LC

Yes this was my reason for not investing. I couldn't determine if elevated sales were cyclical or not. While I concede that the MP brand is doing very well (great reviews from users on YouTube, 3 month customer backlog at retailers, selling above MSRP due to unmet demand) and I am sure polymer guns are better margin products, I don't know if sales will drop off. Management says their backlog is growing, they don't have enough capacity to meet orders, etc. and I believe them. I just don't know if the same level of demand will exist in 3 years.

I interpret the new Apple commercials as a way to retain customers and continue to build brand identity, hence the made in California vs made in USA

I would say I am. 80 pct in my top 5 to 10 ideas and then a bunch of super small positions (mostly penny stocks or odd lot tender arbitrage). I disagree that a more concentrated portolio is less work...I am still reading an annual every day, and trying to come to a rough valuation and buy price.

Thanks hellsten...WTW!

Eh I would say that they are one of the only tech companies to ever establish a durable brand that consumers identify with. Apple has been around since the 80s. In the world of tech that is a long time. And over the past 20 years everyone has said the same thing about apple products. Remember the 90s? PC is more productive but Apple is easier to use. Well, the world has gotten both more productive in terms of computing power, and it has also gotten a lot easier to use in terms of interfacing with computer devices. Apple has certainly led in the latter category. So to say it in a different way, I am not betting on Apple being able to come out with a new innovative a product. The ipad wasn't the first portable music device. But it had the best human-computer interface. Apple owns the game of putting people and machines together in a way that is easy to use and fun for the human! Whatever the hot consumer tech that comes out in 10 years happens to be, I am betting that Apple make it in such a way that it is easy, intuitive, and fun for people to use. PS: Everyone is so shortsighted on this thread. Next ten months? Lets think about over the next ten years!

Has SWHC run across anyone else's eyes recently? I read through their annual yesterday and looked at their history: Excluding 2013, Over the last 10 yrs they generated about 200m of cash and spent all of it and more on Capex and acquisitions. The 'more' came from both debt and equity issuances. So not a good start. However the last few years have been quite good. They've entered the polymer gun market with the MP series, which is very popular in the "concealed carry" market. In 2012 and 2013 they have been capital constrained and were not able to meet demand. Backlog was over 400m for those two years. Based on some random YouTube reviews of their best selling gun the MP Shield, it gets very good reviews but people are having a hard time getting a hold of it. MSRP is 400 and it is selling in the 700 range. The way I see it, their long term history of profitability is so-so. Recently, gun sales have boomed due to fears from the recession but more likely Pres. Obama giving speeches about tighter gun regulation. Financially, they offered to tender $20m of shares at $10/share. They refinanced $50m of 9.5% debt into $100m of 5.875% debt. So for $640m, you're getting a company with $100m in cash, sales next year probably in the 550-650 range, which all else equal looks to me like about 100-125m in owner earnings. Even if the company reverts to its historical norm, which isn't great but isn't a failing business, either...you're still getting a great brand name on top. Not sure if I want to buy, though!

I have their annual sitting in my "to-read" pile...now I have no excuse not to read it!

Very good article on FHCO, specifically on the points of increased competition. I've exited my position, but would consider re-entering at a lower valuation. http://seekingalpha.com/article/1514442-the-female-health-company-a-great-story-for-women-but-not-for-investors?source=yahoo

I missed this too. I was apparently too lazy, staying up all night eating pizza and watching old Led Zepplin concert movies on Netflix. :) Funny, I picked up some shares of MJNA when it was trading at 4c/sh...more just to have fun with what as obvious sensational penny stock scam. Shoots up to 40c/share and to atone for the guilt i felt profitting on a scam penny stock I went educating everyone that its just a penny stock scam, don't get your hopes up, etc. etc. Hoefully some of the folks that bout at 20c got out without too much of a capital loss...

I'm going to disagree. If you think he needs to "talk up" to the investing public in order to move the stock price to what you think is a more appropriate multiple, that to me sounds like you either are looking for a short-term trading opportunity or you're not confident in the business model to consistently generate profits. In either case, why are you investing? Wouldn't you think buybacks would be more valuable at these multiples?

Looks like the grocery store has been having a slight sale the last few days. I picked up some tomatoes (WFC) and lettuce (PMI) but just a bit of each...maybe the sale will continue!

The judge really seemed to be out of his comfort zone when trying to interpret what various financial terms were. UAW is playing hardball...prolonging this as long as possible so hopefully the price of the comparable firms will increase, thus increasing the price of Chrysler.

The government is just protecting the consumer. Just about everyone has an excellent, heartwarming experience with car salesmen....the government doesn't just want that to go away! ;)

Thanks Morgan!

