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   Strategies & Market TrendsBuffettology


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To: hoyasaxa who wrote (1726)8/11/1999 7:49:00 PM
From: Michael Burry
   of 4661
 
The interesting thing is pharms have outperformed over the last 10 years thanks as much to multiple expansion as earnings expansion. We're talking multiples 2-3X historical norms. Now comes Medicare and the issue of lawsuits. AHP's potential liability here is simply staggering. I'm just expecting some multiple contraction to recognize this.

Mike

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To: Michael Burry who wrote (1727)8/12/1999 12:46:00 AM
From: James Clarke
   of 4661
 
Agree on AHP - they've got a BIG problem here and it is going to get bigger. I hear that these diet drugs are the prime target for the extortionist lawyers bankrolled by the tobacco industry. "Corporate greed" my %&#$. But what does that have to do with my plan to buy Merck at 50 in a market meltdown? I see no reason to generalize across the industry. Yes, I agree they got way overvalued, but have come down signifantly already. Not quite at my price yet, but getting closer by the day.

JJC

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To: James Clarke who wrote (1728)8/13/1999 2:51:00 PM
From: Freedom Fighter
   of 4661
 
I picked up some shares of Flowers Industries (FLO) over the last 2 days. Their 55% stake in Keebler is worth about $13 per share. That means the rest of the business is selling for $2-$3. It's hard to place an exact number on the remainder because there's so much restructuring, upgrading and reorganization going on, but it looks like they're giving it away. There's some good brands there.

Wayne
members.aol.com

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To: Freedom Fighter who wrote (1729)8/13/1999 3:42:00 PM
From: Michael Burry
   of 4661
 
Me too. Got mine today at 15 3/4. If anyone doubts Keebler or Mrs. Smith's will be around in 20 years...

Backing out non-cash and interest expense, I see them earning over 20% on capital in a down year. The story makes sense to me: capital and information age improvements expensive now, but improved distribution and profitability later. Feels like no one's looking as I steal this.

The debt probably would rule it out for Buffett, but they could pay it down rapidly if they wish. As far as I'm concerned, they don't have to.

Mike

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To: Michael Burry who wrote (1730)8/13/1999 3:48:00 PM
From: Freedom Fighter
   of 4661
 
Mike,

Glad to here it, partner! I agree completely.

Wayne

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To: Freedom Fighter who wrote (1731)8/13/1999 3:57:00 PM
From: Michael Burry
   of 4661
 
FWIW, after all my hootin' and hollerin', I did buy back into Mattel as well at sub-22 prices today. Traded that one 22 to higher twenties. Then made a big stink about the return on capital. And now I've reconsidered. I see this as low risk thanks to the brand names, the earnings way understating cash flow, and the low it tested for the second time less than a point south of here. I also read a little snipped about Mattel in ComputerWOrld that leads me to believe they do really get where the business of toys is headed. Would I sell if it breaks 20? I'd consider it.

Mike

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To: James Clarke who wrote (1722)8/14/1999 1:04:00 AM
From: jhg_in_kc
   of 4661
 
BUFFETT has said quarterly earnings reports are irrelevant. But now that I think about it, what the hell is relevant? A CD in Westport Bank in Kansas City, Mo paid more than Buffett
THE TRUTH IS WHAT BUFFETT NEEDS IS A TERRIBLE BEAR MARKET, SO HE CAN FIND HIS GREAT FINDS. ARE YOU WILLING TO LOAN HIM YOUR MONEY UNTIL THEN.
WHAT HE IS DOING IS SELLING INSURANCE. SEND ME YOUR MONEY NOW WHEN TIMES ARE GOOD, I WILL REWARD YOU WHEN TIMES ARE BAD....
Any thoughts, as Berkshire languishes....?

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To: jhg_in_kc who wrote (1733)8/14/1999 4:42:00 PM
From: James Clarke
   of 4661
 
Oh I get it, you wait until it goes up and everybody loves it, THEN you buy it. I feel so stupid only being up a few bucks in Berkshire Hathaway after 8 long agonizing months owning this dog of a stock. What could I have been thinking?

Mike, welcome back to Mattel. Stay a while. We've got roughly the same cost. If it goes below 20 and you sell, it may be me you're selling to.

Jimmy Jr. was born on Thursday. Weighed in at 9 pounds, 11 ounces, 21 inches, with a P/E of 30. Mom is doing well. Dad is exhausted. This little guy may be responsible for a few pennies of Mattel and Disney earnings in the future, though so far Proctor & Gamble (Pampers) is the clear winner!

JJC

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To: James Clarke who wrote (1734)8/14/1999 9:42:00 PM
From: Michael Burry
   of 4661
 
Wow, Jim. The next Shaq? At a PE of 30, with so much potential, I'd say he's a keeper ;) Congrats! Don't know the feeling myself yet.

Re: Mattel, I'll try my darndest to stay a while. Re: reconsidering, I meant to say I've reconsidered on Mattel. On the ROIC situation, still mostly sticking to my guns. A poorly run business with potential is my take.

Mike

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To: James Clarke who wrote (1734)8/16/1999 1:10:00 AM
From: jhg_in_kc
   of 4661
 
James, congratulations on fatherhood. Don't sell that boy just cause he has a big P/E
all the best
jhg

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