myinvestingnotes.blogspot.my (Bullbear Buffett Stock Investing Notes)

Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.

Showing posts with label Berkshire Hathaway's Stock Price. Show all posts

Saturday, 21 February 2009

Warren Buffett's Berkshire Hathaway Cuts Johnson & Johnson Stake By Half

Tuesday, 17 Feb 2009
Warren Buffett's Berkshire Hathaway Cuts Johnson & Johnson Stake By Half

Posted By: Alex Crippen
Topics:Warren Buffett
Companies:Wesco Financial Corp Wellpoint Inc Washington Post Company Wal-Mart Stores Inc United Parcel Service Inc Union Pacific Corp USG Corporation Torchmark Corp Suntrust Preferred Capital I Sanofi-Aventis SA Norfolk Southern Corp Nike Inc Moody's Corp M & T Bank Corp Lowe's Companies Inc Kraft Foods Inc. Iron Mountain Incorporated Home Depot Inc General Electric Gannett Inc Costco Wholesale Corporation Comcast Corp Coca Cola Co Bank of America Corp American Express Co Wells Fargo and Co Unitedhealth Group Inc Burlington Northern Santa Fe Corp NRG Energy, Inc. Ingersoll-Rand Co Ltd Eaton Corp US Bancorp Procter & Gamble Co CARMAX INC Conocophillips Nalco Holding Company Johnson and Johnson Berkshire Hathaway Inc.

Warren Buffett's Berkshire Hathaway has just released its fourth quarter stock portfolio snapshot.
Instead of asking what Buffett has been buying, we should have been wondering what Buffett has been selling.
Most notably, Berkshire slashed its holdings in Johnson and Johnson to just 28.6 million shares as of December 31. That's a drop of almost 54 percent. It had reported holding 61.8 million shares as of the end of the third quarter on September 30.
That brings Berkshire's stake in J&J down to just under 4 percent from almost 8 percent.

Johnson and Johnson's shares price fell almost 18 percent during the fourth quarter. We don't know whether Buffett avoided any or all of that drop since the filing doesn't say when the shares were sold. We do know that the stock is down another 6.4 percent year-to-date, a drop that Berkshire has avoided on the 33.2 million shares sold. Based on their December 31 close, those 33 million shares were worth about $2 billion.

Berkshire also made a sizable cut in its holdings of another healthcare company, Procter & Gamble [PG 50.25 -0.88 (-1.72%) ]. That stake fell 9 percent to 96.3 million shares from 105.8 million.

Berkshire's smaller cuts in Q4:

ConocoPhillips [COP 39.44 -2.35 (-5.62%) ] fell 4.8 percent to 79.9 million shares

CarMax [KMX 8.73 0.10 (+1.16%) ] dropped 4.4 percent to 17.6 million shares

US Bancorp [USB 10.58 -0.30 (-2.76%) ] reduced by 7.4 percent to 67.6 million shares

Buffett wasn't just selling in the fourth quarter. Berkshire increased these holdings:

NRG Energy [IR 15.83 -0.22 (-1.37%) ] soared 44 percent to 7.2 million shares

Ingersoll-Rand [IR 15.83 -0.22 (-1.37%) ] increased by 38.1 percent to 7.8 million shares

Eaton [ETN 40.28 -0.44 (-1.08%) ] jumped by 10 percent to 3.2 million shares

And there's one new stake: about 8.7 million shares of Nalco Holding. [NLC 11.31 -0.29 (-2.5%) ]

On its web site, the company describes itself as "the leading integrated water treatment and process improvement company in the world."

At today's closing price of $11.06, the Nalco stake is worth just $96 million. (The stock is getting a 6 percent boost in after-hours trading.)

And Buffett is holding tight on his big financial holdings, including stakes in American Express [AXP 12.97 0.10 (+0.78%) ] and Wells Fargo [WFC 10.91 -1.10 (-9.16%) ].

Overall, the dollar value of Berkshire's disclosed stock portfolio fell 25.8 percent to just under $52 billion as of December 31, down from almost $70 billion on September 30.
Our Berkshire Hathaway Portfolio Tracker shows the portfolio holdings as of December 31 are worth $41.4 billion, using today's closing prices

So what happened to Buffett's high-profile call last October to buy U.S. stocks?

He said then he was buying domestic equities for his personal account. Apparently he felt Berkshire's money could be put to better use elsewhere. One alternative we know about are Berkshire high-interest rate loans to well-known companies facing tough times, such as Tiffany, Swiss Re, Harley-Davidson, Goldman Sachs, and General Electric.

