Yacktman Funds Interview - Great Answers From Great Investors

From :
Yacktman Funds Interview - Great Answers From Great Investors


-The Yacktman Funds seem to contain a lot of “wonderful businesses” as opposed to classic Ben Graham net-net cheap businesses?
-
4. Can you walk us through the investment process at the Yacktman Fund?

A: A good amount of the time is spent finding the ideas. You can quickly filter a lot of things out. Once we’ve sifted through the ideas, generally the first thing we do is to read the annual reports and the proxy statements. We try to first get an understanding of the business so the business description section of the 10K is a great place to start. Then we move on to the risk disclosure section. Those are put together by management and lawyers sitting in a room trying to figure out what can go wrong with the business. These people are worried about getting sued so they’ll include the things that keep them up at night or keep them nervous in the disclosure in case something goes wrong.

I read the business description and risk disclosures first and then move on to financial statements and footnotes. We also use sell side research reports for industries we are not familiar with to help us get up to the speed. We also read trade articles or other publications that are relevant to the business. Typically, the last place we go is to the management team because management is usually there to sell you on why to own the stock. It’s much better to analyze what they have done than have them tell you what they are going to do.

We also try to get an understanding of how the businesses have performed historically. For instance, last night we were looking at the operating margins of consumer companies the 1960s and 1950s. We like history a lot because it gives you a great perspective on what might happen in the future.

-We usually buy and sell gradually. For the most part, we are slow in and slow out. Again, we don’t set a price target. Instead, what we do is we’ll make the stock 2% of the portfolio at this price and 3% if it drops further.

-Comparing companies of different industries using P/E or P/S ratio does not help you when you have a business that to earns a dollar and pays out a dollar and another business that earns a dollar and puts 50 cents back to keep up with competition. So when we are valuing a business, we’d like to focus on the forward rate of return. By that I mean if I buy a stock today at this price, what is my anticipation of the return I am going to get in the future? This forward rate of return includes free cash flow yields and anticipated growth rate.

-Furthermore, we will look at historical data and get an idea of how the business has been doing over the past 10 years. What percentage of earnings did they get to keep? We are trying to get a general idea for the future but we are not forecasting. If you are forecasting whether the business is growing at 7% or 8% in the future, you’ve already got a problem. We look at what the mean case scenario is and what the likely distribution of scenarios around the mean case scenario is. If you look at Procter and Gamble, in 20 years they will probably still own Tide, they are probably still going to be in hair and shampoo and they are still probably going to be dominating. You can pretty much forecast to a certain degree of certainty what is it going to be like in 20 years. But you can’t tell what Microsoft or Intel are going to look like in 20 years.

-The lower the ability to forecast the future, the lower the valuation should be. We’ll pay less because there is more volatility associated with it.

-And risk to us is not the risk of the stock price, it is the risk that the business is not performing as we expected. You can have a business that has been doing very well for the past 10 or 20 years but they may not be doing as well in the future. The newspaper business is a good example of this. We had looked at Gannett in the past. In 2004, at the multiple it was trading, you could expect to earn about 8.5 to 9 percent if they can repeat what they have achieved during the past 10 years. At the end of 2004, we were asking what are the odds that this newspaper company is going to keep earning 8-9% in the next 10 years and it was pretty obvious that the business model of the newspaper business is deteriorating and we did not think it was going to earn 8-9% in the future, we quickly threw the idea away.


-8. When you find out that you have made a mistake in your investment analysis, how do you go about exiting the position? Do you sell it right away?

A: As we gathered historical data from the new management team we did not feel confident in so we sold the position. If you think you’ve made a mistake, you should sell right away. Why hold something you are not comfortable with?

A: There are three co-managers of the funds. Where you see positions are very large, it is usually because we have a uniform consensus from the portfolio managers. Very often it is a relatively cheap low risk, high quality stock.

-We actually looked at JC Penney’s debt and we did not invest in it. It will be very hard to get interested in the equity if we passed on the debt.

-15.What advice would you give amateur investors with regard to suppressing the excitement and urge to act?

A: Some of the biggest investment risks come from valuation and businesses that are in highly competitive, rapidly changing markets. We would recommend sizing positions to manage the risk or uncertainty.

-Investing in cigar butts or wide moat? Both are ok if reasonable return can be expected.

From Do You Feel Lucky? Maybe Investors Should


But aren't individuals at the mercy of high-speed traders and institutional investors with giant portfolios?

"I think a lot of that talk is nonsense," Mr. Cloonan says. "Institutions are very short-term, constantly trading in and out. They're more concerned about not doing worse than average than they are about trying to think originally as investors."

For investors who are patient and disciplined, do their research and don't get caught up in the Wall Street game of trading too much, "it's easier than it's ever been to do pretty well," Mr. Cloonan says. "You just have to decide to do the right thing."

good quotes

“If you own the best dealership, the top bank, and the finest restaurant in town, you will do well.”
― Charlie Munger on Diversification

“I’m not interested in meeting management today… I’m more interested in finding out how a person has behaved in the past.”
― Bruce Berkowitz

“Successful investors tend to be unemotional, allowing the greed and fear of others to play into their hands. By having confidence in their own analysis and judgement, they respond to market forces not with blind emotion but with calculated reason. Successful investors, for example, demonstrate caution in frothy markets and steadfast conviction in panicky ones. Indeed, the very way an investor views the market and it’s price fluctuations is a key factor in his or her ultimate investment success or failure.”
― Seth Klarman


“The most successful horse players (I guess they lose the least) are the ones who don’t bet on every race but wager on only those occasions when they have a clear conviction.”
― Joel Greenblatt

During a visit to Columbia Business School many years ago, a student asked Warren Buffett how one could best prepare for an investing career. Mr. Buffett picked up a stack of financial reports he had brought with him and advised the students to read "500 pages like this every day". One of the students in the class happened to be Todd Combs. Mr. Combs took the advice quite literally and eventually got into a habit of reading far more than 500 pages per day. This work ethic contributed to a successful career running a hedge fund and a position at Berkshire Hathaway allocating several billion dollars of capital.

WB criteria for valuation of the market and some quotes

From a Motley Fool article :

In 2001 Buffett explained that determining whether the market is expensive or cheap doesn't have to be complicated. Here's the metric he uses:

The market value of all publicly traded securities as a percentage of the country's business -- that is, as a percentage of GNP. Basically, Buffett divides the total market capitalization of the U.S. stock market by gross national product. GNP measures the value of goods and services that a country's citizens produce regardless of where they live. This includes the value of goods and services that American companies produce abroad.

