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

To: Madharry who wrote (1091)	1/21/2010 12:15:13 AM
From: Madharry	Respond to of 4719

here the transcript of web and his objections to the kraft transaction: cnbc.com\|headline\|quote\|text\|&par=yahoo

To: Madharry who wrote (1091)	1/21/2010 4:37:11 AM
From: bruwin	Read Replies (1) \| Respond to of 4719

Hi there Madharry. Yes, I can receive CNBC where I am, as well as Bloomberg. I don’t have it on that channel that much because the rest of my family aren’t that enthusiastic about business channels, so I do, occasionally, miss out on interviews such as the Buffett one. Pity. But many thanks for sending me the written transcript. I certainly enjoyed reading what Buffett had to say, ... as I usually do !! I’m not afraid or shy to say that I’m a “Buffett junkie” !! {:-) To be quite honest I’ve not been following the Kraft/Cadbury deal in any great detail. Over the past month or two I’ve seen interviews with the Cadbury’s CEO where he wasn’t prepared to accept offers for the company because he believed they were too low. It seems he was correct based on the increased offer from Kraft. With regard to my thoughts on the acquisition, personally, for what it’s worth, I can’t fault Buffett’s reasoning. As usual he really gets to the heart of the problem and can explain it in plain English. I take Spekulatius’s point regarding the use of stock in the purchase and the “dilution of shares” when compared to what Buffett was prepared to do regarding the Burlington deal. I’ve always had a lot of respect for Spekulatius and his insights and conclusions. In Buffett’s defense he did say, amongst other things, that he hated using Berkshire’s shares. He also said that, ”I hate it. It's costing us somewhat more than that because I do consider Berkshire at selling lower ratios to book value than it has in many years.” He also said, ”... it was a very, very close thing. If we had to give any more stock, we wouldn't have done the deal. I've never said this is a bargain deal. I think it's a great long-term asset for us to own. But it is no bargain deal.” The way I see it, Buffett probably looks at his investment decisions from a slightly different perspective than a lot of us do. He’s a lot more longer term, his company valuation is based on a combination of his “Equity Bond” and Price model, and he looks for Durable Competitive Advantage (DCA). So, as he often says, (and he said it once or twice in the interview) ” I don't know where the market's going to be in a day, week, month or year.” He also said, ”I mean, when people are scared, they pay less for things. We try to price. We don't try to time at all. And pricing, I would rather own equities today.” So, IMO, once Buffett identifies a company with DCA he then waits for external circumstances, generally not something that that company can control, to depress the share price. It’s then that he climbs in and Buys and waits for his Equity Bond process to eventually kick in and make him a great return and Capital Gain. One can’t deny that he’s done very well at it over the years, so there must be something in it !! As an aside, I see your BRKB's were up over 4% in a day. That's more than one would get from most long term bonds etc.., in a year !