Tag Archives: BRK.B

Wall Street Breakfast: Must-Know News

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Wall Street Breakfast Editors submit:

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Japanese economy grows, but capex is weak. The Japanese economy grew 3.5% (annualized) in Q1 as rising stock prices made consumers more willing to spend, a partial confirmation of the effectiveness of Prime Minister Shinzo Abe’s economic policies. On the other hand, capex fell 0.7% Q/Q on expectations of a 0.7% increase, proof the corporate sector is still skeptical regarding fiscal and monetary authorities’ ability to wrest the country from the grip of deflation. The weak read on business investment weighed on Japanese stocks as the Nikkei fell 0.39% — the index did hold the 15,000 level.

IRS chief’s resignation demanded, received, accepted. Acting IRS chief Steven Miller resigned Wednesday in the wake of the agency’s admission it unfairly screened Tea Party groups seeking tax exempt status from 2010 onward. President Obama called the screening "inexcusable" and emphasized that the IRS was the very last


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If I Could Buy Just One Stock, It Would Be This One

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ByMartin Vlcek:

In today’s modern world of investing, every investor can check their portfolio online and make instant online or mobile trades and choose from so many trading vehicles, that it is hard to even make a decision. There are usually a multitude of ways in which investors can realize their desired investing strategies. The emergence of ETFs based on virtually any asset class, region and risk appetite definitely has helped broaden the selection of options available to average investors. We may take this affluence for granted. However, investing has not always been so easy and flexible. Let’s step back into history for a while and imagine for a moment a scenario, although a bit extreme, that we could only choose one stock to buy and hold just that one ticker in our portfolio. Which stock would you choose?

My selection is simple and I didn’t have to hesitate even for a


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IBM: A Disaster In The Making

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By Arne Alsin:

IBM (IBM) is going to cost Berkshire Hathaway [(BRK.A) (BRK.B)] a lot more than the $1.3 billion of paper profit that has vanished since last Friday. With a cost basis near $170 per share, it’s unlikely Warren Buffett can sell 68 million shares of IBM without driving the price below $170, but that’s what he should do: Sell IBM.

The problem for IBM: Its operating model is built around selling on-premise computing – including so-called “private clouds” – but the $3.6 trillion IT industry is moving at an accelerating pace in an entirely different direction, to the public cloud, which is a low-margin utility model.

As Adrian Cockcroft, CTO of Netflix (NFLX) said, “there is zero revenue for traditional IT" in the public cloud. Users pay low variable expense (prices have been dropping from cheap to super-cheap) with no capex. Question: How can IBM compete with cheap "rented" computing


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Bakken: The Rail Revolution – Everything Investors Need To Know

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ByRichard Zeits:

A Big Year Ahead For Bakken

(click to enlarge)
(Source: ND Pipeline Authority; Zeits Energy Analytics)

2013 is shaping up as a strong year for the Bakken, in contrast to 2012 when the play was hurting from skyrocketing drilling and operating costs, severe infrastructure bottlenecks, exploding basis differentials, and disappointing economics, forcing some operators to scale back their drilling plans. Looking forward, several positive factors are at work that should filter through to favorable year-on-year financial comparisons and contribute to a brighter outlook for the play in general:

  • Crude oil takeaway issues have been largely resolved, with ample rail availability and major pipeline capacity additions expected in 2014-2016.
  • Natural gas and NGLs should become increasingly bigger contributors to operators’ bottom lines as the build-out of processing and pipeline infrastructure is beginning to bear fruit and should catch up with production within next two years.
  • Deeper Three Forks exploration is gaining


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Charlie Munger’s Guide To Forever Investing

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author name submits:

In a tribute to the legendary global value investor John Templeton, the team at Franklin Templeton Investments put together a listing of Templeton’s sixteen rules for making sound investments. Under the rule titled “Aggressively Monitor Your Investments”, the folks at Franklin Templeton offer this advice:

"Expect and react to change. No bull market is permanent. No bear market is permanent. And there are no stocks that you can buy and forget. The pace of change is too great…Consider, for example, just the 30 issues that comprise the Dow Jones Industrials. From 1978 through 1990, one of every three issues changed-because the company was in decline, or was acquired, or went private, or went bankrupt. Look at the 100 largest industrials on Fortune magazine’s list. In just seven years, 1983 through 1990, 30 dropped off the list. They merged with another giant company, or became too small for


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H.J. Heinz Company Outlook

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ByJennifer Lynn:

H. J. Heinz Company NYSE (HNZ)(Current: $72.10, Up by 0.08%) announced last Wednesday it will be hosting a special shareholder meeting on April 30. The plan is to allow investors voting of the $28 billion acquisition and $212.6 million golden parachute for CEO William Johnson. The $28 billion buyout by Warren Buffett’s Berkshire Hathaway (BRK.B) and 3G Capital Management has been the biggest deal in the food services industry to date. H. J. Heinz has a market cap of $23.13 billion and is part of the consumer goods sector. H. J. Heinz current operating margin stands at 18 percent. Organic sales growth is expected during second half of FY 2013. The last 5 years of H. J. Heinz have a return-on-equity of 31.7%. H. J. Heinz has 40.9% annual growth in emerging markets and 59% market share in the U.S.

CEO William Johnson is eligible


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Warren Buffett Is Right About Wells Fargo’s Dividend

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author name submits:

Warren Buffett does not make prediction about a company’s dividend policy too often, but he did in the 2010 Letter to Shareholders of Berkshire Hathaway (BRK.B) when he made this prediction about Wells Fargo’s (WFC) future dividends:

"In addition, dividends on our current common stock holdings will almost certainly increase. The largest gain is likely to come at Wells Fargo. The Federal Reserve, our friend in respect to Goldman Sachs (GS), has frozen dividend levels at major banks, whether strong or weak, during the last two years. Wells Fargo, though consistently prospering throughout the worst of the recession and currently enjoying enormous financial strength and earning power, has therefore been forced to maintain an artificially low payout. (We don’t fault the Fed: For various reasons, an across-the-board freeze made sense during the crisis and its immediate aftermath.) At some point, probably soon, the Fed’s restrictions will cease. Wells Fargo


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What You Can Learn From Charlie Munger’s Exit Plan At Berkshire Hathaway

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When I was in college at Washington & Lee, I had an English professor that often said that we don’t really begin the writing process until we begin our first revision. In a similar way, as I’ve spent the past couple weeks re-reading the Charlie Munger biography Damn Right!: Behind The Scenes with Berkshire Hathaway Billionaire Charlie Munger, I have found a renewed appreciation for the different portfolio allocation decisions that have guided the Vice Chairman of Berkshire Hathaway (BRK.B) over the years. I felt as if I were reading about many of Munger’s personal allocation decisions for the first time.

Here’s one of the most useful things I’ve recently learned about Munger’s approach to capital preservation: for every meaningful investment that he’s ever made, he’s always had an exit plan. The best example of this came in 1977 when he possibly considered scaling back his financial commitments within


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