SamiC

Complex Motives Behind Buffett's Burlington Northern Buy

the premium is over the market price, not the value. He "stretched" because he didn't have enough money to do the deal without borrowing and issuing a bit of stock.

Berkshire + Burlington = Hypocrisy, Expediency and Full Dose of Ego?

Carlos, you make some questionable points: see below.

> Perhaps he has great insights into investing, but because Warren
> Buffett is a hypocrite of the greatest magnitude I simply would not
> trust him with my money.

Compared to who? Stanford? Madoff? a mutual fund or hedge fund manager with few assets of his/her own under management and no downside risk?


Behold:
>
> * Buffett criticized Pres. Bush's tax cuts and said that Americans
> should pay more taxes yet had BH bid for Fannie and Freddie's $3
> billion in tax credits. If we Americans should pay more taxes, Warren,
> doesn't that mean BH shareholders as well?

No, as a steward of other people's capital (and his own) Buffett should maximize BH's after tax return within the law, never mind if he believes the law is fair. Beneficiaries who agree with him can give money away if they have more than they need. He doesn't like paying taxes more than anyone else, but unlike most billionaires, he is not blind to the inequality in the world and the moronic overspending by the government since Reagan.


>
> * Buffett begged the US Senate in '03 to NOT eliminate the estate
> tax. What went unsaid was that BH has an insurance business that
> BENEFITS from the estate tax by selling a kind of insurance policy
> that makes sure that heirs have enough money available to pay the
> estate tax without having to liquidate assets.
>

how much of Berkshire's income is in this business? less than a percent maybe? He simply believes that the government should prevent dynastic wealth from being tax-free. not right or wrong, just an opinion.


> * Buffett famously called derivatives "financial weapons of mass
> destruction" yet BH sold $2.5 billion in credit-default swaps in
> '08.
>

Financial weapons of mass destruction for the idiots at AIG, Bear, Lehman, not for people like him who are good at calculating odds and spotting underpricing, and never take positions with unlimited downside risk. That's the part that leads to mass destruction, not taking calculated risks with limited downside risk.


> Such a duplicitous person may, of course, make money for those who
> he invests for. It's the agency risk--trusting a person who is two-faced--that
> would keep me up at night.


I disagree that he is Two-faced, if you actually read enough of his writing to understand what he means, he has pretty high integrity- and a good sense of humor.

I am most worried about the market's inability to price Berkshire properly, though that does make it easier to pick it up for a discount and sell for a premium as long as you don't need your money at a specific time. If I really can't handle market risk, I should have my money in CDs or a mattress.

Berkshire + Burlington = Hypocrisy, Expediency and Full Dose of Ego?

BNI makes six bucks per share in owner earnings at a minimum, right now in the middle of the worst recession in seventy years, (closer to eight the last two years.)
these earnings are growing at roughly 10-11% annually over time. It is a near monopoly with priceless and not replaceable land use right of ways. Rails are the cheapest way to move freight with any weight. BNI debt is about twice their operating earnings, and the returns on equity are the best of any of the rails.
If commodity prices increase due to inflation, they can raise prices accordingly.

why has Buffett been paying sixty five to seventy five dollars for BNI for years?
because it's worth $100 easy, (at about 13x normalized owner earnings) and that value will grow.

I'm pissed he stole it and I have to decide if I want to own more berkshire or pay the tax man.

This is a classic Buffett deal, simple, easy to understand business with high barriers to entry and run by the best managers in the industry at a fair price.

Short Interest, Negative Sentiment High for Sears Holdings

did you know that 65 million shares are owned by the chairman's hedge fund?

13 million shares short are actually about 22% of the float

How About Sears Holdings as a REIT?

and I forgot sears canada too,
add another billion to minimum 15

How About Sears Holdings as a REIT?

Other reits need debt added in to the prices to ground them out.
Kmart had 9 billion worth or prop plant and equipment on its balance sheet when it declared bankruptcy. It was then written down to 30 million dollars after bankruptcy based on its earnings generation (none)
Sears also had about 9 Billion on its books, and still sort of does.

remember, some of these properties are fairly worthless as someone said, yet some of them are the most valuable properties in their given towns.

You also forgot the 70% stake in Sears Canada, and remember, leases signed in 1960 for 50 years with an option to renew can have value.

I don't suggest this as a basis for valuing the rest of the stores, but in 2004 Sears Sold 4 stores and assigned 14 leases for 271 million-CAPITAL GAIN OF 241 MILLION TO Home Depot.

Smart people have estimated the real estate alone at 12-20 billion, so mark that down by half to get 6-10, and don't forget nine billion worth of inventory at cost and a billion in cash.

I get something like this:
brands: 3 billion
(people always talk about craftsman and landsend and diehard, but don't forget sears and kmart and kenmore: not worthless!)
real estate: 6 billion
Inventory at cost of 9 billion: 5 billion
Operating business which cleared 800 million from operations in the midst of the worst recession and consumer contraction in decades: (at 5x depressed cash flow) 4 billion
Eddie lampert as majority owner and Chairman???
Minimum of 14 billion, if you do not value the inventory liquidation simultaneously with the operating business.
subtract 2.5 billion in debt, and there is still:

lots of upside.

S&P 500 Short Sales Reach 5-Month Low

www.nasdaq.com/aspxcon...

did you confuse estee lauder with sears?

the article you cited said nothing about sears short interest.
as of may 15th, short interest was closer to 11.7% of total capitalization, 35% of float if you back out ESL, Fairholme, and Legg