Professor Glen Arnold

HOW DID WARREN BUFFETT'S HELZBERG INVESTMENT TURN OUT?

Sep 21 2020 @ 08:36
The seller of Helzberg Diamonds, Barnett Helzberg was very pleased that it found a home within the Berkshire Hathaway family. He was able to step back from the business and devote more time to his family and philanthropic pursuits. The family were diversified now with a large holding in Berkshire which gained income from a […]
 

Buffett and Munger do discounted cash flow (owner earnings) calculations in their head - never on paper or computer

Sep 18 2020 @ 06:21
When asked at the Annual Meeting in May 1996 for detail on his discounting method, for example, how many future years does he extend the calculation to, Buffett explained that, yes, the discounted owner earnings is the framework at the heart of investing or buying businesses, but, no, there are no written down calculations at […]
 

Warren Buffett's approach to making a deal to buy a company: the Helzberg Diamond case

Sep 17 2020 @ 07:00
Warren Buffett does things completely differently to most people engaged in M&A.  The Helzberg Diamonds purchase illustrates this well. After the owner of Helzberg Diamonds sent Warren Buffett the financial statements in Spring 1994 a few things struck him.  First, sales had grown from $10m in 1974 to $53m in 1984 to $282m in 1994.  […]
 

Warren Buffett's purchase of a jewelry company

Sep 16 2020 @ 04:13
Warren Buffett bought Helzberg Diamonds in 1995 for – I estimate – around $165m – $183m in Berkshire shares (the precise number of shares has never been revealed). There are lessons for today’s investors in understanding what made this company so appealing to Buffett. Today I describe the company’s development leading up to the Berkshire Hathaway […]
 

Warren Buffett's advice on mergers and acquisitions

Sep 14 2020 @ 08:44
Investors need to be cautious when their companies are keen on purchasing other firms. It’s well known that most mergers/acquisitions fail to produce shareholder value.  This newsletter looks at the principles Buffett follows to improve the odds of success. He set these down for us shortly after buying Helzberg Diamonds in 1995. Acquisition by walking around On a sunny […]
 

Does Warren Buffett’s recent positioning of Berkshire Hathaway tell us something about his views on the future?

Sep 07 2020 @ 07:02
Since Covid-19 struck Warren Buffett has been active in selling a number of long-held shares and in spending billions purchasing stakes in other companies. I’m going to speculate about his motivations.         First, the cash holdings Berkshire’s cash and cash equivalents rose over the first six months of the year from $125bn […]
 

Andy Haldane’s thoughts on the UK economic recovery

Sep 03 2020 @ 03:48
Andy Haldane was the only member of the Bank of England Monetary Policy Committee to vote against expansion of quantitative easing in June.  His reasoning was that the glass was half full, in the sense that the economy was on track to recover about half of the lost output. He had been gathering real time […]
 

James Montier’s thoughts on the rise of the US market

Sep 02 2020 @ 04:13
It’s important at this time of enormous economic threat to listen to people who possess, through decades of intellectual effort, an informed long-term perspective on markets. I’ve been reading recent work by James Montier, Andy Haldane and Warren Buffett. In today’s newsletter I’ll try to summarise James Montier’s views on the American market. James has […]
 

Tandem - Owner earnings analysis

Aug 29 2020 @ 02:00
When I bought Tandem’s shares (LSE:TND) at £1.59 in April 2019 I figured the average historical owner earnings to be £1.282m over seven years, which gave an estimated intrinsic value of £16.0m or 320p per share (see newsletter posted 10th April 2019). Now that the shares are over £3.70 I thought I’d update the numbers. We […]
 

Tandem – sold for a 139% profit

Aug 28 2020 @ 06:51
I bought into Tandem (LSE:TND), a bicycle, outdoor toy and furniture company, in April 2019 at 159p – see previous newsletters 3rd – 11th April 2019, 1st – 2nd July 2019. After receiving 9.49p in dividends over the 16 months I’ve now sold at 370.7p for an overall return of 139% Normally I would not have sold given that […]
 
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