Buffett : "If the percentage relationship falls to the 70% or 80% area, buying stocks is likely to work very well for you. If the ratio approaches 200% -- as it did in 1999 and a part of 2000 -- you are playing with fire."

The most common way to calculate the market value is by looking up the market capitalization of the Wilshire 5000. The market cap of the Wilshire 5000 was $20.6 trillion. The Federal Reserve Bank of St. Louis has a great website where you can locate GNP ($16.9 trillion). (http://research.stlouisfed.org/fred2/series/GNP/)

Dividing the total market cap by GNP gives 122% indicates that the market is getting pricey.


-We don't spend any time looking back. We figure there is so much to look forward to, there's just no sense thinking of what might have been, it just doesn't make any difference. You can only live life forward. You can perhaps learn something from the mistakes

-Interest rate impact. What you really want to know in investments is what is important and what is knowable. If its unimportant or unknowable, you forget about it. We don't want to pass up a chance to do something intelligent because of some prediction that we're no good on anyway. So we don't read, or listen or do anything based on macro factors, zero.

-Concentrate on what will happen, not on the when. The when is unknowable.

Good checklist for investing

There's a good compilation of questiosn to think of before investing.

The Quality Of Business Earnings - Checklist Of Questions

by Tannor Pilatzke


Here are quotes by WB from here :

“Investing is reporting. I told him to imagine an in-depth article about his own paper. He’d ask a lot of questions and dig up a lot of facts. He’d know The Washington Post. And that’s all there is to it.”

“You need a moat in business to protect you from the guy who is going to come along and offer it (your product) for a penny cheaper.”

“If (you go into a store and) they say ‘I don’t have a Hershey bar, but I have this unmarked chocolate bar that the owner of the place recommends,’ if you’ll walk across the street to buy a Hershey bar or if you’ll pay a nickel more for the (Hershey) bar than the unmarked bar or something like that, that’s franchise value.”



“How much more fruitful it is for us to think about whether the product is likely to sustain itself and its economics than to try to be questioning whether to jump in and out of the stock.”

“If I’m thinking about investing in a specific company, I try to size up their business and the people running it. And as I read annual reports, I’m trying to understand generally what’s going on in all kinds of businesses. If we own stock in one company and there are eight others in the industry, I want to be on the mailing list for the annual reports of the other eight because I can’t understand how my company is doing unless I understand what the other eight are doing. I want perspective on market share, margins, the trend in margins – all kinds of things...”

“It’s amazing how well you can do in investing with what I’d call “outside” information. I’m not sure how useful inside information is. But there’s all kinds of “outside” information around as to businesses. And you don’t have to understand all of them. You just have to understand the ones you’re thinking about investing in. And you can. But no one can do it for you.”

“In my view, you can’t read Wall Street reports and get anything out of them. You’ve got to get your arms around it yourself. I don’t think we’ve ever gotten an idea from a Wall Street report. However, we’ve gotten a lot of ideas from annual reports. Charlie?”


“PUCCI”: Pricing, Units, Costs, Competition and Insiders



“Investors should remember that their scorecard is not computed using Olympic-diving methods: Degree-of-difficulty doesn’t count. If you are right about a business whose value is largely dependent on a single key factor that is both easy to understand and enduring, the payoff is the same as if you had correctly analyzed an investment alternative characterized by many constantly shifting and complex variables.” -- Warren Buffett

For the casual investor, Greenblatt recommends buying a portfolio of 20-30 Magic Formula stocks, holding for one year, and then re-running the process annually.

On the interest rate environment

The 'Rate Gap' Is Rising (http://online.wsj.com/news/articles/SB10001424052702304384104579143450479627172?mod=djemITP_h)
The gap between deposit rates and borrowing rates is higher than it's been in 32 of the last 40 years. by Andrea Coombes


Low interest rates have been bruising savers for years, but for a while those same low rates
were proving a boon to mortgage borrowers.

Not anymore.

In fact, the gap between the interest consumers earn on a savings account and the rate they pay on a 30-year fixed-rate mortgage is its widest in two years—and among the highest in more than 40 years—according to data analyzed by MoneyRates.com.

The widening spread also is a sign of the hurdles faced by retirees and other savers who are trying to generate income from relatively conservative investments.


For the month of September, the spread between the average rate on a 30-year fixed-rate mortgage (4.49%) and the average rate on a one-month certificate of deposit (0.06%) was 4.43 percentage points, according to data from the Federal Reserve and Federal Deposit Insurance Corp.


Since 1971, the average gap between those rates has been 2.83 percentage points. In 2007, the gap hovered around one point.

The gap has been higher than average since November 2008, shortly after the onset of the financial crisis, coinciding with efforts by the Fed to push short-term rates lower to stimulate the economy. Then the difference shrank to less than four percentage points for most of the past two years.


The problem for savers is that rates on savings accounts, money-market funds and certificates of deposit are tied very closely to short-term interest rates. But other interest rates are subject to a variety of market forces that tend to drive those rates higher, including lenders' perception of risk from inflation and default.


"If you're a bank and you're going to make a 30-year commitment, you don't want to be caught receiving a substandard interest rate," says Richard Barrington, a senior financial analyst at MoneyRates.com. "You're going to be pretty quick to raise your rates on any hint that mortgage rates might be due to go up."


The highest gap recorded since 1971 between 30-year fixed-rate mortgages and one-month CDs was 6.2 percentage points in August 1982. But back then, a one-month CD paid more than 10%. Today, by comparison, "the income-producing ability of your savings has virtually disappeared," Mr. Barrington says.

Consumers have a few options. Consider owning only shorter-term CDs, so you don't lock yourself into meager payments for the long run. Look into online savings accounts, which have fewer restrictions than CDs yet may pay the same or better rates right now. And consider shorter-term mortgages, since they tend to have lower interest rates than 30-year loans do.

From http://on.wsj.com/15ApOsp    Why Tough Teachers Get Good Results

Psychologist K. Anders Ericsson gained fame for his research showing that true expertise requires about 10,000 hours of practice, a notion popularized by Malcolm Gladwell in his book "Outliers." 

The rap on traditional education is that it kills children's' creativity. But Temple University psychology professor Robert W. Weisberg's research suggests just the opposite. Prof. Weisberg has studied creative geniuses including Thomas Edison, Frank Lloyd Wright and Picasso—and has concluded that there is no such thing as a born genius. Most creative giants work ferociously hard and, through a series of incremental steps, achieve things that appear (to the outside world) like epiphanies and breakthroughs.

