Tag Archives: buffett

EP27 Buffett’s Views on Good Management, External Influence, Saloman Brothers Question by Bill Ackman



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This episode covers Buffett’s views on

  • How to identify good management teams for your investments
  • How to deal with the investment analysis by others
  • Buffett’s investment in Saloman Brothers (asked by Bill Ackman)

Podcast Website: http://valueinvesting.blubrry.net/subscribe-to-podcast/

1994 Berkshire Hathaway Annual Meeting: https://www.youtube.com/watch?v=fjXZbW8ALRA


EP17 Capital Allocation Policy (Reinvesting, Dividends, vs. Share-repurchases)



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This episode covers how management’s decision on capital allocation policy can greatly affect the value of your investment in the long term.  Earnings/capital can be allocated in various ways. Warren Buffet mentioned in his shareholder letters as to when it makes sense to use one option vs. the other.  Later, I discuss how you can get a hint of whether the management team acts in the best interest of long-term shareholders.

The following capital allocation options are discussed in this episode.

  • Reinvested back into the business to maintain the current operation
  • Reinvested back into the business to grow the business
  • Used to acquire other businesses via M&A deals
  • Parked and invested in marketable securities such as Treasury Bills
  • Distributed to shareholders in the form of dividends
  • Distributed to shareholders through share-repurchase program

Podcast website: http://valueinvesting.blubrry.net/


EP16 (Part 2) Business Intrinsic Value Calculation



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Followed by EP15 that covered three main valuation approaches (ratio-based, asset-based, and acquisition-based), this episode covers a Discount Cash Flow (DCF) approach to derive an intrinsic value of a company.  In this episode, I discuss three important questions for the DCF approach and show you how you can estimate the intrinsic value by using a 2-stage DCF analysis.

  1. Estimate the first year normalized future cash flow after excluding unexpected items
  2. Determine the first stage growth rate depending on the characteristics of the business
  3. Calculate a terminal value by assuming that the company is mature
  4. Use an appropriate discount rate (either 30 yr Treasury bond rate or other approaches such as WACC)

Additionally, I cover how you can include conservatism as a value investor in three different places (cash flow projection, discount rate, and margin of safety).

DCF tool available on: https://www.gurufocus.com/

 


EP15 (Part 1) Business Intrinsic Value Calculation



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This episode and next episode cover four valuation approaches to derive an intrinsic value of a company.

  1. Ratio-based approach (covered in this episode)
  2. Asset-based approach (covered in this episode)
  3. Acquisition approach (covered in this episode)
  4. Discounted Cash Flow approach (covered in the next episode)

Podcast Website: http://valueinvesting.blubrry.net/


EP14 Why Long-term Investing Works and Is Not So Easy



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This episode covers seven benefits (four explicit and three implicit benefits) with respect to long-term investing.  Additionally, I do a deep-dive analysis on why most people fail to do the long-term investing despite many benefits, and finally discuss what you can do for your portfolio.

Podcast Website: http://valueinvesting.blubrry.net/


EP13 Six Investment Criteria By Warren Buffett



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This episode covers the following six criteria that Warren Buffett checks when acquiring businesses, and I further discuss how you can apply the Buffett’s criteria into your investment strategy as an individual investor.

  1. Large purchases (at least $75 million of pre-tax earnings unless the business will fit into one of our existing
    units),
  2. Demonstrated consistent earning power (future projections are of no interest to us, nor are “turnaround”
    situations),
  3. Businesses earning good returns on equity while employing little or no debt,
  4. Management in place (we can’t supply it),
  5. Simple businesses (if there’s lots of technology, we won’t understand it),
  6. An offering price (we don’t want to waste our time or that of the seller by talking, even preliminarily, about a
    transaction when price is unknown)

Podcast Website: http://valueinvesting.blubrry.net/


EP12 Owner Earnings By Warren Buffett



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Warren Buffett defined the earnings called “Owner Earnings” that is more relevant to the valuation of a company than the reported earnings on the income statement.  The owner earnings can be calculated by adjusting the reported accounting earnings in the following ways:

Owner Earnings = (a) Reported earnings + (b) depreciation, depletion, amortization and certain other non-cash charges – (c) the average annual amount of capitalized expenditures for plant and equipment

= cash flow from operating activities – capital expenditures

Podcast Website: http://valueinvesting.blubrry.net/

Reference Documents: 1986 Berkshire Hathaway Shareholder Letter


EP11 Mr. Market By Warren Buffett



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This episode covers the concept called Mr. Market that teaches how you can be prepared with short-term stock price fluctuations.  It is a very simple concept to understand, but it is not an easy concept to implement in real life if you are an emotional person and are attached to the money invested in the stock market.  Remember that Mr. Market is there to serve you, not to guide you.

Podcast Website: http://valueinvesting.blubrry.net/

Reference Documents: 1987 Berkshire Shareholder Letter; 1985 Berkshire Shareholder Letter


EP10 Warren Buffett’s Views on Boards’ Roles



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This episode covers Warren Buffett’s views on why “independent” directors may not be best positioned to represent a majority of shareholder under the current corporate system, and how the board of directors should perform their job on behalf of shareholders.  Warren Buffett provides his own criteria to select the best directors who can truly be independent and are willing to challenge a forceful CEO.

Podcast Website: http://valueinvesting.blubrry.net/

Reference Documents: 1993 Berkshire Shareholder Letter; 2002 Berkshire Shareholder Letter; 2004 Berkshire Shareholder Letter

 


EP9 (Part 2) Business Principles (Owner’s Manual) of Warren Buffett at Berkshire Hathaway



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Followed by the EP8 which covered the first 7 business principles, this episode covers the rest of 8 business principles in the owner’s manual written by Warren Buffett for Berkshire Hathaway shareholders. The purpose of the manual is to explain Berkshire’s economic principles of operation and the manual is included in every annual letter for new shareholders as a reference to understand the important principles behind how Buffett and Munger run the company.

Podcast Website: http://valueinvesting.blubrry.net/

Owner’s Manual: http://www.berkshirehathaway.com/ownman.pdf