Bloomberg quotes Buffett-style investor Mohnish Pabrai as saying before the portfolio filing, "Buffett has shown a preference over the past couple years toward buying whole companies, the debt markets or other private deals."
That's certainly evident in today's filing.

Here are the details from tonight's Berkshire Hathaway portfolio snapshot as of December 31, compared to the filing for September 30.

ADDED STAKES
Constellation Energy added at 19,894,322 shares. Berkshire obtained these shares in mid-December as part of its break-up fee after Constellation agreed to be acquired by Électricitié de France and canceled its tentative deal with Berkshire's MidAmerican Energy Holdings. Subsequent filings show that Berkshire sold over five million shares in January and early February, bringing its holdings down to 14,831,107 shares as of February 6.
[CEG 21.60 -1.22 (-5.35%) ]

Nalco Holding added at 8,739,100 shares.
[NLC 11.31 -0.29 (-2.5%) ]

INCREASED STAKES

Burlington Northern increased 9.9% to 70,089,829 shares from 63,785,418 shares.
(Berkshire reported holding 76,777,029 shares as of January 30.)
[BNI 61.84 0.07 (+0.11%) ]

Eaton Corp. stake increased 10.0% to 3,200,000 shares from 2,908,700 shares. Eaton was a new holding as of the end of the third quarter.
[ETN 40.28 -0.44 (-1.08%) ]

Ingersoll-Rand stake increased 38.1% to 7,782,600 shares from 5,636,600 shares.
[IR 15.83 -0.22 (-1.37%) ]

NRG Energy stake increased 44.0% to 7,200,000 shares from 5,000,000 shares. The stake was also up in the third quarter, increasing by 54.4%.
[NRG 19.80 -0.12 (-0.6%) ]

DECREASED STAKES

Carmax stake decreased 4.4% to 17,636,500 shares from 18,444,100 shares from 21,300,000 shares.
[KMX 8.73 0.10 (+1.16%) ]

ConocoPhillips stake decreased 4.8% to 79,896,273 shares from 59,688,000 shares.
[COP 39.44 -2.35 (-5.62%) ]

Johnson & Johnson stake decreased 53.7% to 28,611,591 shares from 61,754,448 shares.
[JNJ 54.65 -1.28 (-2.29%) ]

Procter & Gamble stake decreased 9.0% to 9,530,990 shares from 105,847,000 shares.
[PG 50.25 -0.88 (-1.72%) ]

US Bancorp stake decreased 7.4% to 67,551,426 shares from 72,937,126 shares. [USB 10.58 -0.30 (-2.76%) ]

UnitedHealth Group stake decreased 1.3% to 6,300,000 shares from 6,379,900 shares. [UNH 27.98 -0.67 (-2.34%) ]

Wells Fargo stake decreased 0.1% to 290,244,868 shares from 290,407,668 shares. [WFC 10.91 -1.10 (-9.16%) ]

UNCHANGED STAKES

American Express unchanged at 151,610,700 shares.
[AXP 12.97 0.10 (+0.78%) ]

Bank of America unchanged at 5,000,000 shares. The stake had dropped 45.1% in the third quarter.
[BAC 3.79 -0.14 (-3.56%) ]

Coca-Cola unchanged at 200,000,000 shares.
[KO 42.84 -0.46 (-1.06%) ]

Comcast unchanged at 12,000,000 shares.
[CMCSA 12.84 -0.15 (-1.15%) ]

Comdisco unchanged at 1,538,377 shares.
[CDCO 7.60 0.10 (+1.33%) ]

Costco Wholesale unchanged at 5,254,000 shares.
[COST 42.76 0.14 (+0.33%) ]

Gannett unchanged at 3,447,600 shares.
[GCI 3.70 -0.16 (-4.15%) ]

General Electric unchanged at 7,777,900 shares.
[GE 9.38 -0.68 (-6.76%) ]

GlaxoSmithKline unchanged at 1,510,500 shares.
[GSK 32.55 -0.77 (-2.31%) ]

Home Depot unchanged at 3,700,000 shares.
[HD 19.46 -0.70 (-3.47%) ]

Iron Mountain unchanged at 3,372,200 shares.
[IRM 19.89 0.07 (+0.35%) ]

Kraft Foods unchanged at 138,272,500 shares.
[KFT 23.51 -0.82 (-3.37%) ]

Lowes Companies unchanged at 6,500,000 shares.
[LOW 15.86 -1.12 (-6.6%) ]

M&T Bank unchanged at 6,715,060 shares.
[MTB 35.10 1.80 (+5.41%) ]