Prof. Weisberg analyzed Picasso's 1937 masterpiece Guernica, for instance, which was painted after the Spanish city was bombed by the Germans. The painting is considered a fresh and original concept, but Prof. Weisberg found instead that it was closely related to several of Picasso's earlier works and drew upon his study of paintings by Goya and then-prevalent Communist Party imagery. The bottom line is that creativity goes back in many ways to the basics. "You have to immerse yourself in a discipline before you create in that discipline."

http://online.wsj.com/article/SB10001424127887324324404579044891534700108.html

Many money managers spend their days in meetings, riffling through emails, staring at stock-quote machines with financial television flickering in the background, while they obsess about beating the market. Mr. Munger and Mr. Buffett, on the other hand, "sit in a quiet room and read and think and talk to people on the phone," says Shane Parrish, a money manager who editsFarnam Street, a compelling blog about decision making.

We're happy due to: a strong sense of purpose, meaningful work, good friends, health, loving relationships, chance to learn, grow and help others. Long term profits come from having a deeper purpose, great products, satisfied customers, happy employees, great suppliers, and from taking responsibility for the community and environment.
John Mackey (Investment checklist)

You can't make a good deal with a bad person.
Turnarounds seldom turn.

“If you don’t know jewelry, know the jeweller.”

You do things when the opportunities come along. I’ve had periods in my life when I’ve had a bundle of ideas come along, and I’ve had long dry spells. If I get an idea next week, I’ll do something. If not, I won’t do a damn thing.

If a business does well, the stock eventually follows.

There are all kinds of businesses that Charlie and I don’t understand, but that doesn’t cause us to stay up at night. It just means we go on to the next one, and that’s what the individual investor should do.


I am out of step with present conditions. When the game is no longer played your way, it is only human to say the new approach is all wrong, bound to lead to trouble, and so on. On one point, however, I am clear. I will not abandon a previous approach whose logic I understand ( although I find it difficult to apply ) even though it may mean foregoing large, and apparently easy, profits to embrace an approach which I don’t fully understand, have not practiced successfully, and which possibly could lead to substantial permanent loss of capital. - 1969

If I was running $1 million today, or $10 million for that matter, I’d be fully invested. Anyone who says that size does not hurt investment performance is selling. The highest rates of return I’ve ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It’s a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that. “Homespun Wisdom from the ‘Oracle of Omaha’", BusinessWeek, 5 July 1999.


No sector is a good buy unless you understand the business. However, I do believe that there is good value and great opportunity now in the financial sector because it is extremely unpopular. Sector’s themselves don’t make good buys, companies that are undervalued make good buys. You know how to value a business, you project the future cash flows discounted to present and buy with a margin of safety. The earnings prospects need to be greater than the current value. Anything that is unpopular is always great to look at. If I was getting out of school right now, I would take a look.

None of this means, however, that a business or stock is an intelligent purchase simply because it is unpopular; a contrarian approach is just as foolish as a follow-the-crowd strategy.


-WB

From PD James "The private patient"

-His life was a mess. Some part of his nature, timid, indolent, lacking in confidence, had led him into this pattern of indecision, of leaving things to sort themselves out, as if he put faith in a benevlovent providence which would operate on his behalf if left alone.

-You surely understand one thing, the need to do what every instinct of your body tells you is ordained for you.

-Don't we all at some time or another make a decision which we know is absolutely right, the assurance that some enterprise, some change, is imperative? And even if it fails, to resist it will be a greater failure. I suppose some people would see that as a call from God.

-Life is too precious and too short to waste on people we don't care for, and much to precious to give up on love.

-A garden she could make and cherish, a useful job that she could do without strain with people she respected...

-"I like you, I respect and admire you. I'm never bored on irritated when we're together, and we share the same passion for the house, and when I return here and you're not about I feel an unease which is difficult to explain. Its a sense that there's something lacking, something missing. Can you call that love? Is it enough? It is for me, is it for you? Do you want time to think about it ?" And now she turned to him, "Asking for time would be play-acting. It is enough".

From "http://www.businessnewsdaily.com/4211-business-profile-warren-buffett.html"

"You can have the greatest goals in the world," he said, "but if you have the wrong people running it, it isn’t going to work. On the other hand, if you’ve got the right person running it, almost anything is possible."

-When his first child was born, he turned a dresser drawer into the baby's bassinet and borrowed a crib for the second child. Not one for fancy cars, Buffett drove a Volkswagen until his wife upgraded him to a Lincoln Towncar. 

-"I'm happy there," he said. "I'd move if I thought I'd be happier someplace else. How would I improve my life by having 10 houses around the globe? I'm warm in the winter; I'm cool in the summer. It's convenient for me."

-"I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will."

Avoiding mistakes - routine is key

Having well-defined procedures is a start. For everything from acquisitions to annual budgets, when CFOs and management teams follow well-structured processes, more careful analysis takes place. Checks and balances kick in that can curb impulses and other destructive forms of fast thinking.

Aswath Mohan on Valuation

-Some analysts determine operational cash to be 1-2% of revenues. Rest is treated as excess cash and used to reduce debt balance.

-It is safer to separate cash and marketable securities from operating assets and to value them individually.  Thisis because we use operating income to estimate free cash flows to the firm and operating income generally does not include income fromfinancial assets. Once you value the operating assets, you can add the value of the cash and marketable securities to it to arrive at firm value.

From Seth Klarman's 2007 MIT speech

-A steadily rising housing market erased fears of credit risk, since one’s credit really doesn’t matter if the collateral—in this case houses—is only going up in value 

-Institutional selling of a low-priced small-capitalization spinoff, for example, can cause a temporary supply-demand imbalance. If a company fails to declare an expected dividend, institutions restricted to owning dividend-paying stocks may unload shares. Bond funds allowed to own only investment-grade debt would dump their holdings of an issue immediately after it was downgraded below BBB by the rating agencies. Market inefficiencies, like tax selling and window dressing, also create mindless selling, as can the deletion of a stock from an index. 

-My firm’s approach is to seek situations where there is urgent, panicked or mindless selling.

-smart investors look to the market not as a guide for what to do but as a creator of opportunity.

