peter1234

Buffett sent him a brick ;)

Thanks for the links!

Here is a good chart from Frederik Vanhaverbeke's book Excess Returns: A comparative study of the methods of the world's greatest investors. Spoiler alert: return scale "only" goes to 30% per year...(I believe it is returns over S&P 500, so maybe add another 10% to get absolute returns). :)

+1

Of Permanent Value by Andrew Kilpatrick Everything and more you ever wanted to know about Warren Buffett and Berkshire. :)

It is in the pdf http://www.valuewalk.com/2015/11/berkshire-hathaway-50th-anniversary-symposium/?all=1 :)

Congratulations! ?

Thanks for sharing. :)

I thought you started a good discussion. :)

When you buy Posco, you are mainly buying the steel business. The "Bet" is that Earnings/Operating Income/FCF is depressed, and they should return to normalized historical levels. Right now Market cap is around $12.5B, with consolidated debt around $40B, so the enterprise value is around $52B. What do you get for $52B? Off $60B of steel sales, right now they are achieving 5% operating margins or about $3B of operating income. So if steel prices stay at where they are for a long time, Posco trades at 17X operating income, which is actually a pretty high price to pay for a cyclical commodity business, even if it's the best in the world. Let's say they can return to 10% operating margins and generate $6B of operating income, then they are trading for 8.5x operating income which is far more attractive but still not a large margin of safety, especially since Posco is pretty capital intensive and needs to reinvest a lot just to stay competitive(meaning FCF is lower). To answer your question about Posco going down 50%, I think it could still be possible, because right now a large portion of Posco's enterprise value is debt, the equity portion could swing wildly and the enterprise value wouldn't move as much. I've heard the argument that a lot of the debt does not have to be paid by the parent, but I'm not sure how accurate that is. Also a statement on book value. Companies trade often trade below book value if they're not using their assets effectively or generating an adequate return, and above if they're generating above average returns. Posco right now falls into the former, so some discount is warranted. Hope this helps. +1 This is a great and short summary thesis. Might want to read a few times. Small Equity value (25% of Enterprise value) means it is a highly levered investment. Leverage amplifies both up and down moves. ;)

They usually overstate free FCF. Unless they give you their numbers, you will not be able to recreate. ???

Here is one: Walt's Revolution!: By the Numbers

Bring back Ballmer! I second that! I am thrilled he finally got his well deserved retirement! ;)

I liked them, there is no downside in getting the illuminated edition. ;)

The oracle once remarked: I have an 800 number I call when I get the urge to buy an airline stock. And I call them up at midnight and say my name is Warren and I'm an airholic and they talk me down. No more airlines! ;)