Interesting
insights from Berkshire's Annual meeting:
Nebraska
Furniture Market acquisition - sticks to 10 x PBT multiple
rule
Paid 11-12x after tax earnings. Bought 80% of company at $60 million =
100%value. This was a little more than BV. Sales roughly $100 mm about
$7 mm pre-tax earnings; $4.5 mm after tax. German co was trying to buy at
same time.
Paid 11-12x after tax earnings. Bought 80% of company at $60 million =
100%value. This was a little more than BV. Sales roughly $100 mm about
$7 mm pre-tax earnings; $4.5 mm after tax. German co was trying to buy at
same time.
On investing
in brands
Q: See's
Candies. Since 1999 profits have apparently stalled. Did
something change about business. Could relatively recent geog
expansion reignite growth.
Boxed choc business has not grown much. Have lost position dramatically
primarily to salted snacks of one sort or another. See's has done far better
than others. Can't do much about increasing size of market. See's has
provided earnings that have been used to buy other businesses. Also opened
Warren's eyes to power of brands. Seeing the possibility of it and what it
might do. Would be surprised if would have ever bought KO if hadn't owned
See's. CM - We're pretty good at ignorance removal and have a lot of
ignorance left.
something change about business. Could relatively recent geog
expansion reignite growth.
Boxed choc business has not grown much. Have lost position dramatically
primarily to salted snacks of one sort or another. See's has done far better
than others. Can't do much about increasing size of market. See's has
provided earnings that have been used to buy other businesses. Also opened
Warren's eyes to power of brands. Seeing the possibility of it and what it
might do. Would be surprised if would have ever bought KO if hadn't owned
See's. CM - We're pretty good at ignorance removal and have a lot of
ignorance left.
Bank investing
in Panics
Depends on
which name you pick. Hurt by spending too early. Bottom was
quite a bit lower in March 90 than September 08. Have never really figured
quite a bit lower in March 90 than September 08. Have never really figured
out how to
spend it all at the bottom. Did buy BNSF, which is enormous part
of future. Want to buy big businesses with good management that can grow
over time. CM - Private businesses BRK controls have become bigger and
bigger piece of biz. Wasn't that way going back in time. Expect that to
continue. Being right about stocks shows up in market value and net worth.
For businesses it shows in improved earnings power which is more enduring
but a little harder to see. More in this second phase now. CM - investing
moderate amounts of capital in middle of panic, you can't purchase
significant share. Their own success has resulted in this change.Have
adapted pretty well to changes in circumstances. WB - Bought a fair amount
of Wells over last few years. Most money actually came from buying banks
of lesser quality, which needed a good economy even more to come back.
Felt 100% comfortable buying WFC only 50% comfortable buying others. Ones hit the hardest had the greatest recovery potential.
of future. Want to buy big businesses with good management that can grow
over time. CM - Private businesses BRK controls have become bigger and
bigger piece of biz. Wasn't that way going back in time. Expect that to
continue. Being right about stocks shows up in market value and net worth.
For businesses it shows in improved earnings power which is more enduring
but a little harder to see. More in this second phase now. CM - investing
moderate amounts of capital in middle of panic, you can't purchase
significant share. Their own success has resulted in this change.Have
adapted pretty well to changes in circumstances. WB - Bought a fair amount
of Wells over last few years. Most money actually came from buying banks
of lesser quality, which needed a good economy even more to come back.
Felt 100% comfortable buying WFC only 50% comfortable buying others. Ones hit the hardest had the greatest recovery potential.
On intrinsic
Value
Differences
between intrinsic value calculated in Security Analysis
and now. Also, who do you fear as a competitor.
Graham did not fully define IV. Has come to relate to IV as private biz value.
PV of all cash that will be distributed by that biz between now and judgment
day. Fisher would want to look a lot harder at the qualitative factors in
making that decision. Graham focused on the quantitative aspects. Charlie
pushed WB more to the qualitative side. He was right to do that. Doesn't
really see any competitor to BRK. Private equity and its willingness to lever
up does make them a competitor. Don't see anyone else drying to run biz
that way. CM - BRK business will go a long time. Has enough advantage to
keep going a long time. Most don't. Think will be more like Standard Oil than
ordinary businesses. Keep doing what they're doing, learn from mistakes.
The system is in place.
and now. Also, who do you fear as a competitor.
Graham did not fully define IV. Has come to relate to IV as private biz value.
PV of all cash that will be distributed by that biz between now and judgment
day. Fisher would want to look a lot harder at the qualitative factors in
making that decision. Graham focused on the quantitative aspects. Charlie
pushed WB more to the qualitative side. He was right to do that. Doesn't
really see any competitor to BRK. Private equity and its willingness to lever
up does make them a competitor. Don't see anyone else drying to run biz
that way. CM - BRK business will go a long time. Has enough advantage to
keep going a long time. Most don't. Think will be more like Standard Oil than
ordinary businesses. Keep doing what they're doing, learn from mistakes.
The system is in place.
No comments:
Post a Comment