-The best investors do not target return; they focus first on risk, and only then decide whether the projected return justifies taking each particular risk

Case Schiller P/E 

Diversification reduces risk

If there is a bet on a flip of a coin : $100 becomes $120  on heads and becomes 0 on tails.
Value of bet is : 120 *0.5 + (-100) * 0.5 = 10.
Return is 10/100 but worst case is too risky (-100%)

If there are 10 coins, $10 bet on each, it becomes : $12 on each head and $0 on tails.
value of bet is 5heads and 5 tails : 10* (12 * 0.5 + (-10) * 0.5) = 10   = 10%
If it is 4H:6T : 4*(12 * 0.5) + 6*(-10)*0.5 = 24 -30 = -6  = -6%


-Lastly, O’Shaughnessy believes that proper diversification is a key factor in maintaining a profitable portfolio. He recommends at least 25 stocks in a micro-, small- or mid-cap portfolio and at least 10 in a large-cap portfolio. 
-In case you were wondering, a strategy based on buying stocks with the worst 6-month returns and then holding for a year had an annualized return of 4.15 percent (compared to 14% for low p/s)!  As stated in the book, “If you’re looking for a great way to underperform the market, look no further [than buying relative strength laggards].”
-Low P/S and P/B led to best returns.  Adding a generic relative strength strategy based on a 6-month return factor with annual rebalances outperformed further.

Greenblatt's little book notes

From Greenblatts little book that beats the markets
-If the gum shop earns 1.2M last year. 1M shares. How much  to buy at?  $12 seems good for 10% earnings yield. But main problem in investing is determining if we will get $1.2 per year going forward as well and if earnings could be higher going forward.

-There are many ways to define what makes a business good or bad- quality of products or services, loyalty of customers, value of its brands, efficiency of its operations, strength of competitors, long term prospects of a business.

-If it cost jason $400K to build each of his gum stores and if each store earned him $200K, he is earning a retun on capital of 50%.

-Buy at high earnings yield + high ROIC

-Graham suggested that by buying a group of these bargain stocks, investors could safely earn a high return without worrying about a few bad purchases and without doing complicated analysis of individual stocks.

-Magic Formula : IT takes also stocks and ranks them based on earnings yield. It also takes the same list and ranks them on ROIC. Then the two ranks are added together for a final list that is ranked from highest to lowest combined score.

From "The outsiders" by William Thorndike

-The outsider CEOs achieved extraordinary results by consistently zigging while their peers zagged.

-The outsider CEOs consistently calculated the projected return before starting a project. They believed that the value of the financial projections was determined by the quality of their assumptions, not by the number of pages. Many developed single-page analytical templates that focused employees on key variables. These deceptively simple but analytical one-pagers served as a trigger to invoke Kahneman's slower reflective/analytical System 2

-To Buffett, there is a compelling  Zen-like logic in choosing to associated with the best and in avoiding unnecessary change.

-Buffett believes that excellent investment ideas are rare and exceptional returns come from concentrated portfolios. "We believe that a policy of portfolio concentration may well decrease risk if it raises the intensity with which an investor thinks about a business and the comfort level he must feel with its economic characteristics before buying into it"
-Better to change vessels in a chronically leaking boat than to patch leaks

-See's : The Turning point : WB bought See's for $25 million. They had tangible book of $7M and 4.2M in pre-tax profits. They paid an exorbitant 3X book and 6 times pre-tax income compared to Graham's strictures. They saw a beloved brand with excellent returns on capital and untapped pricing power. The company has sent 1.65B in free cash to Omaha in 39 years.

-Buffett's contrarian insight was that companies with low capital needs and the ability to raise prices were actually best positioned to resist inflation's corrosive effects.

-The deals not done were very important.

-Singleton was a very disciplined buyer, never paying more than 12 times earnings and purchasing most companies at lower multiples. Many companies were acquired using Teledyne's pricey stock.

on gold

From Hulbert on gold 3/29/13

Consider: Investors who bought gold at its January 1980 peak of $875/oz are today still below water in inflation-adjusted terms. They even were showing a loss two years ago when gold was trading for more than $1,900.

The investment implication is to pay careful attention to gold's longer-term cycles before buying gold—or be willing to hold it for many decades.

So how should you decide where gold is in its long-term cycle? As a rule of thumb, the researchers urge investors to calculate a ratio of gold's price to the level of the consumer-price index. This ratio's historical average has been about 3.4 to 1, so it is a good bet that gold is overvalued whenever the ratio is well above that level.

When gold hit its high over $1,900 an ounce in September 2011, for example, the ratio was more than 8 to 1. In January 1980, the ratio stood at more than 11 to 1.

Unfortunately for the gold bugs, the current gold/CPI ratio—5.3 to 1—is still above average, even in the wake of gold's plunge over the past three months. To be in line with that average, gold would have to trade for $780 an ounce. 

buffett 2013 AM

http://dealbook.nytimes.com/2013/05/04/live-blog-berkshire-hathaways-2013-shareholder-meeting/


Q Asked about Herbalife and Ackman's fight and multi-level marketing.
A Mr. Buffett replies that the ultimate test is whether there’s a market for the goods being sold. And in the case of Pampered Chef, he says, there’s no question that there is. (BH owns Pampered Chef, also an MLM)

Qut still, interest rates will rise, and it will be a “shot heard around the world.”

A separate question from Ms. Quick: How does the policy affect Berkshire’s companies? Mr. Buffett notes how asset prices have risen because of the abundance of cheap debt, as well as lowering the costs for a deal like the Heinz takeover.

“This is like watching a good movie, as far as I’m concerned,” he says, “because I don’t know how it will end.”

Mr. Buffett says that the past decade has generally been rough for business. That said, if the market continues to rally as it has this year, Berkshire will suffer its first five-year period of trailing the S.&P. 500.

“It won’t be a happy day, but it won’t discourage us,” he said. He added as a caveat that the company is likely to outperform the market in down years.

• What Buffett says about his research and process in making investments given there are legendary stories of his past due diligence, including of American Express, where he hired advisers. That contrasts to the $5 billion he put into Bank of America in 2011, which Buffett has admitted he decided in the bathtub would be a good idea and called.
• “You have to love something to do well at it. ... It is an enormous advantage if you absolutely love what you are doing. ... The nature of it is that intensity adds to your productivity.

  That follow-up shareholder asked them about metrics and screening for stocks, and Buffett and Munger both said they don’t really look at numbers.
• “We are looking at businesses exactly like we are looking at them if somebody came in and asked us to buy the whole business,” Buffett said. He said they then want to know how it will do in ten years.

  Munger was even more forceful: “We don’t know how to buy stocks by metrics ... We know that Burlington Northern will have a competitive advantage in years ... we don’t know what the heck Apple will have. ... You really have to understand the company and its competitive positions. ... That’s not disclosed by the math.

  Buffett: "I don’t know how I would manage money if I had to do it just on the numbers"

  Munger, interupting, "You’d do it badly."

WB U nebraska speech contd

We pay no attention to economic forecasts. I don’t read anything [along those lines]. I read annual reports, but I don’t read anybody’s opinion about what’s going to happen next week, or next month or next year.