I see the following 2012 stats for the continuing operations: EBITDA = $1752.3M I = $292.6M T = $158.6M Q9. CapEx = $837M 2012 FCF = EBITDA - I - T - capex = $1752.3-292.6-158.6-837 = $464M. This is lower than previously estimated. Much lower than I estimated. I'm surprised at the breakout of capex of US vs. Canada. I'm not sure how management plans on paying off 800m of debt with FCF and proceeds from Blackhack if their 2012 FCF is less than 500m and are using 100m of the Blackhawk IPO proceeds (pg. 5, ** notation). This suggests they are estimating ~700m of FCF in 2013. Even my previous conservative (at the time) estimate of $600m of FCF was shooting too high. The only way I see them going from 465 to 700m of FCF in 2013 is by drastically cutting capex. Has management disclosed anything to this effect?

Very astute observation, and one I forgot! Thank you for reminding me. Makes me feel a bit better about locking in low rates via LEAPs.

I'm not sure if it's been mentioned, but we also have to consider the competitive advantages of the two firms. Company A might be able to generate higher cash flows given the low capex, but if it turns out to be a tech company that will go out of business in 3 years, then the potential return on capital over the next 20 years doesn't really matter. So I'd invest in whichever company has a better "moat" :)

Berkshire has been investing in "local newspapers" and Buffett has said it is more of vanity investment rather than obscenely profitable investment...but I am thinking I will look at his actions and look past his words ;D So I think the question is, what do we think the newspaper business will look like in 10 years? If the trend we are seeing continues, then the business will be mostly selling digital subscriptions, yes? Whatever type of pricing model they choose, the nuts and bolts of it are that they will not be selling a physical paper. Therefore there is relatively little future capital investment needed, very little distribution costs, and the only major costs will be the cost of generating the content (i.e. staff). So could this be another brilliant move by good ole' Warren? I was looking at Lee Enterprises, which owns about 30 or so local newspapers nationwide. Berkshire has refinanced a portion of their debt at 9% and owns equity as well. I think it's just brilliant. Lee pays Uncle Warren the majority of the profits of their print & circulate newspaper business in interest on the debt. These operations will eventually fade off into the sunset, meanwhile Berkshire retains equity ownership as the digital business picks up with the next generation in these towns and generates recurring revenues. I think if one can pick up these "brands" at distressed or reasonably cheap prices, in 5-10 years they might look like a great investment. What do you folks think?

I agree but with a caveat: "blockbusters" are different to everyone. I would absolutely to go the movies to see the next Lord of the Rings/Hobbit/<insert Sci-Fi or Fantasy movie here>. I wouldn't bother going to see the next Nicholas Cage/Bruce Willis/Tom Cruise/Brad Pitt action flick. But I realize I am the minority here...but do the action flicks have enough critical mass to make the $50.00 movie theater experience profitable over an entire year? And if this is the case, wouldn't the better investment be selling the "shovels", i.e. the Imax screens/massive speakers & audio tech/whatever widgets they throw in there to convince people it is truly a "$50.00 experience"? Just my two cents.

I'm curious....is it possible for a company (Apple) to take out a line of credit from an international bank in the US, use that money to buyback shares/issue dividends, then pay that bank's division in Luxembourg back on the LOC? This seems too simple to me so it's probably not feasible, but I'm no expert on international tax legalities.

How did you come to the 500-570m FCF? I got to the 600m number by dividing 2012 FCF by the breakout of operating income in US vs CA. Actually when I broke out FCF per each country's share of Op Inc, it breaks down into aprox 690m FCF in the US...so I was conservative by estimating 600m. Am I missing something?

Phaceliacapital, Thanks for reminding me about the tax issue, in that case I am more comfortable. I also understand from a theoretical perspective that if the earnings yield is greater than the interest rate on the debt, it will benefit shareholders. What I am troubled about, or I should say what I do not understand, is the thinking behind the type,s of firms I am seeing partake in this practice. I see a lot of firms with recurring revenues taking out debt to finance buybacks. It is a page out of John Malone's book, but I am curious what happens if these recurring revenues dry up? There seems to be almost no room for error when I see a company like ADT, which was just spun off, taking out another billion in debt over the Q1 to buyback shares at an earnings yield of 20. Have you seen this before in previous market cycles? How have you seen this play out in 5 years time? LC

I would like to know your guys thoughts on debt financed buybacks. A lot of large caps I'm looking at have been financing buybacks with debt. What are the implications of this?

SD has preferreds? Per Morningstar I only see bonds. Edit: found one issuance, SDRXP...I wonder why Morningstar does not list these.

I figure 600m is a conservative estimate of FY2013 free cash flow. Add 65m of after tax interest reductions and you have 665m FCF. Market cap is 5.9 bln....less 2 bln of buybacks...3.9 bln. The market puts their operations at 5.9x FCF. Kroger's FCF was 750m in 2012...yet their market cap is 18bln. Krogers seems to be a better run organization, but Safeway seems way more undervalued by the market.