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Strategies & Market Trends : Buffettology
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To: cfimx who wrote (1523)6/8/1999 10:21:00 AM
From: cfimx  Read Replies (2) of 4691
 
when an analyst throws out a bunch of numbers they get from some database and use them to justify their view of a stock, good or bad, they are doing the antithesis of buffet style analysis. That's ironic when it is done on a BUffet thread.

Any practiced reader of Buffet would know that he disregards amortization charges, of which TLC has or had a large amount of and MAT may as well. He also disregards goodwill on the balance sheet. So any attempt to offer up an roe calculation without making these adjustments, I, and Buffet would say is pure folly. What a company earns on "unleveraged OPERATING assets" is the important number here. And just regurgitating stuff you download from a database won't get you there.

And you can't look at debt to equity or capital to determine whether the company is appropriately capitalized. That takes an understanding of the business. Equity, as we have discussed, can be skewed by non cash charges and share buy backs. It's highly likely that "they don't have to work down" ANY debt. It may be that they should take on MORE of it. The database won't tell you that. Providing an opinion on stocks from this kind of data has about as much value as trying to determine where MAT will be two years from now by looking at a chart.
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