The second question is whether there are any special industries we favor. The only thing we favor is industries we can understand. And then, we like businesses with what I call “moats” around them. We like businesses that are protected in some way from competition. If you go in the drugstore and say “I want to buy a Hershey bar” and the guy says “I’ve got an unmarked chocolate bar that’s a nickel cheaper,” you’ll buy the Hershey bar or you’ll go across the street.

One of the interesting things to do is walk through a supermarket sometime and think about who’s got pricing power, and who’s got a franchise, and who doesn’t. If you go buy Oreo cookies, and I’m going to take home Oreo cookies or something that looks like Oreo cookies for the kids, or your spouse, or whomever, you’ll buy the Oreo cookies. If the other is three cents a package cheaper, you’ll still buy the Oreo cookies. You’ll buy Jello instead of some other. You’ll buy Kool Aid instead of Wyler’s powdered soft drink. But, if you go to buy milk, it doesn’t make any difference whether its Borden’s, or Sealtest, or whatever. And you will not pay a premium to buy one milk over another. You will not pay a premium to buy one [brand of] frozen peas over another, probably. It’s the difference between having a wonderful business and not a wonderful business. The milk business is not a good business.

Anything that differentiates your product – those are the businesses we like to be in.

The durability and strength of the franchise is the most important thing in figuring out [whether it’s a good business]. If you think a business is going to be around 10 or 20 years from now, and that they’re going to be able to price advantageously, that’s going to be a good business. And if somebody has to have a prayer session every time they want to raise the price a dollar a pound on whatever they’re selling, that’s not going to be a good business.

One of the things you will find, which is interesting and people don’t think of it enough, with most businesses and with most individuals, life tends to snap you at your weakest link.

The two biggest weak links in my experience: I’ve seen more people fail because of liquor and leverage

Buffett Nebraska

Q What exactly do you do all day?
A I spend an inordinate time reading. I probably read atleast six hours a day, maybe more.And I spend an hour or two on the telephone.And I think. Thats about it.

-I would say there is no hunch or intuitiveness or nothing of the sort. I try to sit and figure out what the future economic prospects of a business are. I try to figure out whether the management is someone or a group I both trust and admire, and I try to figure out whether the price is right. I mean that: Its the right business, the right people and the right price.

Buffett notredame, pricing power

Buffett Notredame

-I would say that the most important thing in business, and investments, which I regard as the same thing, from our standpoint, is being able to accurately define your circle of competence.

-You need very few good ideas in your lifetime. You have to be willing to have the discipline to say, “I’m not going to do something I don’t understand.”

-Why should I do something I don’t understand? That’s why I find it an advantage to be in Omaha instead of New York. I worked in New York for a few years, and people were coming up to me on the corner and whispering in my ear all the time. I was getting excited all the time. I was a wonderful customer for the brokers.

-But now you say “I don’t know how to evaluate the Washington Post.” It isn’t that hard to evaluate the Washington Post. You can look and see what newspapers and television stations sell for. If your fix is $400 and it’s selling for $390, so what? You can’t [invest safely with such a small margin of safety]. If your range is $300 to $500 and it’s selling for $80 you don’t need to be more accurate than that.

-[Question from audience about how many of his investment ideas are pitched to him by others.]

Practically none. The Wall Street Journal is my deal source. There are 1,700 or 1,800 of America’s companies that I’m generally familiar with

-We read hundreds and hundreds of annual reports every year. I own 100 shares of everything. I find this much more reliable than asking to be put on a mailing list

-Well, I would say this. If we were working with $25 million – so we could sort of look at the whole universe of stocks – I would guess that you could find 15 or 20 out of three or four thousand that you would find that were A) selling for substantially less than they’re worth, and B) that the intrinsic value of the business was going to grow at a compound rate which was very satisfactory.

-You don’t want to buy a dollar bill that’s sitting for 50 cents, and it demands positive capital, and it’s going to be a dollar bill ten years from now. You want a dollar bill that’s going to compound at 12% for [a long time].

-Incidentally, I would say that almost everybody I know in Wall Street has had as many good ideas as I have, they just had a lot of [bad] ideas too. And I’m serious about that. I mean when I bought Western Insurance Security selling at $16 and earning $20 per share, I put half my net worth into it. I checked it out first – I went down to the insurance commission and got out the convention statements, I read Best’s, and I did a lot of things first.

-A couple of fast tests about how good a business is. First question is “how long does the management have to think before they decide to raise prices?” You’re looking at marvelous business when you look in the mirror and say “mirror, mirror on the wall, how much should I charge for Coke this fall?” [And the mirror replies, “More.”] That’s a great business. When you say, like we used to in the textile business, when you get down on your knees, call in all the priests, rabbis, and everyone else, [and say] “just another half cent a yard.” Then you get up and they say “We won’t pay it.” It’s just night and day. I mean, if you walk into a drugstore, and you say “I’d like a Hershey bar” and the man says “I don’t have any Hershey bars, but I’ve got this unmarked chocolate bar, and it’s a nickel cheaper than a Hershey bar” you just go across the street and buy a Hershey bar. That is a good business.

-I’ll try this on the students later: What’s the highest price of a daily newspaper in the United States? [Pause] The highest priced daily newspaper in the United States is the Daily Racing Form. 150,000 copies a day, $2.25 a copy, they go up in 25 cent intervals, and it doesn’t affect circulation at all. Why? There is no substitute. If you go to the track, assuming you’re a forms player, you don’t want “Joe’s Little Green Sheet”, you want The Form. And it doesn’t make any difference what it costs! There is no substitute. And that’s why they’ve got a 65% pretax margin. It doesn’t take a genius to figure it out.
There are products like that, and there are products like sheet steel. And they’re night and day.

-Then [I said] “I’ve got only one other question: How do you figure out how much to charge people? You look like a man of awesome commercial instincts – you started with a $1,500 radio station, now you’re worth $4 or $5 billion dollars.”
He said “Well, that’s another good question. I just tell my US managers to try and make 45% pretax and figure that’s not gouging.”

-Lord Thompson, once he bought the paper in Council Bluffs, never put another dime in. They just mailed money every year.

- The idea was that, essentially, he raised prices and raised earnings there every year without having to put more capital into the business.

-The product was undifferentiated (berkshire lining). The candy product is differentiated (sees). (Garbled story of Hershey Bar and Coke versus unbranded but modestly cheaper products).

-You really want something where, if they don’t have it in stock, you want to go across the street to get it. Nobody cares what kind of steel goes into a car.

-someday, there’s going to be some business I understand selling for way less than the value I arrived at. It doesn’t have anything to do with book value, although it does have to do with earnings power over a period of time. It usually relates, fairly closely, to cash [flow]

-Essentially, they ignored it because it was so familiar. But that happens periodically on Wall Street.