Moody's unchanged at 48,000,000 shares.
[MCO 19.16 -2.91 (-13.19%) ]

Nike unchanged at 7,641,000 shares.
[NKE 42.93 0.12 (+0.28%) ]

Norfolk Southern unchanged at 1,933,000 shares.
[NSC 33.97 -0.07 (-0.21%) ]

Sanofi Aventis unchanged at 3,903,933 shares.
[SNY 28.25 -0.58 (-2.01%) ]

SunTrust Banks unchanged at 3,204,600 shares.
[STI 7.35 0.65 (+9.7%) ]

Torchmark unchanged at 2,823,879 shares.
[TMK 22.07 -2.86 (-11.47%) ]

USG unchanged at 17,072,192 shares.
[USG 5.63 -0.25 (-4.25%) ]

Union Pacific unchanged at 8,906,000 shares.
[UNP 40.03 0.80 (+2.04%) ]

United Parcel Service unchanged at 1,429,200 shares.
[UPS 42.80 -0.13 (-0.3%) ]

Wabco Holdings unchanged at 2,700,000 shares.
[WBC 10.66 -0.21 (-1.93%) ]

Wal-Mart Stores unchanged at 19,944,300 shares.
[WMT 50.02 -0.43 (-0.85%) ]

Washington Post unchanged at 1,727,765 shares.
[WPO 390.30 -1.20 (-0.31%) ]

Wellpoint stake unchanged at 4,777,300 shares.
[WLP 41.45 0.19 (+0.46%) ]

Wesco Financial unchanged at 5,703,087 shares.
[WSC 265.00 -5.00 (-1.85%) ]

Current Berkshire stock prices:

Class A: [US;BRK.A 77000.0 -1600.00 (-2.04%) ]

Class B: [US;BRK.B 2387.0 -129.50 (-5.15%) ]

For more Buffett Watch updates follow alexcrippen on Twitter.

Tuesday, 25 November 2008

Berkshire Hathaway's Stock Price

Compound Annual Growth Rate from 1990 to 1996 approximately: 26%

Compound Annual Growth Rate from 1996 to 2000 approximately: 18%

Compound Annual Growth Rate from 2001 to 2005 approximately
(still positive CAGR but well below Buffett's goal of 15%): 4%

Compound Annual Growth Rate from 2006 to Mid 2008 approximately: 31%
Berkshire Hathaway played a serious game of catchup during this short time frame.

Compound Annual Growth Rate from 1990 to Mid 2008 approximately: 17%
Berkshire Hathaway has exceeded the goal of 15% CAGR over a 17.5 year period.

----------

Of course there are some companies that exceeded 100% CAGR on their stock price during the 1990's.

It is interesting to note that RedHat (ticker: RHT) had more than a 14000% CAGR from August 11, 1999 until December 9, 1999 when the share price went from $54.50 to $286.25.
Of course it also had a very bad CAGR of -89% from December 9, 1999 until September 18, 2001.
During this time the stock had a 2 for 1 stock split on January 10, 2000. On a split adjusted basis, the stock went from $143.12 to $3.02 per share.

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My 18 points guide to Successfully compounding your money in Stocks

Be a good stock picker.
Think as a business owner.
Always look at value rather than the price. Do the homework.
Buy and hold is alright for selected stocks.
Compounding is your friend, get this to work its magic.
Mr. Market is there to be taken advantage of. Do not be the sucker instead. BFS;STS.
Always buy a lot when the price is low.
Never buy when the stock is overpriced.
It is alright to buy when the selected stock is at a fair price.
Phasing in or dollar cost averaging is safe for such stocks during a downtrend, unless the price is still obviously too high.
Do not time the market for such or any stocks.
By keeping to the above strategy, the returns will be delivered through the growth of the company's business.
So, when do you sell the stock? Almost never, as long as the fundamentals remain sound and the future prospects intact.
The downside risk is protected through only buying when the price is low or fairly priced.
Tactical dynamic asset allocation or rebalancing based on valuation can be employed but this sounds easier than is practical, except in extreme market situations.
Sell urgently when the company business fundamental has deteriorated irreversibly.
You may also wish to sell should the growth of the company has obviously slowed and you can reinvest into another company with greater growth potential of similar quality. However, unlike point 16, you can do so leisurely.
In conclusion, a critical key to successful investing is in your stock picking ability.

http://myinvestingnotes.blogspot.com/2012/07/my-18-points-guide-to-successfully.html

11 Lessons From Peter Lynch

Peter Lynch taught me:

