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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Jurgis Bekepuris who wrote (33540)	2/19/2009 1:55:46 PM
From: Paul Senior	Read Replies (3) \| Respond to of 78751

re: "Buffett sells 50% of JNJ holdings and nobody cares... BRKA itself is at 5 year low and nobody cares..." Mr. Buffett's JNJ sell seems to have been in 4th Q of '08 when JNJ share price was higher. Imo, now at JNJ's current lower price, the sell info is now not relevant, and it only matters if JNJ is a buy or not for him or anyone else right now. For me, if stock drops to new lows, maybe another 5-10%, I'll add. ======================= Only sorry I didn't act on my own idea here to short BRKb last month with stock $3300 or so. A general problem for me of not being flexible enough/tough enough or something to employ shorting. Message 25297879 Berkshire still seems to me to be a very expensive stock when I look around and see what other companies - insurance/conglomerates - are trading for. (p/e, p/bk). How to conclude Berkshire is a value stock, I do not know. Often you will mention roe/roic as criteria in your posts here about stocks you are buying and in comments about what others are buying. You have said: "I use couple valuation methods: ROE/ROIC based extrapolation of earnings to the future and then calculating rate of return; inverse P/E or earnings yield adjusted for cash/debt; net-net current assets or net cash." We all have our methods, and it's only important that you know what you are doing -- evaluating/concluding/buying -- and not that I know what you are doing. My BRK view though is this: I see that Berkshire never in past ten years has had an average annual roe greater than 10.9% (and in most of those years, like now, under 10%), and from what I can find, an ROIC now about 10%. Okay, maybe that improves when extrapolations are made, and adjustments made for cash/debt. It seems to me that either ROE/ROIC values don't come into the buy decision-making process for BRK because it's special, or else the ROE/ROIC criteria doesn't work unless the adjustments are made. To me, BRK is such a huge complex entity, and there are so many, many stocks that seem to be value plays without having to determine it through extrapolations/adjustments (and assuming maybe the future will be better than the poor (under 11% roe) past, that I'm not able to see BRK as a buy. I note that Fairholme Fund - I am interested in its manager Bruce Berkowitz's value picks - in past has been a big supporter of Berkshire. In past year, he materially disposed of its BRK position. I view BRK as getting 10% on its preferred's, having a call option on stocks that may or may not go up enough in the next few years, a conglomerate with companies that are exposed to the economic declines that seem everywhere, a company that pays no dividend, and a company with a p/e that looks high to me for this market and its broad exposure to that market. For someone like me who is long only, it's an opportunity to hedge some market risk with a little short. My view is that if I can tighten up my resolve and be a little more flexible, if BRK moves back up from $2700-2800 to $3000, I will open a short position.

To: Jurgis Bekepuris who wrote (33540)	2/23/2009 11:50:38 PM
From: Jurgis Bekepuris	Respond to of 78751

GRMN - I am the lonely investor in this company on Value Board. Nobody else cares. IMHO, their report was great considering the economic situation. Unless they are cooking their books ala SAY, the results are spectacular. Sure, the stock jumped +7% in -3% market, but IMHO, it's still a great buy. Super spectacular ROE, good margins, 28% earnings/EV, lowish P/book. So where's the catch? Everybody thinks that GPS is becoming a $50 commodity and GRMN will die. They may be right... IMHO, Garmin has a brand, but they will have to operate smartly to avoid being squeezed out by phone based GPSes and commodity boxes. Can they do it? Place your bets. ;) I am planning to add more in $16 range or so.