Professor Glen Arnold

Buffett managed to get some profit out of one of his worst investments, NetJets

Jan 29 2021 @ 05:40
When Dave Sokol took over the management of NetJets at Warren Buffett’s request in 2009 he hit the ground running. Within a week he had reshaped the managerial structure, including appointing a new head for NetJets North America and a new Chief Operating Officer. He also announced that NetJets’ headquarters would be relocated from Woodbridge, […]

Warren Buffett's $725m investment in NetJets looked like a waste in 2009

Jan 28 2021 @ 05:53
Buffett’s 2009 letter included a mea culpa, “It’s clear that I failed you in letting NetJets descend into this condition”. It lost $711m in 2009 and the aggregate loss over Berkshire’s eleven years of ownership was $157m. And the Great Recession was only just getting going. There was plenty of room for regretting this investment decision. […]

Buffett's fast growing business, making losses year after year

Jan 26 2021 @ 06:08
With Berkshire Hathaway behind them the managers at Netjets really went for growth after the 1998 merger. Within two years revenue had more than doubled and customers held $2bn worth of planes. As early as 1998 Buffett asked Santulli “Who’s the competition in Europe?” to which he replied “No one.” Then Buffett pointedly said, “What […]


Jan 23 2021 @ 02:23
This newsletter is instructive in two ways (a) the priorities in business deal-making (b) looking for the qualitative factors making a business attractive even when short term profits are non-existent. Why sell? Goldman Sachs in 1998 wanted to realise a return on its 25% stake, or at least obtain a market value and trading for […]

The invention of a business model that Warren Buffett would later buy

Jan 22 2021 @ 05:52
In 1984 Richard Santulli bought a small loss-making private jet hire company called Executive Jet Aviation, EJA.  He thought it might be useful as a dumping ground for aircraft coming off leasing deals, his main business. Little did he know that he would soon invent a completely new type of business, one that was so […]

Warren Buffett's investment in NetJets - followed by 11 years of losses

Jan 21 2021 @ 05:16
When asked about the influence of the French Revolution, the late Chinese premier Zhou Enlai is reputed to have said: ‘Too early to say.’ It’s much the same with Buffett’s August 1998 investment in NetJets, at $725m. For the next 11 years it made an aggregate loss of $157m. By 2010 the investment was certainly […]

MS International - Owner earnings and intrinsic value estimation

Jan 13 2021 @ 08:53
It’s important to examine MS International (LSE:MSI) with an income metric better than conventional profits after tax, which fails to properly consider the annual cash flows which end up being spent on fixed assets and in working capital items (inventory and receivables in particular) just to support the current strategic market position, and therefore turnover […]

MS International - A valuation using return on net tangible assets

Jan 12 2021 @ 06:39
MS International (LSE:MSI) has a very strong balance sheet and decent profits history.  But what about the relationship between the two?  Given the large amount of net assets devoted to the operating business, does it generate a good rate of return on the money invested? With a Warren Buffett-style investment I expect to hold “forever”.  […]

MS International – Net current asset value and financial stability

Jan 11 2021 @ 06:01
MS International (LSE:MSI) has such a strong balance sheet – including £14m of cash and no debt – that it qualifies for my net current asset value portfolio as well as the Warren Buffett portfolio.  This works if I’m prepared to overlook the fact that its collection of freehold property is allocated not to the […]

MS International – the two pan-European niches

Jan 09 2021 @ 02:00
MS International’s (LSE:MSI) directors have done a very good job of diversifying from guns and forks. In 2010 they paid £3.53m to buy the second half of the Petrol Station Superstructures business they did not own.  And in 2015 they paid €3.4m (£2.6m) for a company which was to become their Branding Division. Both divisions […]
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