-Western Insurance companies: I didn’t have any background in insurance. But I knew I could understand it if I worked at it for a while. And all I was really trying to do was disprove this thing. I was really trying to figure out something that was wrong with this. Only there wasn’t anything wrong. It was a perfectly good insurance company, a better than average underwriter, and you could buy it at one times earnings.

-think the Wall Street Journal is essential. I spend 45 minutes a day with the Wall Street Journal. Actually, I got up the night before, about 11:00... I frequently read it at night. But I’ll read anything. Actually, I probably spend five or six hours a day on reading

-Buried in rented suit

Mecham

Mecham:

-It’s really quite simple. I need to understand the business like anowner. The firm needs to have staying power; I want to be confident about thegeneral nature of the business and industry landscape on a longer term basis 

-In fact, I think very little about quarterly earnings and more aboutthe barriers to entry, competitive landscape/threats, the ongoing capital needsand overall economics, and most importantly, the durability of the business 

-Wealso stress test the business under various economic scenarios and look to anormalized earnings power. We passed up many seemingly attractive ideas overthe years as we would ask, “What happens under 7-10% unemployment (whenunemployment was in the 4-5% range) and 6-8% interest rates?

 
-“Is the business overly reliant on loose credit extension and frivolousspending?” Many names didn’t hold up under these stress test scenarios, so wepassed.

 
-We prefer cockroach-like businesses — very hardyand almost impossible to kill!

 
-Oftentimes a key cog of valueis in a form that’s difficult to measure — brands, mindshare/loyal customers,exclusive distribution rights, locations, management, etc. Sometimes it’s thelocation of assets that can be hugely valuable. Waste Management [WM] andUSG [USG] both have assets that are uniquely located and almost impossible toduplicate, which provides a low-cost advantage in certain geographies.

 
-Any time you arepaying a price today that’s dependent on heroics tomorrow — fantastic growthfar into the future, favorable macro environment, R&D breakthroughs, patentapproval, synergies/restructurings, dramatic margin improvements, large payofffrom capex, etc. — you run the risk of inviting pesky over-optimism(psychologists have shown overconfidence tends to infect most of us), whichcan result in skewed probabilities and payoffs. We want to see a return todayand not base our thesis on optimistic projections about the future. Investments based on projections that are disconnected from any historicalrecord make us leery. Investments dependent upon a continued frothy macroenvironment (housing, loose credit) are prone to over-optimism as well — howmany housing-related/consumer credit companies were trading at 6x multiplesgrowing 15%+ inviting IV estimates 5x the current quote?

-How do you generate investment ideas?

Mecham: Mainly by reading a lot. I don’t have a scientific model to generateideas. I’m weary of most screens. The one screen I’ve done in the past was bymarket cap, then I started alphabetically. Companies and industries that are outof favor tend to attract my interest. Over the past 13+ years, I’ve built up a baseof companies that I understand well and would like to own at the right price. Wetend to stay within this small circle of companies, owning the same namesmultiple times

-That’s the beauty of the public markets: If you can be patient, there’s a goodchance the volatility of the marketplace will give you the chance to owncompanies on your watch list. The average stock price fluctuates by roughly80% annually (when comparing 52-week high to 52-week low). Certainly, theunderlying value of a business doesn’t fluctuate that much on an annual basis, sothe public markets are a fantastic arena to buy businesses if you can sit stillwithout growing tired of sitting still

-We try andstick with companies we understand, where we have a high degree of confidencein the staying power of the firm. We spend considerable effort thinking criticallyabout competitive threats (Porter’s five forces, etc). We really stress long-termstaying power and management teams with proven track records that are focusedon building long-term value. Then we always “stress test” the thesis againstdifficult economic environments.

 

-If the financialcrisis taught nothing else, it showed how elegant financial models that calculaterisk to decimal point precision act like a sedative towards critical thinking andeven common sense

 
-Most investors are their own worst enemies — buying and sellingtoo often, ignoring the boundaries of their mental horsepower. I think ifinvestors adopted an ethos of not fooling themselves, and focused on reducingunforced errors as opposed to hitting the next home run, returns would improvedramatically

 

  

 

When to walk away

Scott doesn’t need predictions of US$60 iron ore to tell him to steer clear of the notoriously cyclical sector. If he can’t reasonably predict the future demand or supply for something — especially a commodity like iron ore — he simply walks away.

There are no penalties in the investing game for missing out on the next big winner.

From http://www.forbes.com/sites/johnnosta/2013/02/25/the-genius-of-raising-brilliant-kids/

Limit rules, encourage independence.  We have ‘minimal rules’, but nothing that stifles creativity. Basically, you can sum it up simply: treat people with respect, do your homework be honest and try to be safe.  Having too many rules burdens down the entire family and limits thinking.

Buffett on pricing and a good business

In an interview with the Financial Crisis Inquiry Commission (FCIC), Buffett said, "The single most important decision in evaluating a business is pricing power. If you've got the power to raise prices without losing business to a competitor, you've got a very good business. And if you have to have a prayer session before raising the price by 10 percent, then you've got a terrible business." Lubrizol appears to fit the bill.


Read more: http://www.marketfolly.com/2011/03/why-did-warren-buffett-purchase.html#ixzz2LY1buBpj

Principles from "Influence" by Robert Cialdini

1. Reciprocity - People tend to return a favor, thus all those annoying address labels charities send out as a fundraising ploy.

2. Scarcity - Perceived scarcity fuels demand. “Only four memberships are left” prompts action!

3. Authority - People will tend to obey authority figures. What expert can attest to the value of your organization?

4. Consistency - If people commit to an idea or goal, they are more likely to follow through. It’s why pledging is a great option for people who aren’t ready to take action.

5. Liking - People are easily persuaded by other people whom they like. That’s why you want your champions spreading the word about your cause among their friends and family.

6. Consensus - People will do what other people are doing. That’s why it’s great to show who is taking action for your cause - others are likely to conform.

In this clip, Buffett's asked how the rest of us can find a job that has us tap dancing to work. Here's his advice:

"Find your passion. I was very, very lucky to find it when I was seven or eight years old... You're lucky in life when you find it. And you can't guarantee you'll find it in your first job out. But I always tell college students that come out (to Omaha), 'Take the job you would take if you were independently wealthy. You're going to do well at it.'"

And if Buffett hadn't found his passion for investing?  He says he might have been a journalist.

buffettt on buying a house 10/22/2012

Warren, do you —do you still think a single family home is one of 

the best investments around? And have you actually tried to figure out 

a way to invest in that? You'd like to buy 100,000 —you've said that 

you'd like to buy as many as you could, but they're impossible to 

manage and you can't really do it. Have you figured...

