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   Strategies & Market TrendsBuffettology


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To: Michael Burry who wrote (1705)7/24/1999 11:28:00 PM
From: James Clarke
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<<Now I've just been asked to manage a couple custodial counts for a couple just-born nieces. They'll need the money in 18 years. And you can bet Disney will be going in those too, at the right price.>>

My first baby is scheduled to pop out in three weeks, and I am starting a college fund right off. I'm thinking the same thing as you are about Disney - just waiting for the right price, then in it goes. Maybe that price comes during a market meltdown, maybe it comes without one. (I am in no hurry to invest this account with the market at 30 times earnings and interest rates going up.) The problem with this patient strategy is that my wife has loved Disney since she was a little kid with her Bambi blanket in Japan 35 years ago. So ever since I told her I'm looking at Disney she asks me every day why I haven't bought it yet so she can get the annual report. So if I miss it, I am going to have hell to pay.

"Run by morons" was probably a facetious comment. Eisner had a hell of a run with this business for five years. But the guy has always struck me as sleazy - maybe it was the half a billion of options he cashed in near the peak, maybe it was the board's payoff of several other executives to the tune of $100 million each. But I don't like to see sleazy management running a company with Disney's image. They do not behave like owners.

JJC

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To: James Clarke who wrote (1711)7/25/1999 12:03:00 AM
From: LauA
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James, I don't think that I'd characterize Mike Eisner as "sleazy". That's a cheap shot from someone who doesn't know him. Re: options - I assume that if your BOD offered you a slug of options which then became quite valuable, you'd cash them too. I remember one big instance of option cashing was tax driven. Eisner has been runing Disney for 15 years, not five. The current Disney is a very, very different business than when he first started. It could be time for someone new. But you do recall that when he started there, he took over from a Disney-in-law. And he has operated with the blessing of Roy. Shareholder/owners have been pretty happy until recently. Many years ago his contract was nominal until ROE exceeded 11-12%. But above that hurdle he received a big chunk of profits. When things started, that seemed quite fair because the company had underperformed for so long. I don't know what it looks like now.

Lau

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To: Michael Burry who wrote (1710)7/25/1999 1:21:00 AM
From: Shane M
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makes me regret bringing it up on this board. When I come right down to it, I own it for reasons other than Buffett's tenets.

Don't apologize for discussing PPD. I'm glad it was discussed here. PPD was showing on my screens too and I had yet to look into it. Financially it looks like a stock with the appropriate criteria. Given the context (I think it turned up on a Buffett screen you ran on your value thread, right?) talking about the business is entirely appropriate here IMHO.

Shane

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To: Shane M who wrote (1713)7/27/1999 1:22:00 PM
From: Michael Burry
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Today I bought into Pepsi as a Buffett stock, and put it in one of my niece's 18 year accounts. Everyone knows it is a Buffett company. It's been run by idiots without much fail. Now it appears to becoming more aggressive. Having shed YUM and PBG, and making the EU complaint. Even making market share gains. Something's going on. And it appears cheap as these sorts of companies go. Funny, but I also bought YUM today with the intent to hold it. There's been a modicrum of insider buying in each, which is about all I'd expect in such large caps.

Mike

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To: Art Vandelay who wrote (1697)7/28/1999 11:20:00 PM
From: Shane M
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Art,

More on HMA and the hospital sector. Saw this from the Yahoo thread - has a fairly good overview of the issues most players are facing.

biz.yahoo.com

Excerpt:
" And I think a third inflection point is that it's become apparent that the flogging of some healthcare providers is beginning to affect quality and access to care; as that has become apparent, I think there has been a move in Congress to perhaps moderate some of the cuts that have already been legislated.''

Shane

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To: James Clarke who wrote (1702)7/30/1999 11:52:00 PM
From: Madharry
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Have you also looked at sony? Somehow they seem more forward looking to me than disney.

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To: Shane M who wrote (1715)8/1/1999 9:55:00 PM
From: James Clarke
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Have to sell a large mutual fund holding of my mother's and just want to slip in into some quality and reasonably valued stocks that she can hold for a while. I'm splitting it roughly equally into these six. I think two of them are Buffett companies and the other four are in the next zip code. In terms of value, forgetting where the market trades, I would say Clayton is a steal, Ambak, Crane and Disney are on the cheap side, and other two are just companies I want her to own that are reasonably valued.

Berkshire Hathaway
Ambak
Disney
Crane
Clayton Homes
General Mills

I know, Disney I said just a week ago is a few bucks off. But part of that might be a market call (see recent Value Investing Thread posts). For money I have to invest now, Disney makes more sense at 27 than most any other business of its quality at the current price.

I was convinced today when reading a Buffett book and I found this quote about why Disney is such a great business. Concerning Mickey Mouse - "The nice thing about the mouse is that he doesn't have an agent. You own the mouse. He's yours." What a wonderful business. They can reissue the classics every seven years or so. "Owning Snow White is like owning an oil field. You pump it out and sell it and then it seeps back in again." And then I thought about my own experience. My first baby is due in two weeks and my mother had a whole bunch of my old toys, and a bunch of videos ready for when the baby comes to her house. Virtually all the toys are one of two companies - Mattel or Lego. (I guess I didn't like Hasbro as a kid any more than I like it as an investor.) And the videos are 100% Disney. She already owns Mattel, so now she'll own Disney too.

I think she will be happier with these in ten years than with the mutual fund her broker sold her when I wasn't watching. It charges a 2% expense ratio to own what looks to me like the most popular stocks in the S&P, but somehow trails the index by 3-10% a year. I guess they buy them when they're popular and sell them when they're not - turnover of 130% a year!

Hopefully some food for thought. A few new names.

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To: James Clarke who wrote (1717)8/2/1999 1:06:00 AM
From: Michael Burry
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I don't know that I like Disney's internet actions. And if you don't like management, I wonder how safe Disney is. I mean, you are counting on them to develop an internet property correctly. I never use the GO network. Are they developing a sinkhole to counteract the cash flow of their real franchises? And do their real franchises grow anymore at anything greater than the rate of inflation? I mean, electronica/internetica is taking dollars from somewhere among the 4-12 year olds.

Clayton is the lone stock in its sector not yet crushed by any disaster. I don't know what is holding it up. But when it's raining stones, I don't expect even Clayton's umbrella to hold up. We'll see.

Mike

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To: Michael Burry who wrote (1718)8/2/1999 1:19:00 AM
From: James Clarke
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Disney was one of the Master's seven largest positions at year end '98. Maybe he sold it - I doubt it. By definition that makes it a Buffett stock. And as you have told me every time I cringe at one of yours, if everybody loves it, it ain't cheap. That's why the one I hesitated the most about was Berkshire.

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To: James Clarke who wrote (1719)8/3/1999 11:05:00 PM
From: jhg_in_kc
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How about putting mom in a little AOL at 45% off, or RMBS, whose bus will leave the station on Sep. 5 .LET'S ROCK AND ROLL. BABY. OH BEHAVE! (allusion to Austin Powers)
jhg

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