Professor Glen Arnold

SpaceandPeople’s (LSE:SAL) shares have fallen from £1.45 in 2014 to 21p today (market capitalisation £4.6m). Average earnings per share over the eight years for which we have figures is 4.34p, which puts the shares on a cyclically adjusted price earnings ratio of 4.84, about one-third that of the average share on the market. Furthermore, the […]

Following these eight principles will assist your value investing: Knowing the people running a business can be very important. Because Buffett trusted Murphy to run the business well and in the interests of shareholders he looked for an opportunity to invest at a later date. Patience and discipline. Following a first-class company is wise – […]

The obvious logic of combining the world’s number one content provider and the world’s number one distribution company was discussed by many analysts in the 1990s. There was enormous potential in expanding the geographical area where their products could be offered to countries outside of the USA, particularly for sports and animated entertainment. Despite talks, […]

The case study of Capital Cities/ABC neatly illustrates a transition from a strong franchise to a business – a good business at that, but a mere business. Understanding the difference may be vital for investors. In the early 1990s the writing was on the wall for old media companies as new technology threatened their ability […]

Question: “Professor Arnold, with the current market jitters and uncertainty in the markets, I sold some of my shares and was thinking about buying some more Connect as a defensive stock with potential in the longer term. Would be grateful for your view on this course of action, or even suggestions which of the shares […]

On buying into Capital Cities Buffett wanted to reassure the senior executives, Tom Murphy and Dan Burke, that he would not cut and run.  He said that handing voting control and the decision on when to sell the shares to them was intended to motivate his managers to give of their best for the long-term […]

Buffett thought about his portfolio of shares in terms of look-through earnings.  In most cases the actual income received from a holding for the year – dividends – is far smaller than the profit after tax for that holding.  Most of those earnings are retained within the business, but as part owner of that business […]

In his March 1986 letter to Berkshire shareholders Buffett said that the January purchase of 3 million shares in Capital Cities enabling it to acquire ABC would result in “economics that are likely to be unexciting over the next few years.” This is not exactly what Berkshire shareholders wanted to hear, but Buffett did offer […]

The 1980s was the era of corporate raiders, fed by junk bonds and egged-on by investment bankers, buying up companies, playing financial games and then selling, often causing great disruption to the operating businesses and their previously loyal managers. ABC was being eyed by these marauders, and the man who had built this company into […]

Before examining the purchase of shares in Capital Cities/ABC by Berkshire Hathaway it’s instructive for investors today to consider how it was that Warren Buffett could easily sign a cheque for $517.5m only 20 years after taking over the tiny textile company then with net assets of a mere $22m.  It’s a story of smart […]