BUFFETT: Yeah.

JOE: Have you tried to figure out a way to do it?

BUFFETT: Yeah. And I've had a lot of suggestions from people after I

made that statement. But it's not really feasible, certainly, compared 

to other things we can do with money. They're —it's just too big a 

problem to deal with small units like that and management problems 

and human problems. So I think that anybody that knows where 

they're going to want to live, has a reasonably assured income. I think 

they're making a terrible mistake if they don't buy a single family 

home now and get a mortgage at these rates. And they should get a 

30-year mortgage. It's a —it's a —really a golden opportunity. It was a 

little bit better six months ago, but it's still wonderful now. You're not 

going to see a chance like this five years from now. I'll guarantee you 

that.

BECKY: Five years from now it's going to be a different picture, and 

that's interesting.

BUFFETT: Yeah. Rates will be higher and all kinds of things. I mean,

this is —this is the time to buy.

BECKY: And you think prices will rebound, too.

BUFFETT: If you know where you want —you've got to want to live 

there, I mean, and a home's a wonderful thing.

BECKY: Hm.

BUFFETT: But I wouldn't buy one if I was going to move in six months 

or something of the sort. And I wouldn't buy one if I was terribly nervous about my 

job.

BECKY: Ted Weschler and Todd Combs talked about what they've 

been doing as an investment cycle. 

How much of that is yours? How much of that is theirs?

BUFFETT: Very little of it's mine. I mean, if it's Wells Fargo or IBM or 

Coca-Cola, I mean, I've got four stocks that aggregate over 50 billion 

that I manage. And then I've got a bunch of other things, too. But the 

action is with Ted and Todd. And they're building up portfolios, and 

they will buy $500 million at a time of something. And they're probably 

more prone —one of the two is more prone to move around in 

securities than I would be. But there's a lot of styles that work. So I 

am enormously pleased.

Greenblatt on investing

"When we buy things, we like companies that generate large amounts of cash flow relative to the price we're paying.  On the short side, we would like to be short, high-priced, cash-eating companies."

"If you don't lose money, most of the alternatives are good.  Even if you don't know what the upside is - if you just know there's upside - you can create scenarios where you have an excellent risk/reward.  Positions with limited downside are the types of positions that I have loaded up on in the past.  Not the positions with the biggest payoff.  I could buy a lot knowing that I wouldn't lose much and that there were good possibilities that it was worth a lot more over time."

my fave quotes from quora

Nobody tells this to people who are beginners, I wish someone told me. All of us who do creative work, we get into it because we have good taste. But there is this gap. For the first couple years you make stuff, it’s just not that good. It’s trying to be good, it has potential, but it’s not. But your taste, the thing that got you into the game, is still killer. And your taste is why your work disappoints you. A lot of people never get past this phase, they quit. Most people I know who do interesting, creative work went through years of this. We know our work doesn’t have this special thing that we want it to have. We all go through this. And if you are just starting out or you are still in this phase, you gotta know its normal and the most important thing you can do is do a lot of work. Put yourself on a deadline so that every week you will finish one story. It is only by going through a volume of work that you will close that gap, and your work will be as good as your ambitions. And I took longer to figure out how to do this than anyone I’ve ever met. It’s gonna take awhile. It’s normal to take awhile. You’ve just gotta fight your way through.” ― Ira Glass


 "Be who you are, and say what you feel, because those who mind don't matter, and those who matter don't mind." - Dr Seuss.


 Steve Jobs's 2005 Commencement Address"Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma — which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary."


 People are often unreasonable, illogical and self centered;Forgive them anyway.
If you are kind, people may accuse you of selfish, ulterior motives;Be kind anyway.
If you are successful, you will win some false friends and some true enemies;Succeed anyway.
If you are honest and frank, people may cheat you;Be honest and frank anyway.
What you spend years building, someone could destroy overnight;Build anyway.
If you find serenity and happiness, they may be jealous;Be happy anyway.
The good you do today, people will often forget tomorrow;Do good anyway.
Give the world the best you have, and it may never be enough;
Give the world the best you've got anyway.
You see, in the final analysis, it is between you and your God;It was never between you and them anyway. -Dr. Kent M.

Wsj 2012

12/4/12
ISM index of non manufacturing activity - above 50 signifies expansion. They expect it to be 54 in November. This is the 35th consecutive month above 50, that dignifies expansion. A number closer to that line or below it would be due to a weak economy or fiscal cliff worries. Services.
In jan 2008, a streak of 57 consecutive months of expansion was broken when the index plunged to 45. The great recession started that month.


11/21
-open source animation software
Dreamworks open vdb
Disney render man 2000
Sony alembic

-vivendi owns canal plus



largest ng Producer in us is xom, next is Chesapeake.
Suncor those producers who mine bitumen and produce synthetic crude from it , the break even threshold is $100 a barrel. Most efficient oil sands producers need $50
Us n Dakota oil output is threatening Canada's boom. Lower prices.
10/30/2012
Housing starts have risen to 872k.
During the peak of new home construction in 2006, the us built 1.6M homes. Today's 872k annual rate of homes is short of average for past half century. On average, buildrrs hVe started construction on about 1.5M new homes a year since 1959

Samsung mobile business accounts for more than half of revenue

Telefonica has highest debt 57b. Difficult to refi



Buffett thinks sfh is a great buy right now compared to 5 yrs from now.
Us is doing better than Europe. Asia slowing some as is global economy.
Loves wfc and IBM
Doesn't think ng will be exported from us. Should not be anyway for benefit of future generations.
Acquisitions happening at high multiples dues to cheap money.
He thinks European banks still have too much leverage



3M only 30% revenue from north America. A good bellwether for global economy. Same as Dow chemical?

Natural gas is 70% of fertilizer cost


Hotel companies
Accor and ihg largest in china
Hilton Waldorf Astoria doubletree
Marriott ritz renaissance courtyard
Accor Sofitel Pullman mgallery mercure
Novotel ibis etap
Ihg intercontinental holiday inn crowne indigo

College housing firms- American campus communities, education realty trust, landmark properties
Warehouse firm- prologis
Mall company Simon property group

Bp estimate of reparation to us is 5-21B

Caterpillar promotes from within
Total eni at discount due to Europe
Avoid realogy iPo
Worlds no 2 retailer by sales Carrefour.

