Money and Finance
- Berkshire Struggles With Being Ignored
Thanks to Barry for passing this along.By Warren Buffett's reckoning, his company had a good 2011. But you would hardly know it to look at Berkshire Hathaway Inc.'s stock price. When Mr. Buffett releases his annual letter to shareholders on Saturday,...
- Gurufocus Interview With Prof. Bruce Greenwald
Back to your comment, what’s the best way, do you think, to distinguish the ones that are temporarily sick from the ones that are terminally ill?The first judgment that you have to make is that is it a franchise business or is it not. And the reason...
- So, What's Berkshire Worth Anyway?
It seems to be pretty clear to most value investors that Berkshire Hathaway is a bargain. But, how big of a bargain is it and how much can we expect to make over the next few years by purchasing a stake in Warren Buffett's masterpiece today? I view...
- Intel Put Option
With Intel currently trading at $25.60 it looks like my put option that I sold on Intel is going to expire today. It's a good and bad thing because I wouldn't have minded getting Intel at the $25 strike less the premium. But I got a pretty good...
- Recent Transaction
This is going in the Recent Buy section even though I didn't buy anything. I sold a put contract for Intel today expiring July 20, 2012. The strike price is for $25 and I sold it for $0.53 per share or $53. By selling this put contract I was able...
Money and Finance
A 13% hurdle...
Just an interesting couple of comments mentioning the 13% hurdle number which I hadn’t noticed together until recently. In Poor Charlie's Almanack, I think there was also a comment from Munger along the lines that Berkshire's one big, 'hedgehog' type of idea was to continually borrow at 3% and earn 13%.
Charlie Munger on Berkshire (via Whitney Tilson’s notes from the 2001 Wesco Annual Meeting):
“The businesses that Berkshire has acquired will return 13% pre-tax on what we paid for them, maybe more. With a cost of capital of 3% -- generated via other peoples’ money in the form of float -- that’s a hell of a business. That’s the reason Berkshire shareholders needn’t totally despair. Berkshire is not as good as it was in terms of percentage compounding [going forward], but it’s still a hell of a business.”
…..
Bruce Greenwald on the return Buffett expects (via a GuruFocus interview):
“His idea of a fair price, by the way, is a price that gets him a return going forward on that investment without any improvement in the multiple of somewhere between 13 and 15%. By normal standards, when the average market return is 7-8%, that’s a really good price, he’s looking for a very good price. They call it a fair price because the multiple may be fairly rich, it may be 13, 14 times earnings. But the value of the growth may bring his return up to 13-15%. So when he says a fair price he’s talking in terms of normal value metrics, and there the reason that you prefer that to a poor company at a really good price is that because the good company can grow through reinvestment and things like same-store sales growth, your return will come in the form of capital [gain], not distributive income, and that, after tax, is much more valuable.”
- Berkshire Struggles With Being Ignored
Thanks to Barry for passing this along.By Warren Buffett's reckoning, his company had a good 2011. But you would hardly know it to look at Berkshire Hathaway Inc.'s stock price. When Mr. Buffett releases his annual letter to shareholders on Saturday,...
- Gurufocus Interview With Prof. Bruce Greenwald
Back to your comment, what’s the best way, do you think, to distinguish the ones that are temporarily sick from the ones that are terminally ill?The first judgment that you have to make is that is it a franchise business or is it not. And the reason...
- So, What's Berkshire Worth Anyway?
It seems to be pretty clear to most value investors that Berkshire Hathaway is a bargain. But, how big of a bargain is it and how much can we expect to make over the next few years by purchasing a stake in Warren Buffett's masterpiece today? I view...
- Intel Put Option
With Intel currently trading at $25.60 it looks like my put option that I sold on Intel is going to expire today. It's a good and bad thing because I wouldn't have minded getting Intel at the $25 strike less the premium. But I got a pretty good...
- Recent Transaction
This is going in the Recent Buy section even though I didn't buy anything. I sold a put contract for Intel today expiring July 20, 2012. The strike price is for $25 and I sold it for $0.53 per share or $53. By selling this put contract I was able...