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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: StockHawk who wrote (29888)8/12/2000 4:40:49 PM
From: hueyone  Read Replies (1) of 54805
 
re: Buffet, Johnson and Sandisk.

Great post Stockhawk! I wish Buffet had tried investing in tech after getting the letter from Paul Johnson---I would be retired now instead of working. (LOL)

Unfortunately, I respectfully disagree with how you tied Buffet investment techniques to Sandisk. There is one major problem with using that Quicken site to measure Sandisk's ROA, ROIC, and ROE, and then going on to compare those figures to other companies. The site fails to exclude the one time extraordinary investment gain of $2.79 EPS from Q1 when it calculates those percentages. Among the many points I agree with Mr. Buckley on is the importance of excluding extraordinary one time non recurring gains from a valuation analyses.

Excluding the one time gain, for the year just ended June 30, 2000, I calculate an ROE of 6.3% and an ROA of 4.8%. I get an ROIC of roughly 7.08% using the Quicken basis for the invested capital denominator.

On a more favorable note, the one time investment gain of $2.79 per share in Q1 reflects very highly on Sandisk management and I certainly would much rather see a large extraordinary one time gain than a large one time loss! Sandisk is executing well---no question about it.

Best, Huey
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