Guest dealraker Posted January 20, 2010 Share Posted January 20, 2010 Parsad, you win. I concede! http://finance.yahoo.com/news/Buffett-sour-on-Krafts-candy-rb-517557421.html?x=0&.v=3 Link to comment Share on other sites More sharing options...
Parsad Posted January 20, 2010 Share Posted January 20, 2010 You are going to make lots of money on the Cadbury deal? So who is the real winner! ;D Cheers! Link to comment Share on other sites More sharing options...
Guest dealraker Posted January 21, 2010 Share Posted January 21, 2010 Kind of a wash out for me at this point. A little more KFT stock and taxes to pay. Link to comment Share on other sites More sharing options...
Cardboard Posted January 21, 2010 Share Posted January 21, 2010 This acquisition is a terrible deal short term and I am not certain how long it will take to really deliver large cost savings. I am also not too happy to see how Irene got this through by effectively shutting down shareholders with no vote anymore. So what are you guys doing? Selling? The stock is still cheap, but nowhere near what it was prior to this acquisition. They made about $2 a share in 2009 and EPS was forecasted around $2.20 for 2010. With Cadbury and assuming a full year, 2010 earnings would be around $2. So instead of a 12.8 P/E, we now have a 14.1. IMO, a P/E of 15-16 for Kraft with or without Cadbury is about all one can hope for. I have a feeling that the Street will take a wait and see attitude which could mean little upside for the next few years. Cardboard Link to comment Share on other sites More sharing options...
oldye Posted January 21, 2010 Share Posted January 21, 2010 Think of Kraft stock as a BBB rated Perpetual Bond, (strictly back of the envelope calculation here) Pre Cadbury you had a bond paying 7.1% growing at 10% per year Post Cadbury you have a bond yielding roghly 6.2% growing a little faster than before. Buffett doesn't like to use synergies in his calculations so I'm not surprised he doesn't think the added growth will make up for the lost yield. At 28$ it still fits the Peter Lynch stalwart stock criteria and should earn a satisfactory return for its owners over time. Link to comment Share on other sites More sharing options...
twacowfca Posted January 22, 2010 Share Posted January 22, 2010 Think of Kraft stock as a BBB rated Perpetual Bond, (strictly back of the envelope calculation here) Pre Cadbury you had a bond paying 7.1% growing at 10% per year Post Cadbury you have a bond yielding roghly 6.2% growing a little faster than before. Buffett doesn't like to use synergies in his calculations so I'm not surprised he doesn't think the added growth will make up for the lost yield. At 28$ it still fits the Peter Lynch stalwart stock criteria and should earn a satisfactory return for its owners over time. Kraft may actually get some synergies out of this one if dealraker is correct that Cad. should have been able to have gotten better returns in recent years. Link to comment Share on other sites More sharing options...
Uccmal Posted January 22, 2010 Share Posted January 22, 2010 I sold half my Kft shares - small position anyway. I just dont have the patience for this one to turn. The stock will probably lose 15-20% during the transition creating some value along the way. Link to comment Share on other sites More sharing options...
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