Projected Costs per megawatt hour 2017
Ng 66
Hydro 88
Wind 96
Coal 97
Geothermal 98
Nuclear 111
Biomass 115
Solar photovoltaic 152
Solar thermal 242

10/7
Fox news corp
Abc Disney
CBS CBS corp
NBC Comcast
Focus features a unit of comcasts NBC universal
Image nation - financing of movies. Partially owned by Abu dhabi
Xom, cop and chevron defend tracking as safe
-Monsanto requires growers to use seeds only for a single crop and they can't save the 2nd generation seeds from the harvest. Seeds are called roundup ready and produce crops resistant to weed killer.
-
10/1
Drought has sent crops skyrocketing but south America and us should increase plantings next year. Should benefit fertilizer companies like mosaic, potash corp, cf industries. Rock wood holdings, .

- metals could drop almost 40%. Current bhp and rio shares trade at 15 times earnings at current metal prices.
-seadrill, noble and transocean deep water drillers may benefit as oil reserves become more difficult to reach
-nat gas is 2.8 per mbtu, up from 1.91 but well below average of 10 yrs $6.
Companies that benefit from cheap gas: mosaic, lyondellbasell. Both use nat gas as inputs.


9/29

-Anglo American lot of project delays, lagging gold and problems in Africa.
-Ford gm Peugeot etc struggling in Europe
-modest debt and improving profits in financial statements.
-make money in diverse ways
-consolidated Edison
-at the moment priciest shares based on forward p/e are steady consumer staples, telecom and utilities
-one time share buy backs are I'll timed. Consistently buying back shares companies outperform a bit. Eg autozone, resmed. Also those who pay a dividend and repurchase shares.
-a basket of stocks with the highest investor yield: high dividends + large buy back yielded 6.6% more
-highest investor yield: duke energy, triumph group and Polaris industries.
-biggest buys : susp 20.50 7.2m$, agco 5m 45.56 Natr 3m 15.90,
-bac Merrill acquisition have good profits but country wide was disaster. Overpaid for Merrill.
-avoid Sony Olympus sharp renesas.
Sony 4 yrs of losses,
-

-Leslie Michelson CEO of private health management co.ultra high end health care. Manages patients care by coordinating multiple best doctors, research etc.

9/27
-proctor gamble concentrated on upscale products. Pampers, charmin, Gillette, Tide, Pantene, Olay, Old spice,
-tempur pedic has 13% of us market, sealy has 22%.
-fiat got 92% of first half profit from Chrysler.
-premium metallurgical coal was trading 330 per metricyon, now 170 per ton. Chinese sales down.
-honhai net margin from 12% in 2000 to 2.4% in 2012
-


Rim us market share has dropped from over 50% 2008 to under 5% in 2012.
-airlines hand out iPads instead of tv screens.
- dishtv to roll out broadband service for rural areas. Directv also next quarter. These 2 are competitors. Echo star is sibling of dishtv that launched a high speed satellite. Cable and phone companies offer 305 mbps max vs max 5-10mpbs for 39$ to existing customers or 49$ per month. for new. 19 million market?

9/23

-the launch pad- book on ycombinator. Where apps are hatched.
-where have all the cowboys gone? Old fashioned individualism.

-exelon nuclear plant operator. Dominion resources. AES corp gas fired units.

- Delhi dazzler- the story of my assassins. Tarun tejpal

-unh being added to Dow. Intuitive surgical makes robots for surgery. Richly valued. Varian medical a better bet, radiation machines to precisely target rumors. Cerner's systems digigitize patient records. Perrigo is maker of store brands of OTC medicines. Gilead sciences has an HIV treatment that can replace multiple pills with single. Also has a hepatitis c drug with promising results. Insurers have uncertainty with future overhaul but unh has a good history of helping customers cut costs. Merck Pfizer also decent.
-denbury sold bakken assets to Exxon. More interested in old oil fields instead of shale. Gas accounts for less than 10% of output compared with 2/3rds for the sector. If you're betting on a gas rebound in 2013, denbury is not for you. Denbury made the highest margin per barrel. Unlike a shale field much of the investment is made upfront in securing co2 supplies and pipelines. They pump co2 into mature oil fields to force more oil out. Once this initial spending is done, less spending required to maintain output. Also lives within its means, capex at denbury is equal to cash flow compared to 160% at peers.


-Liberty global 2nd largest csble subscribers after Comcast. Operates 13 cable companies in Europe. In Europe cable business more regulations and different appetites for expensive cable. Libertys monthly arpu is$24 in Germany vs nearly $150 in the us for Comcast. But libertys per subscriber content costs are $5 per month whereas they are about $40 for us companies.
Liberty has raised profits even during economic turmoil and aggressively bought back shares. If Europe consolidation can occur, it may benefit.



9/22
Last 5 yrs, gold has risen 142%, miners of gold gone up only 20%. Gold deposits harder to develop. While gold prices doubled so did costs. Also miners profligate spenders. Over last decade, they made operating cash flow combined of 68b but spent 89b on acquisitions and capex. Dividends meanwhile wee less than 10b even as shareholders were diluted to help fund expansion with the share count jumping 151%. Acquisitions have irked investors at barrick gold, kinross. Canadian b2gold dropped 12% after saying it would pay 26% premium for Cga mining. One route miners could try is what oil majors did in late 1990s: mergers with no premium paid.


-Pernod 2nd largest company- makes chivas absolut among others. Diageo is number 1
-brown Forman jack Daniels no.3 spirits group by sales.
-beam
-ikea catalog graphics 3 interns
-virgin owns 51% of Singapore
-royalty trusts depletion means income may go to zero. Also no principal returned
-syartups bar code for tracking where food is from. Chegg is textbook rental
-best buy 91% profit down
-sales force yet to turn a profit
-lowes overcapacity too many stores

-in us car sales 1.2M per month. 240 gm, 196 ford, 188 tm, 148 Chrysler, 131 Honda, 98 Nissan. Shortage of Hyundai due to strike.

-85M pc shipments in 2nd quarter worldwide. 4m in brazil 5th largest market.

-national oil well varco and Cameron make oil rigs and parts for them. Transocean runs the drilling rigs. Bp etc own the oil coming out.

-globally, 69% of planets fresh water used in agriculture, 23% in industry and 8% in municipal uses.

-Monsanto making drought resistant crops. Droughtgard

From eat pray love

I have been thinking that I need to consciously divert my mind from negative thoughts and focus on things that move my life forward. Iam ruining my own potential by corrosive thoughts.

- as smoking is to the lungs, so is resentment to the soul
- god dwells within you as you yourself, exactly the way you are.
-to know god, you need only to renounce one thing -your sense of division from god. Otherwise, just stay as you were made, within your natural character.