1. Behind every stock is a company. Find out what it’s doing.
2. Never invest in any idea you can’t illustrate with a crayon.
3. Over the short term, there may be no correlation between the success of a company’s operations and the success of its stock. Over the long term, there’s a 100% correlation.
4. Buying stocks without studying the companies is the same as playing poker – and never looking at your cards.
5. Time is on your side when you own shares of superior companies.
6. Owning stock is like having children. Don’t get involved with more than you can handle.
7. When the insiders are buying, it’s a good sign.
8. Unless you’re a short seller, it never pays to be pessimistic.
9. A stock market decline is as predictable as a January blizzard in Colorado. If you’re prepared, it can’t hurt you.
10. Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
11. Nobody can predict interest rates, the future direction of the economy, or the stock market. Dismiss all such forecasts and concentrate on what’s actually happening to the companies in which you’ve invested.

Lynch’s advice had a profound effect on my stock market approach. He taught me that investment success isn’t the result of developing the right macro-economic view or deciding when to jump in or out of the market. Success is about researching companies to identify those that are likely to report positive surprises.

Capital Expenditure

A great company with a Durable Competitive Advantage will have a ratio of Capital Expenditures to Net Income of less than 25%. Less is better.

Capital Expenditures are expenses on:
- fixed assets such as equipment, property, or industrial buildings
- fixing problems with an asset
- preparing an asset to be used in business
- restoring property
- starting new businesses

A good company will have a ratio of Capital Expenditures to Net Income of less than 50%.

A great company with a Durable Competitive Advantage will have a ratio of less than 25%.

Less is better.

Benjamin Graham's 113 Wise Words

The true investor scarcely ever is forced to sell his shares, and at all times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgement."

Philip Fisher's Wise Words

"The refusal to sell at a loss, while completely natural and normal, is probably one of the most dangerous in which we can indulge ourselves in the entire investment process.

More money has probably been lost by investors holding a stock they really did not want until they could 'at least come out even' than from any other single reason. If to these actual losses are added the profits that might have been made through the proper reinvestment of these funds if such reinvestment had been made when the mistake was first realized, the cost of self-indulgence becomes truly tremendous."

(Common Stocks and Uncommon Profits)

The Ultimate Hold-versus-Sell Test

Here is the overriding primary test, followed by observations on why it is so critically important:

Knowing all that you now know and expect about the company and its stock (not what you originally believed or hoped at time of purchase), and assuming that you had available capital, and assuming that it would not cause a portfolio imbalance to do so, would you buy this stock today, at today's price?

No equivocation. Yes or no?

Answers such as maybe or probably are not acceptable since they are ways of dodging the issue. No investor probably buys a stock; they either place an order or do not.

Here is the implication of your answer to that critical test: if you did not answer with a clear affirmative, you should sell; only if you said a strong yes, are you justified to hold.

Some thoughts on Analysing Stocks (KISS)

Ideally a stock you plan to purchase should have all of the following charateristics:

• A rising trend of earnings dividends and book value per share.
• A balance sheet with less debt than other companies in its particular industry.
• A P/E ratio no higher than average.
• A dividend yield that suits your particular needs.
• A below-average dividend pay-out ratio.
• A history of earnings and dividends not pockmarked by erratic ups and downs.
• Companies whose ROE is 15 or better.
• A ratio of price to cash flow (P/CF) that is not too high when compared to other stocks in the same industry.

Margin of Safety Concept: Stocks should be bought like groceries, not like perfume

The high CAGR in the early years of the investing period, due to buying at a discount, tended to decline and approach that of the intrinsic EPS GR of the companies over a longer investment time-frame.

Chapter 20 - “Margin of Safety” as the Central Concept of Investment

A single quote by Graham on page 516 struck me:

Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.

Basically, Graham is saying that most stock investors lose money because they invest in companies that seem good at a particular point in time, but are lacking the fundamentals of a long-lasting stable company.

This seems obvious on the surface, but it’s actually a great argument for thinking more carefully about your individual stock investments. If most of your losses come from buying companies that seem healthy but really aren’t, isn’t that a profound argument for carefully studying any company you might invest in?

myinvestingnotes.blogspot.my (Bullbear Buffett Stock Investing Notes)

Saturday, 21 February 2009

Warren Buffett's Berkshire Hathaway Cuts Johnson & Johnson Stake By Half

Tuesday, 25 November 2008

Berkshire Hathaway's Stock Price

All equity security investments present a risk of loss of capital

The Ultimate Hold-versus-Sell Test

Some thoughts on Analysing Stocks (KISS)

Benjamin Graham

Sell the losers, let the winners run.

Investment Style

Warren Buffett

Political and Economic News

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