Tag Archives: hathaway

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/


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