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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (74083)	10/28/2023 3:16:38 AM
From: bruwin	1 Recommendation Recommended By Sisyphus Read Replies (1) of 78525

Precision Castparts PCC). I have to wonder if its P/E was a major consideration when Buffett decided to buy PCC. The latest set of PCC's financials that I could find was for 2014 (Copy link into browser) :- https://web.archive.org/web/20140916034650/http://www.precast.com/web/user_content/files/743553_002_precision_castparts_corp_bmk1.pdf According to David Clark, Buffett used his "Equity Bond" strategy when considering the preferred Share Price of a company relative to his calculated "Equity Bond". The formula is :- Pretax Income/No. of Shares/10 Yr AAA Corporate Bond Rate. In 2014 we saw :- PCC's Pretax Income = 2601 No. of Shares = 146.6 10 AAA Corp. Bond Rate = +/-4% (?) So 2601/146.6/0.04 = ~$440/share which was very much greater than PCC's average share price at the time of around $180/share. So at $180 it would have been regarded as a favourable purchase price. I suspect that the situation would most likely not have been that much different in 2016, but 2014 was the latest I could find.

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