Michael's Berkshire Notes
Berkshire's Early Years
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The real financial story behind Berkshire Hathaway's first decade under Buffett - 1966 through 1976. I was just
Deciphering Retailing
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Personally, I dislike shopping and avoid stores like the plague (except Costco). If I have to
Fairness Opinions
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Those reading through the proxies of the Heinz transaction and other recent acquisitions – Lubrizol
Due Diligience
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I got a call --a referral by a mutual acquaintance-- asking if I could spend a couple of
Berkshire's Competition: ESOP's
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If the phone ain’t ringin’, maybe there’s a reason. The biggest competition to Berkshire
Newspapers - The Inside Scoop
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As readers may have long suspected, if you catch me trying to add some anecdotal
Berkshire's 250-Million-Dollar Man
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We certainly appreciate the influences a single person can have on retailers and brands, but
JCP's New Muse
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Maybe a dozen years ago I was sitting in on a session with a successful private equity
Why I Don't Hate Costco
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Q: What is it about Costco that makes you not hate being there?
PIPE Dreams, Nightmares
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The mention a of PIPE the (private placement of public equity) financing in a Chinese-controlled
Working Capital - 'Always Invert'
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NYU’s Spring semester MBA classes in Valuation and Corporate Finance are underway -- videos of
Private Companies - An Inefficient Market
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Here’s something got me thinking about the private company opportunities. I’ve been lending
Valuing a Small Closely Held Bank
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Continuing an online bank valuation discussion:
More Berkshire valuation notes
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It's helpful to keep in mind that in BRK valuations, we’re trying to arrive at a reasonable
Valuing Berkshire - Enhanced Two-Column
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Why not do a straight-up valuation of Berkshire? While the exercise may not be for
Alice's Veiled Threat
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A reader of Alice's blog posted the simple question regarding Berkshire's offer to buy
Borders Liquidation Economics - Part 2
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Hilco and Gordon Bros fund their larger purchases, such as Borders, with short-term
Borders Liquidation Economics - Part 1
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The Borders liquidation news is interesting from a number of perspectives, not the least
Wrath of Public Servants: Punishing Presto
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National Presto was almost like a long-forgotten high school friend. Berkshire owned
Will 'Deferred Replacement' Help?
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There was some disbelief here and there when Buffett said that he thought unemployment
Valuing Burlington Northern Post-Acquisition
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Say we wanted to get an updated value of various Berkshire subs – or get an idea of a public-equivalent
Conglomerate Yet? Or still Uber-Private-Equity?
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It’s telling that even Berkshire shareholders are starting to think of Berkshire as a conglomerate.
BRK's Succession Activities - Erosion of Confidence
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I think I’m a fairly typical long-term Berkshire Hathaway shareholder, as much as there is such a thing.
Global Retail Smack-Down Begins
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Each of the four major international retailers - US's Walmart, France's Carrefour, England's Tesco,
Hamburg's Ill-Advised SEC Letter
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I’m sure I’m in the small minority in thinking that Hamburg should be cuffed upside the head.
PIPEs - Corporate Finance's 'Death Roll'
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We’ll remember that Mark Cuban ran afoul of regulators for selling his stake
A-T-F -- Alcohol, Tobacco, and Firearms
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How about an ATF theme. The whole idea is actually intriguing. If we packaged this
NetJets Mystery - Arms-Length Transactions?
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It never entirely made sense to me that Santulli's departure was about earnings. Buffett hates losses
Lubrizol - Introduction to 'Fairness Opinions'
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Lubrizol’s filing includes the two ‘fairness opinions’ prepared by Lubrizol’s advisers, Evercore and Citi.
Superb Ajit Jain Interview by Anjana Menon
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Some of the credit probably should also go to the interviewer, Anjana Menon. We'll notice that her
DJCO's Untapped Value and Related Fantasies
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Is DJCO an example of Munger’s Japanese-style model for public ownership?
BNSF Economics - CAPEX disguised as Expense?
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Looking into BNSF's capital expenditures... The ATSF merger was finalized at the end of 1996, but
BNSF - Quality of Earnings Still Lags
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Hopefully Burlington Northern only gets better from Q1. The $2.25B in dividends paid out
BRK's {$3 Earned + $2 Unearned} Model: Gone Forever?
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If we look back from about the beginning of time (Berkshire’s Buffett era) to the end of
Taking 'Two-Column' Mainstream: Looking Beyond PE
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Awhile back, Stifel Nicolaus analyst Meyer Shields put that highly publicized ‘sell’ recommendation
BRK Dividend: 'Devil's Advocate'
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From the ‘black and white’ perspective, a disgruntled BRK shareholder might be forgiven for
Walmart & Costco - Customers & Trends
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Some of us won't spend $30/year at Walmart, and have given up on BJ’s. We'll shop Costco, though. But as a
Valuing Costco & Walmart: Some Caveats
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Taking a lesson from Berkshire valuation exercises, sometimes it’s helpful to look at the value of the underlying
Look-Through Earnings Miscalculations
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The challenge with look-through earnings over extended periods – and when there is trading – is
Berkshire's Other Retailer
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Last I checked, Berkshire’s position in Tesco was almost equivalent (on a dollar basis) to its
Walmart's Comparative Scale
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In 2010, Walmart earned more than all of the following retailers combined - on slightly less revenue.
