Why Won't Exxon Consider Valuation When Buying Back Shares? [View article]
Exxon uses their buybacks as kind of a flexible more tax-friendly kind of dividend. While it would be nice for them to buyback more when the price is low, that also tends to be when the cash flow isnt quite as strong. As a shareholder, you can make up for this by buying some extra shares when you deem that the valuation is low and selling some shares when you find the valuation too high
Wal-Mart: Looking Like Dead Money At Best In 2013 [View article]
I disagree. With walmart trading at 14.17xPE, its still fairly inexpensive. 5% revenue growth is all wmt investors need, that combined with dividends and stock buybacks should easily provide returns in excess of 10%. WMT is gettings it capex under control which will allow it to return more to shareholders. I have no clue what it will do in 2013, but I think its still a good long-term bet
Walgreen's Poor Acquisition A Concern For Shareholders [View article]
First of all, alliance has 7 billion not 11 billion in debt. Alliances net income in dollars is slightly over a billion, so a 45% stake would be worth annual earnings of 450 million so they are paying about 14 times earnings and are likely to realize some synergies. The 23-27 c increase in eps will be on the diluted number of shares so they are essentially paying 4 billion for that eps increase. Now the midrange of that would be 17x earnings but that is likely constrained by costs associated with the acquisition. I believe the 14 x earnings is closer to the true costs and if walgreens management is right that the savings by 2016 will be a billion dollars then this may end up being a pretty good acquisition
there is certainly an overfixation on dividends. Returning capital to shareholders is nice but there is often a better use for that money. However, to buy such a company, an investor has to be confident that management is deploying its capital wisely and not destroying shareholder value through poor acquisions or investments. Investing takes work and its far more complicated than whether dividends are good or bad.
Talking about valuation without mentioning p/e seems odd. Its sitting at just below 15 right now, which seems pretty reasonable considering the consistency of the company and its history of returning capital to shareholders through dividends and buybacks.
Has Buffett Got This Wrong? - Why IBM Does Not Appear To Be A Good Fit In The Berkshire Hathaway Portfolio [View article]
I think ROE is a poor way to measure IBM. ROA is better and they have a very strong ROA of ~11.5%. IBM has used a moderate amount of debt to boost their returns which is very appropriate for a company of this stability. Even so their income could pay off their entire debt in less than 2 years so this is far from overleverage
Sell Wal-Mart Prior To February 21st Earnings [View article]
I bought walmart right after the bribery article and sold half of my stake at 75. Im not selling the rest yet though. I think q1 comps will be slightly negative to flat, mostly due to payroll expiration. Things will return to normal soon. Walmart trades at below 14x ttm earnings and would be a steal if it dips below 13x. Im not buying more at this price but will be keeping an eye on it
I agree walmarts a stable performer and has earned a chunk of my portfolio. I dont know about 2013 but walmart is likely to deliver above average returns going forward and if they slow down dividend growth for more share buybacks, thats fine with me
Time is money: The driving force behind an initiative by Wal-Mart (WMT +0.5%) to test using iPhones as a self-checkout device is financial. Every extra second of transaction time at the Wal-Mart stores, adds about $12M in cashier wages. If smartphones could eventually clip 5 seconds from the average transaction checkout, the company just found about $60M behind the sofa cushions. [View news story]
I like it, and if it may cut down on processing fees as well then that would be a very profitable sofa indeed.
I like hp and i think it would probably be a good investment at this level. However, im waiting to see some insider buying near this level before i jump in.
Berkshire Hathaway: Worth Its SALT - 2012 Update [View article]
Another thing to consider is what is the real liability of the equity index puts that expire between 2019 and 2025 are. I think in the letter, buffett said that berkshire's book value carries them as a liability of $8.5 billion but if they were to come due at that time they would in fact cost $6.2 billion and I think its likely that number will come down prior to expiration.
I agree with the majority of your analysis. I think the growth of berkshire's assets are more telling than the growth of their book value. As far as their equity portfolio, I think look-through earnings are what should be watched and when I last calculated it, berkshire's look through earnings came to about $3.6 billion.
There is also talk of lowering the corporate tax rate, if so I believe that would be very beneficial to berkshire.
Why Citigroup Could Be The Financial Multi-Bagger Of The Decade [View article]
I agree with you, but i think the target is book value. I dont see the banks as trading far above book value. I see citi as being to increase its bvps at maybe 8% plus a small dividend. However buying at half of tangible book should give very nice annual returns
Revisiting The Intrinsic Value Of Berkshire Hathaway [View article]
Well i dont think it will do as well. One of buffetts greatest strengths is his ability to allocate capital effectively and grow berkshires operating businesses internally. I think this will be diminished somewhat when hes gone. However, the fundamentals of the businesses and the investment portfolio are sound and most of thhem are protected by moats albeit some of them weak ones.
I think he should probably be there another five years, 10 if im lucky.
My investment timeframe is not absolute and im fairly certain and at some point in the future especially if we approach fair value that there will be better alternatives. However at this point i consider berkshire to be a very attractive and safe investment
Why Won't Exxon Consider Valuation When Buying Back Shares? [View article]
Wal-Mart: Looking Like Dead Money At Best In 2013 [View article]
Walgreen's Poor Acquisition A Concern For Shareholders [View article]
Do Dividends Matter? [View article]
Why Wal-Mart Is A Sell [View article]
Has Buffett Got This Wrong? - Why IBM Does Not Appear To Be A Good Fit In The Berkshire Hathaway Portfolio [View article]
Sell Wal-Mart Prior To February 21st Earnings [View article]
Wal-Mart Is Worth A Look On A Dip [View article]
Wal-Mart Earnings Preview: Retail Juggernaut Is Model Of Earnings Consistency [View article]
Time is money: The driving force behind an initiative by Wal-Mart (WMT +0.5%) to test using iPhones as a self-checkout device is financial. Every extra second of transaction time at the Wal-Mart stores, adds about $12M in cashier wages. If smartphones could eventually clip 5 seconds from the average transaction checkout, the company just found about $60M behind the sofa cushions. [View news story]
HP's Dip Is A Buying Opportunity [View article]
Berkshire Hathaway: Worth Its SALT - 2012 Update [View article]
I agree with the majority of your analysis. I think the growth of berkshire's assets are more telling than the growth of their book value. As far as their equity portfolio, I think look-through earnings are what should be watched and when I last calculated it, berkshire's look through earnings came to about $3.6 billion.
There is also talk of lowering the corporate tax rate, if so I believe that would be very beneficial to berkshire.
Why Citigroup Could Be The Financial Multi-Bagger Of The Decade [View article]
Revisiting The Intrinsic Value Of Berkshire Hathaway [View article]
I think he should probably be there another five years, 10 if im lucky.
My investment timeframe is not absolute and im fairly certain and at some point in the future especially if we approach fair value that there will be better alternatives. However at this point i consider berkshire to be a very attractive and safe investment
What Will $2 Million Get You In Retirement? [View article]