Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Paul Senior who wrote (50917)	2/15/2013 1:15:20 AM
From: AFed	Respond to of 78814

Good thoughts Paul. I'd add two things: 1. The 9% preferred is probably worth 120 cents in this rate environment and on a company with this much stability. So he probably factored that in heavily. After his foray into TXU bonds at 12% which will probably be worth 60 cents on the dollar (after collecting coupons) when that company eventually files for bankruptcy, he's probably enthusiastic about 9% money-good paper. 2. I suspect this is like the Wrigley deal with Mars in some ways... It's to get close to a group/family for the NEXT deal. If he can grow that cash pile big enough over the next 10 years, I bet he'd love to buy 100% of Mars + Budweiser + Burger King. And with these relationships, he could. Would need to be at a fair price of course, but "these are businesses that nobody else could get unless they bought Berkshire." I think that's the end goal before he hangs it up / passes away.

To: Paul Senior who wrote (50917)	2/15/2013 1:18:43 AM
From: Jurgis Bekepuris	Respond to of 78814

Yeah, HNZ seems to be expensive to me too. I raised the same question on Buffettology thread: how much do you pay up for a real Buffettology company? It seems that in certain cases paying up works (MA, TJX in the past). But then the lost decade has shown us that even for best companies paying up may be a crap-shot. My tired example is zero-ish % gain in KO for ten+ years. Yeah, I know that incremental buyer would have made more, but what if you bought the whole company for $30-32 per share in 2000ish? Does not look so hot, does it? Of course, better comparison is perhaps KO in 2006'ish, when the EPS (according to Gurufocus gurufocus.com , which is not very reliable) was ~$1 and stock was at $20ish and went to run up to $30ish. So there was KO at 20'ish PE. Interestingly Buffett did not bite. So perhaps financing is the key.