Companies Warren Buffett invested between 1998 and 2001 (Part 3)

Companies Warren Buffett invested between 1998 and 2001 (Part 3)


GPU Inc: This is a utility holding company that distributes electricity to 2 million people in New Jersey and Pennsylvania. It was serves 1.4 million customers in Australia. This is a Berkshire holding.
We believe Buffett started buying this stock in February of 2000, for around $25 a share, against a book value of $28.46 a share, dividend payout of $2.18, and 1999 per share earnings of $3.25 a share. Buffett's buying opportunity came when the cost of creating energy increased to more than GPU could charge its customers, which caused it to lose $1.74 a share in the second quarter of 2000. To increase rates, the company has to apply to Pennsylavania regulators. If the regulators don't increase rates, GPU will go out of business and the good people of Pennsylvania will go without power. As of May 2001, First Energy, another utility holding company, had made a bid of $36 a share for the company, and the wise regulators of Pennsylvania are considering giving GPU a huge rate increase.

Price paid: $25 a share
Dividend: $2.18 a share
Earnings: $3.25 a share
Book value: $28.46 a share


H&R Block: This company prepares income tax returns. It is currently expanding its financial services group.

HRPT Properties Trust: This is a REIT that focuses on commercial real estate. Its earnings are solid and it pays a dividend every year between $0.88 and $1.51 a share. It is presently repurchasing its shares. We believe Buffett has been buying this stock at a price rumored to be $7 to $8 a share, where it traded for much of 2000. At that price he is getting an initial return of between 12.5% and 20%. We might add that at that price it was considerably below its book value of $11.60 a share - a Grahamian value play? As of May 2001 you could still buy it at $8.90 a share.

Price paid: $7 to $8 a share
Dividend: $0.88 to $1.51 a share
Book value: $11.60 a share
Initial return: 12.5% to 20%


JDN Realty: This is a REIT that develops, acquires, leases, and manages shopping centres in 18 states. It has a book value of $14.80 a share and pays a dividend of $1.20 a share. We believe Buffett started buying its stock at around $9 a share. The book value represents real estate that has been depreciated and is worth far more than it is carried on JDN's books. Buffett bought the stock at an initial return of 13% ($1.20 / $9 = 13%) and as an asset play.

Price paid: $9 a share
Dividend: $1.20 a share
Book value: $14.80 a share
Initial return: 13%



Related articles:
Companies Warren Buffett invested between 1998 and 2001 (Part 1)
Companies Warren Buffett invested between 1998 and 2001 (Part 2)
Companies Warren Buffett invested between 1998 and 2001 (Part 3)
Companies Warren Buffett invested between 1998 and 2001 (Part 4)
Companies Warren Buffett invested between 1998 and 2001 (Part 5)