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WIKI ANALYSIS
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This article is about a notable investor or financier. View articles referencing this individual. |
Warren Buffet is considered one of the most successful investors in modern history. He is the Chairman and CEO of Berkshire Hathaway (BRK) and manages its capital as well.
Warren Buffett has been moving his personal investments from safe Treasuries into U.S. stocks, he wrote in a New York Times opinion piece on October 17, 2008.
[1]
Entry Moves on Subprime lending
- Constellation Energy Group (CEG) : investment in nuclear energy. EDF already owns almost 10 percent of Constellation and is a joint venture partner in the construction of four 'new nuclear power plants.' $4.7 billion bid from MidAmerican Energy Holdings Co., a subsidiary of Warren Buffett's Berkshire Hathaway Inc [2]
- 10 percent stake in BYD Company Limited (BYDDF) [1] Warren Buffett Invests In Chinese Company Developing 'Green' Cars [3]
- Goldman Sachs Group (GS): $5 billion equity stake in Goldman. He also got more than 43 million warrants to buy Goldman shares at $115 and a 10% annual dividend to boot.
the value of each of Berkshire’s warrants is $60.26 a piece.If you add it all up, Berkshire is walking away with $8.2 billion for its $5 billion cash infusion. That’s equivalent to buying dollars for 61 cents each[4]
- General Electric Company (GE) he is getting perpetual preferred stock with a 10% dividend that is callable after three years at a 10% premium. He’s also snatching up warrants to purchase $3 billion of common stock at $22
[5]
- Wells Fargo (WFC) in August, Buffett told Becky that Berkshire had been adding to its holdings in Wells Fargo.Wells Fargo announced a deal to buy Wachovia Bank [6]
- Burlington Northern Santa Fe (BNI)After high-profile investments in Goldman Sachs (NYSE: GS - News) and GE (NYSE: GE - News), Buffett made a lower-profile move last week when a unit of his company, Berkshire Hathaway (NYSE: BRK-A - News, BRK-B - News), sold puts in railroad Burlington Northern Santa Fe (NYSE: BNI - News), according to filings with the SEC. Burlington Northern is joined by the other two railroads he has been investing in: Norfolk Southern (NSC) and Union Pacific (UNP) . [7]
Exit ?
- no AIG [8]
What is the system or the hidden hand who helps Warren Buffet to decide ?
He wants certainly undervalued companies, that are undervalued through the current market situation. Hence companies falling in the first quarter of relative valuation are prime candidates. Since you can diversify risk away, Buffet is certainly not riskavert, he tries to combine non-correlating business together. And finally your company can correct his value if the company is a good performer. (High return on assets and equity, good economical added value)
Buffet style selection criteria
1. Demonstrated earnings power:
2. Good returns on employed capital:
- ROE return on equity fe bigger then 20%
- ROIC return on invested capital bigger then weighted average cost of capital
- EBIT/Company value
3. Low debt:
- Current ratio bigger then fe 7
4. Management in place:
- “owner thinking”
- conservative accounting
- clear guidance
5. Economic moat:
- Value approach on underwriting
- Economics of scale
- Diversification of their business
which screening tool mimics Buffet style ?
- www.gurufocus.com [10]
- S&P Missing: lacks GE - CEG - AIG hence worthless [11]
- guru investor misses also the ball.. [12]
| Ticker | Sector | Performance | Risk | Value | PRVit
|
| GE | conglomerate energy industry | 86% high | 46%medium | 14% undervalued strong buy | 2.85 [13]
|
| CEG | energy electricity | 30% low | 60% high | 16% undervalued strong buy | -1.875[14] |
| WFC | Bank | 50% medium | 54% medium | 30% Buy | -0.13 [15] |
| GS | Bank | 70% strong | 56% medium | 12% Undervalued Strong Buy | 1.16 |
| AIG | Insurance | 14% very weak | 64% high | 48% Hold | -1[16] |
| BNI | Railroad | 64% high | 42% medium | 60% Hold | 0.33[17] |
What is the plan ?
invest more in alternative energy resources
The U.S. Chamber of Commerce said that with India's 34-year nuclear isolation now history, a potential $150 billion (EUR107 billion) of new investments were expected in terms of new nuclear generating capacity by 2030.
"Companies like GE and Westinghouse, we think, are quite capable of competing there. The other international players, whether they be French or Russian, will be there I'm sure in a substantial margin," Rood said. [18]
Draining the Paulson plan to Wells Fargo
Wells Fargo may have decided to make a move as the passage of the government's financial bailout plan seemed imminent, said Donn Vickrey, co-founder and chief analyst at Gradient Analytics.
"At the time they made the decision, it looked a lot more likely that it would pass," he said. "You have the possibility of offloading these loans at a price that is higher than current values." [19]
References
- ↑ THE ASSOCIATED PRESS (Friday, October 17th 2008, 10:57 AM). Berkshire Hathaway's Warren Buffett: I'm buying US stocks 1. Retrieved on Friday, October 17th 2008, 10:57 AM.
- ↑ By Steve Gelsi, MarketWatch (EDT Sept. 30, 2008). Constellation Energy Partners may be on the block 1. Retrieved on EDT Sept. 30, 2008.
- ↑ Posted By:Alex Crippen (09-29-08). Warren Buffett Invests In Chinese Company Developing 'Green' Cars Topics:Automobile Industry 1.
- ↑ Andrew Mickey (September 28, 2008). Buffett's Big Bet: The Real Value of the Berkshire Investment in Goldman Sachs 1.
- ↑ by John Carney (Posted Oct 01, 2008 02:39pm EDT). Buffett Buys $3B of GE Preferred, Company Selling $12B of Common 1. Retrieved on Posted Oct 01, 2008 02:39pm EDT.
- ↑ Alex Crippen (10-2-08). [hhttp://www.cnbc.com//id/27011627?__source=yahoo Warren Buffett to CNBC: Rescue Bill Will Help, But Not "Panacea" for Economy] 1. Retrieved on 10-2-08.
- ↑ By the tickerspy.com Staff (Thursday October 16, 9:26 am ET). Buffett Makes a Bullish Bet 1. Retrieved on Thursday October 16, 9:26 am ET.
- ↑ Alex Crippen. CNBC: Warren Buffett No Longer In Talks With AIG.
- ↑ Sascha Seiler (October-5-2008). Value Idea Analysis: Munich Reinsurance Group.
- ↑ Guru Investor.
- ↑ S&P's New "Buy 'Em Like Buffett" Stock Screen.
- ↑ guru investor.
- ↑ GE PRVit analysis. |
- ↑ CEG PRVit analysis. |
- ↑ WFC PRVit analysis. |
- ↑ AIG PRVit analysis. |
- ↑ BNI PRVit analysis. |
- ↑ (END) Dow Jones Newswires (10-3-08). Rice Set To Leave For India To Sign Landmark Nuclear Deal 1. Retrieved on 10-3-08 12:28 AM ED.
- ↑ By Sara Lepro, AP Business Writer- (10-5-08). Wells Fargo agrees to buy Wachovia; Citi objects 1. Retrieved on Saturday October 4, 3:22 am ET.
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