Antti

Anheuser Busch: The First Round Is On Bud Shareholders

To User 225407:

You are right, higher leverage is OK in beer industry if the company has as strong brands as BUD has. It will make consistent and high enough margin to cover the financial costs anyway. I was actually considering BUD worth 41 dollars per share regardless of debt.

My generalizations were partly of-topic as we are discussing BUD. I'm sorry for my bad attitude, too. I was stressed after analyzing stocks for 19 days in a row. You have great arguments.

BTW, my analysis gives up to 7 % return of investment for the 70 dollars bid. It is not that bad for InBev especially if dollar gets stronger in the long run.

Anheuser Busch: The First Round Is On Bud Shareholders

To User 225407:

I think your corrections about Buffet and Ichan were to the point, but I disagree with you on two things:

1) I looked at the Modigiliani-Miller theorem and it was terrible thing to read. Two theorist professors "with no experience in finance" and probably with no real life experience either make a theorem with pen and paper. Leverage is the major reason for the economical turmoil we are experiencing today. In real life there are bad times in economy and highly leveraged companies get into trouble. Companies with no debt and lots of cash have a better ability to buy those troubled companies. I have seen this happen many times. Buffet favors companies with little or no debt and I understand why. Buffet has real life experience contrary to these professors.

2) I think the first commenter had a point in favoring family-owned companies. Family owned companies are being lead with focus on long term benefit of the company and therefore also the long term benefit of employees and of the society in general. On the contrary, institutional owners don't care about anything else but a relatively short term gain in the price of the common stock. That is why they give stock options to the management. Motivated by the options the management does what ever it takes to please the stock market. Unfortunately this means all the fashionable things like repurchasing own stock by huge amounts, rising leverage to dangerous levels, capitalizing every possible cost to balance sheet and writing beautiful income statements. The sad thing is that those acts have serious real life consequences. That kind of irresponsibility makes me feel sick.