Investment Philosophy

Some Thoughts on Investment Strategies and Buffett’s 1966 Disney Investment

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There seems to be a strange dichotomy in the value investing universe: those who buy so-called compounders, and those who buy so-called cheap stocks. I want to own businesses that are building value, but that doesn’t mean I don’t care about valuation. I pass on probably 99% of the ideas I look at, many of which are great businesses, simply because the current price won’t allow my investment in the stock to compound at the rate of return that I’m […]

General Thoughts

Walking, Thinking, and Investing

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I just came across an article I just read that I thought was interesting, and thought certain readers might enjoy. Although the article has nothing directly to do with investing, I think there are some takeaways for those of us in the investment world. Certainly the article has relevance to anyone whose chosen endeavor requires the occasional deep thinking. The article is called “Why Walking Helps Us Think”. The article—as you probably guessed from the self-explanatory title—describes the benefit of […]

Charlie Munger

Circle of Competence, Fat Pitches, and How To Become the Best Plumber in Bemidji

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“The way to win is to work, work, work, work and hope to have a few insights.” – Charlie Munger I came across a post on one of my favorite sites (Farnam Street) about Buffett on some fundamental keys to successful investing. I’ve always thought the most important aspect of investing is waiting for the proverbial “fat pitch”. As readers know, I’m a baseball fan (I love the game, and I love the numbers that are part of the fabric […]

Case Studies

Buffett’s PetroChina Investment: Finding Large Gaps Between Price & Value

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“You don’t have to know a man’s exact weight to know that he’s fat.” – Ben Graham I was reading through some notes from the 2008 Berkshire Hathaway Annual Meeting and one of the questions grabbed my attention. The question was pertaining to Warren Buffett’s decision to purchase stock in PetroChina back in 2002. Basically, the questioner was surprised that Buffett made such a sizable investment after a seemingly small amount of due diligence saying “all you did was read the annual report… […]

General Thoughts

Macroeconomics & NBA Free Agency: Important, but not Knowable

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“I don’t think about the macro stuff. What you really want to do with investments, is think about what’s important and what’s knowable. Understanding Coke or Wrigley is knowable… but we have never bought a business or not bought a business because of any macro feeling of any kind… We don’t want to pass up the chance to do something intelligent because of some prediction about something that we’re no good at anyway.” – Warren Buffett, 1998 at the University […]

Ben Graham

Buffett’s Early Investments

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“The highest rates of return I’ve ever achieved were in the 1950’s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It’s a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.” – Warren Buffett, 1999 Most Buffett fans have seen that quote. I recently had a few questions and comments that […]

Ben Graham

Net-Nets: A Riddle Wrapped in Mystery Inside a Cigar Butt

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I received a couple questions/comments from readers lately regarding Buffett and some previous comments I made on strategy before and after the Berkshire annual meeting. I always enjoy interacting with readers. The vast majority of my days are spent researching new investment ideas, so I can’t always respond to everything, but please feel free to email me questions/comments to john@sabercapitalmgt.com. I read all my emails even if I don’t always have time to respond. When possible, I’ll respond individually, or […]

Charlie Munger

Some Thoughts on the Berkshire Hathaway Annual Meeting

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I had a great time in Omaha this past weekend. I got to meet with a couple clients, reconnect with some like-minded value investors, and meet some new friends as well. And of course, being in the same building with two of the greatest investment minds in history is something special. I wanted to make just a few comments on a couple things in my notes from the weekend. This is by no means a comprehensive summary—and there are many […]

Investment Philosophy

Buffett on How to Think About Stocks

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“Investment is most intelligent when it is most businesslike”. – Ben Graham, The Intelligent Investor This is the time of year that I always look forward to for a variety of reasons. Spring is near in my area of the United States, college basketball tournaments will be captivating audiences around the country, the azaleas will soon be in full bloom at Augusta National Golf Club (the site of my favorite golf major), and my personal favorite: the slew of annual […]

Education

1987 Berkshire Letter and Buffett’s Thoughts on High ROE

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I am in the midst of writing a few posts on the importance of Return on Invested Capital (ROIC). I wrote two posts last week discussing Greenblatt’s formula and some thoughts on the topic (Here and Here). I’ll have one or two more posts next week discussing a few brief examples of compounders (companies that exhibit unusually high returns on capital over extended periods of time, allowing them to grow–or “compound”–shareholder value over long periods of time). There always seems […]