Jurgis,
I'm in a dry-spell right now finding companies. I've been reduced to 'special situations'. Plus longterm stuff. And lots of cash.
You say: "I know exactly two companies that behave HIS WAY: BRK and Wesco. And both are not exactly bargains."
I have to say that during the last two years I bought BRKb's under $1400/share - my average is on the order of $1500-1600. WSC was selling below $200/share. I bought most in the low 200's. I got some WPO in the 470's.
During the past year it has been possible to buy AXP, G, GLK, GMT, and HMSV at prices comparable or below that last paid by Buffett/Simpson. Charlie will tell you that if you want to shoot fish in a barrel, it's a good idea to let some water out of the barrel. 9/11 certainly spilled a lot of water. I hope that Charlie doesn't mind my shooting in his barrel.
Of course, you need the numbers. But you need hard numbers. And it's alot easier for folks like me to have the CEO point out the numbers to focus on. These days I look at annual reports for the shareholder letter, and to see how much it looks like a sales document. I will compare the CEO letter from year to year to see if it is insightful or misdirecting. I pay attention to the proxy. But I read the K's and Q's. (It was interesting to me that Buffett said in the roundtable that he reads a K and several Q's daily. My take is that he's reading the same stuff we are, and he's focused. Not a Peter Lynch who used to brag about taking hundreds of filings home for reading each weekend.)
FWIW - to show you how low I've sunk - yesterday I bought CPQ and shorted HWP to capture the 9-10% spread - assuming that the merger goes ahead in a couple of weeks. The MA uses 'buying power' generated by a boat anchor position of BRKb's.
I don't think you will often be able to buy companies with a Buffett-type CEO at a cheap price, maybe a fair price, but not cheap.
Right now I think that someone buying a drug basket containing MRK, SGP, and BMY will do OK. Talk about big and confusing! But their internal rates of return are good. Demographics are on their side. MRK is one of only 9 or 10 AAA rated companies in the market.
If you listened to webcasts of EK's CFO Brust during the past 6 months, you can believe him or not. I chose to believe him when Mr. Market was dissing. I thought he was describing the operation of a buggywhip company much the same way Munger has recommended such be run. We'll see.
Listen to the last GLK cc. Check out cash flows for the past couple of quarters, and correct the balance sheet for the OSCA buyout.
I was very pleased with the operation and communications from Utilities, Inc. The amiability and logic of their president from several telephone calls caused me to make a serious investment. Since they seemed pleased to sell the company to Nuon, I followed onto NCEB.
As Paul Senior knows, I like the folks at UNAM. I've chosen to believe them. The numbers look awful, but when they take you by the hand, it seems OK. If you like micro family-run insurance companies.
Or BRID, if you like micro family-run food companies. It's not going to blow your socks off, but the dividend softens the blow, and downside risk is limited by stock buy-backs. But this is one where you have to beware of their printed stuff. They like to talk about 'successes' with big-box retailers, when they are getting hosed by one truck jerky-jobbers in the convenience store market. They are honest and hard-working, but the Bridgford name ain't Coca Cola.
Good luck with Easter Eggs |
