Excuse me? If I am getting your point it is that I am buying Boeing solely because it is off 50% from its peak, just as I would buy Amazon at $115? Is that what I said? I believe I have said before, if not on this thread on others, is that Amazon should trade in single digits - and that was before its last split. Or am I missing your point?
Setting that aside, it should be blindingly obvious that there are other reasons to buy Boeing. The problem I have is that it the company is incredibly difficult to value, so I take it as good that I am buying it 50% off its high. In that sense it is not a Buffett investment - I would love to value everything precisely. But in another sense it is a Buffett investment. Airplanes are a growth industry. Two companies make them. Ten years from now, I believe two companies will make them. Will Boeing's franchise be worth much more in ten years than it is now? Yes.
Do I know for a fact whether Boeing is worth 25, 30, 35, 45, 60 dollars a share now? No. But just thinking in terms of common sense, is this a franchise I want to own? Yes. Is $35 billion in the ballpark? Yes. Could the stock price fall further? Yes. Does that have anything to do with why I am starting a position now? No. Will I fill my position if it does? Yes.
My thinking boils down to this. If I were General Electric or a guy with the ability and the capital to bring Boeing management into the 21st century (they're in the 70s now) would I pay $33 billion for half of a duopoly on airplane manufacturing (and half of another forgotten duopoly on global defense contracting and satellite growth) would I buy it? Absolutely. I do not believe Boeing's historical profitability reflects the value of the franchise under good management. If you know your history, I think I am buying Coke in 1980. Obviously the economics of a capital intensive industry are different from Coke, but my point is that this franchise can earn a lot more money than it has in the past. That is my vision for this investment.
Jim
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