That Remarkably Overused Descriptor: 'Moat'
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Long-standing moats seem to be most vulnerable to fundamental changes that initially are not
Valuing Berkshire's Non-insurance Companies
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In Berkshire circles there's often discussion as to the PE that might be applied to Berkshire’s
Corporate Cash Levels, Taxes, and the Impact
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Companies – foreign or domestic, here and abroad – are generally only required to pay taxes in
Same Store Sales - Retailers' Various Definitions
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Here are some of the examples I cited earlier, with the definitions verbatim from the referenced SEC
Thinking Through Retail Gross Margins
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Gross profit percentages of major retailers range from the 'teens' to approaching 50%. The margins,
Same Store Sales Games
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We might question why wouldn't we give Walmart same store growth credit for any of their ‘same stores’ outside
The Myth of 'Same Store Sales'
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'Same store sales' need a bit of clarification. There is no GAAP or industry definition for
Most Respected Companies - Apple, Berkshire...and Amazon?
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Barron's ran a featured article entitled Most Respected Companies. Their top pick:
Senate's BNSF Regulation Discussion
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I'll be the first to admit that Sen. Rockefeller's crusade to regulate the railroads is a long shot indeed.
Buffett's Support of Beleaguered Colleagues
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Few individuals have offered as much, without regard to political correctness. Examples:
Buffett Plays the 'Value Scale'
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One of the beauties of Buffett's acquisitions is that he almost always has been adept at playing
The Tata Model: Buying Brands
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AIG in India is a reminder of one of my favorite-to-watch companies, Tata. Much as we
Deferred Taxes: BNSF Acquisition Lessons
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APB 11 was the accounting profession's initial solution to handling 'book depreciation'
Does the 'Moat' Label Apply to ADP?
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atWe’ll remember years ago Buffett liked Pinkerton’s, specifically because his managers
Berkshire's CPA-Abuse?
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Munger's periodic criticisms of accountants usually have merit, and always give us
Reinsurance Capacity - January Policies Are Key
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The problem, to put it bluntly: too much recent success, both in underwriting
Buffett Spoke, World Listened: Owner's Earnings and FCF
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Essentially, Owner's Earnings are pretty much the same as Free Cash Flow .... at least as FCF
When 1st TARP Vote Failed, Flight to...Berkshire
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The 2008 spike in price lasted just a few days. That was a monumental few days that
Universal Express - Anatomy of a Fraud
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Whenever I read about companies claiming abuse by short sellers, I'm reminded
The Walmart / Tesco / Carrefour Line-up
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Walmart/Tesco/Metro/Carrefour - These guys are all in the same boat in terms of
Brazilian Land Nonsense - and Journalism's Slide
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A rookie Brazilian-born reporter for Forbes has picked up a short piece in a Brazilian
Hidden In Plain Sight (from Buffett): Vornado's Value
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Whenever the IV subject comes up, I think of Vornado. As pointed out in Snowball, Berkshire
Berkshire's No-Due-Diligence: Always Appropriate?
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Obviously, Buffett didn’t jump into Gen Re with the idea of changing management. The
Observations on Airline Economics
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Since deregulation – and where there is competition on a route – prices will tend to
Two-column, ROCE, and the Usefulness of EV/EBIT
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As subscribers to the 'two-column' method for looking a Berkshire, we wouldn't
Buybacks? The Long-Term Reduction of A-Shares
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A long term bias towards reducing A shares? Back before Gen Re,
How deep is the 'Buy & Hold' Culture?
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While Buffett has long advertised his allegiances to his businesses, his actions suggest an
BNSF - Economist Rail Notes
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"How, exactly, would you put BNSF out of business?"
GS report on BRK
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The rating aside, the GS report itself is a trove of information about Berkshire and
Private Equity -- Berkshire Copycats
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The term we sometimes see used for the Merkel's, Leucadia's, Brookfield's, etc, etc. At an event
NYSE's Former BRK Specialist: Jim Maguire
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A Barron's article included mention of Jim Maguire, NYSE's former specialist for BRK (now
Conglomerate Discount? Or Do We Mean 'Key Man'?
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Berkshire notably does not have a 'conglomerate discount', nor does it or its companies warrant
Attorneys' Schadenfreude / CPAs' Dilemma
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Some CEO's are intolerant of hearing bad news. That's not just a problem for internal
What's Behind Munger's Stock Gift?
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Pure speculation.. but...having no insights on this other than the post above, it just could be that once
Dollar Stores
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Dollar stores are the new retail darlings. We can hardly read anything about retailing these days
USG Drivers
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Some notes: ( a) industry demand for wallboard (20 bill sf) vs current capacity (35 bill sf) is
The Preempted Case for Dividends
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I would suggest that anyone wanting to make the case that Berkshire pay a dividend simply invoke
Retailers - Four Tell-Tale Cues
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First ...Any time a retailer stops reporting monthly 'same store sales' with everyone else, because it
Post-Recession Retail Landscape
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Retail casualties have included:
Buffett: Lincoln to Cadillac
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A refresher on how Buffett's switch from Lincoln took place:
'Closely Held' Reporting & Valuation
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http://www.aba.com/Issues/Issues_UpdatingSEC.htm Reporting requirements basically depend on the
Just How Useful is the Gordon Growth Model?
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The Gordon Growth Model: "A model for determining the intrinsic value of a stock, based on a future
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