive but gain considerable market share. They collect low cost deposits and lend them at what are now much higher rates. Their return on equity is going to shoot up. Along with a few other strong survivors, they are going to have the whole market to themselves! This indeed is a growth stock even in tough economic conditions.

Remember, Buffett is never wrong on his big bets.

American Express: False Sense of Security?

What an ‘excellent’ evaluation of AXP! With comments like ‘…they are lending more money during a time when they are seeing a higher level of delinquencies…’ or ‘…BEFORE you answer that, whatever you do, don’t tell me that the worst has been priced already…’. (LOL)

Obviously the author is able to (or expects to be able to) catch the bottom, or time the market. Has it ever occurred to him that when it becomes obvious to the street that the financial crisis and the economic downturn are behind us, AXP’s stock would have already shot up 50%. If the economy was firing on all cylinders, you would very likely have to pay at least 25 times earnings for AXP. The only time you can pick up one of the highest quality businesses in the world at 13 times depressed earnings, IS during a severe downturn.

What determines the true value of a business is the stream of its future earnings discounted at an appropriate rate of return, not the day to day or month to month stock price action. And if you can take advantage of a downturn to purchase a quality business at a huge discount to its intrinsic value then you’ll be handsomely rewarded, regardless of whether ‘the worst is priced in’ or not.

I can’t believe this guy has written a book on investing!!!

By the way, the famous value investors at Tweedy Browne, used the recent downturn to add to their AXP holding: www.dataroma.com/m/hol...

Is GE a Buy?

firstly, 1/3 of GE's earnings come from financial operations not the 40% the article states. That does not make GE - again as the article suggest - 'essentially a financial company'! In fact GE is essentially an infrastructure company. Furthermore, the businesses complement each other, allowing the cheap AAA rated debt to be used where ever there is more potential for growth.

When GE had a p/e of 30 everyone wanted to own it. Now at p/e 14, no one wants to know. I call that opportunity. What is amazing is that, GE's earnings yield is actually much higher than what their AAA rated debt will cost them after tax. So, as Immelt mentioned in the CC, they will keep buying back stock.

It's the most widely owned stock among value managers:
www.dataroma.com/m/hom...

As a side note Immelt is a personal friend of Buffett.

Is General Electric Overvalued?

What utter nonsense. Sorry to sound harsh but, shouldn’t evaluating a security involve at least some form of calculation (discounted cashflow maybe)? Or, should we just base our investment decisions on “…more cardholders might default…” or “… we may have a recession…”? And, the part about how the widening spreads will hurt them!!! If anything, the widening spreads will actually earn them more money since they will be one of only a few firms who can still borrow money relatively cheaply and lend it out at a even higher rate than before. Even if their AAA credit rating is revoked (which at this point does not seem likely), they will still have a high credit rating RELATIVE to others, so their profitability will remain intact. Tighter credit environments in fact benefit the strong well-managed firms who can gain market share at the expense of the capital starved lesser players.

General Electric: It's All About the Numbers

Great company. Stock is very cheap. I have been adding to my position. The lower share price will enable management to buyback more stocks with the same cash. Buffett recently commended Immelt for being one of the best ceo's.

GE's guru ownership for anyone interested: www.dataroma.com/m/sto...

Four Reasons Wal-Mart Is at a 2-Year High

Even though it is at a 2 year high (or possibly atop its trading range), it's great value at p/e of 14. During the last recession they were actually posting 4-5% same-store-sales, while other retailers were suffering. So it might actually experience a well deserved p/e expansion at last.

Many guru investors like it too: www.dataroma.com/m/sto...

Three Financials Worth Buying: US Bancorp (Part I)

Sorry, can't get the link right. Try it without the ';'

Three Financials Worth Buying: US Bancorp (Part I)

Sorry about the wrong link. Here it is again:

www.dataroma.com/m/his...

Three Financials Worth Buying: US Bancorp (Part I)

Interestingly axp, usb and wfc are 3 financials Buffett owns huge chunk of.

He's been gradually building a position in USB:

www.dataroma.com/m/his...

Three Financials Worth Buying: US Bancorp (Part I)

Interestingly axp, usb and wfc are 3 financials Buffett owns huge chunks of.

He's been gradually building a position in USB:

www.dataroma.com/m/his...

A Rare Opportunity To Buy AmEx On The Cheap

Agreed, never thought I'd see AXP at p/e of 13. I unfortunately bought to early a few weeks ago. They have huge exposure to the fast growing economies of the world. I will add to my position here. So many great value inestors own it:

www.dataroma.com/m/sto...

No doubt they will use this opportunity to add to their positions.

Seeking Stocks With Cheap, Safe Dividend Streams

Given the choice between dividends or stock buybacks, I'd choose the latter anytime. Among the banks, I actually prefer WFC. It pays out less dividend than BAC or USB, but thats because its payout ratio is lower. It spends a lot more on stock buybacks and its extremely well managed. And regarding Warren Buffett, well, he clearly has a far bigger preference for WFC according to his portfolio holdings and this years investment purchases: www.dataroma.com/m/sto...