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

To: peter michaelson who wrote (440)	10/18/1998 2:49:00 AM
From: James Clarke	Read Replies (2) \| Respond to of 4691

I can't believe how fast people jumped on Dover - we're talking two hours! Way to go, guys. There's no "sumptin" here - management is straight as an arrow - these guys are like Warren Buffett (headquarters is only 24 people last I heard - for a $6 billion company!) They don't issue stock options and their accounting is conservative (think hard about whether goodwill amortization should be added back to earnings). Is the acquistion strategy sustainable? Has been for decades. And unlike a General Electric, the company is only $6 billion, so a $200 million acquisition, which is their bread and butter, still makes a difference. Think about this when you are thinking about Dover in the context of Buffett investing. Dover has grown sales from (I don't have the numbers in front of me, so don't hold me to this) $30 million to $6 billion since 1965. They have done this through acquisitions, but HAVE NEVER ONCE ISSUED A SHARE OF STOCK, and don't like debt much either. That is the Eureka on this investment. They buy businesses that make large amounts of free cash flow and don't pay much for those businesses. Then they reinvest that free cash flow in similar businesses for 20%+ returns. That is going to make you a lot of money over time if it is sustainable. And it has been sustainable for 40 years. If you believe that, then start looking at valuation. JJC