Before I get back into research and finishing up my checklist I wanted to give you some links that I thought held some kind of insight or knowledge that we all could learn from.
Warren Buffett on his Investment in See’s. See’s is one of his favorite all time investments and I think his reasons for investing should be studied by every investor. Article is from Valuewalk, @Valuewalk on Twitter.
The Secret’s of See’s Candies is an extensive profile of the business, why Buffett bought it, why it is such a good business, its new expansion plans, and how Buffett and Munger almost blew the investment.
Visiting Warren Buffett are notes from someone who visited Berkshire Hathaway on a trip from Columbia Business School in 2006. These notes are from an interview and speech that was given while on the trip where Buffett gives some very valuable lessons. The most fascinating thing to me was that Buffett was the following quotes from the article: Emphasis mine.
Question 12: What would you pay for a solid company that is growing earnings at 8-10%/year?
Not many companies will do that. You see a lot of garbage about EBITDA. Depreciation is the worst kind of expense in that it is prepaid. He looks at EBIT/EV. He’ll generally pay 7x for a decent business. For insurance companies, he looks at float and the cost of float.
Looks like that could be a very good starting point for valuations.
Masters of Compounding: Walmart ($WMT) 1968-2012 is an exceptional article from Student of Value on the history of Walmart and what has made it such a fantastic company over time. I would also recommend following @dgenchev on Twitter if you would like to see his future write ups as they have so far all been fantastic.
How an Average Business Can be a Great Investment by Oddball Stocks has some interesting thoughts about average businesses and their investment potential. There is some great back and forth in the comments section as well. I would also recommend reading his two write ups about Hanover Foods that he links to in the article as the analysis he presents is very detailed.
4 Mistakes When Valuing Companies With Large Cash Holdings, and How to Avoid Them is another fantastic write-up by Simple Value Investing. I would also highly recommend following him on Twitter @SimpleValue as all of his write ups thus far have also been fantastic. His write ups on Ibersol were very detailed and he laid out a very good investment case for them. Part 1 and Part 2.
I hope you enjoy the links over the next few days as I am now off to finish up my own investment checklist and to research some more companies.
Thank you for the mention, Jason. The articles about See’s are great and so is the visit from Columbia. Did he really call private equity ‘porn shops’ 😀