Case Studies

Notes on Credit Acceptance Corp (CACC)

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I recently made a list of a few shareholder letters I want to read, and one that I completed a few days ago was Credit Acceptance Corp (CACC). This post is not a comprehensive review of the business, as I just started reading about the company. But I thought some readers might be interested in some initial notes. (I am thinking about putting more of these “scratch notes” up as posts. If this is interesting to readers, please let me […]

Investment Ideas & Company Research

A Safe Bargain for 70 Cents on the Dollar

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I talk a lot about compounders–businesses that produce lots of cash flow and have opportunities to reinvest that cash flow at high rates of return. Such businesses that produce high returns on capital can compound their intrinsic value at above average rates over time, and the stock price follows intrinsic value over the long haul. But while I spend time reading and researching great businesses, occasionally I come across an opportunity to buy a bargain–a stock trading for less than the […]

Investment Ideas & Company Research

Berkshire Hathaway is Safe and Cheap

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I own Berkshire Hathaway stock. In fact, it’s a stock I bought recently for the first time ever, despite following it for years. I think earlier this year it became (and to a large extent still is) far too cheap. It’s not a stock that I think has huge upside, but it is a stock that I think has no downside. (That said, I do think there is enough upside to get plenty excited). In proper investment parlance, the risk/reward […]

Industry-Banks

Wells Fargo and the Incredible Predictability of Deposit Growth

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“In the end, banking is a very good business unless you do dumb things.” – Warren Buffett Buffett has been investing in bank stocks since the 1950’s, and I think one of the things he probably likes most about banking is the predictability of deposit growth. As he says, if you don’t do dumb things—if you stick to taking in deposits and lending them out, you’ll mint money. All the money center banks reported earnings a couple weeks ago. In […]

Industry-Railroads

Some Thoughts on Coal Companies and Railroads

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Stock prices have finally entered the much anticipated correction, and so I’ve spent more time lately looking at my watchlist of great businesses that I’d like to own at some point. My portfolio has been largely made up of special situation investments for some time, and although I don’t really have a preference when it comes to value (I’m just looking for the most mispriced investments relative to risk), I’ve always liked the compounders. These types of businesses do a […]

Industry-Insurance

Some Thoughts on Markel’s Intrinsic Value

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I thought I’d write a post with some quick thoughts on Markel’s value. I recently had a few conversations with a friend regarding how to think about the return on equity that Markel produces relative to the investment return that you will receive as a shareholder. For example, I’ve had a couple questions from clients similar to this: “It’s great that Markel can produce 15% ROE over time, but will we receive 15% if we’re paying above book value?” The current price […]

Case Studies

Importance of ROIC Part 5: A Glance at the Last 42 Years of Wells Fargo

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“Experience, however, indicates that the best business returns are usually achieved by companies that are doing something quite similar today to what they were doing five or ten years ago… a business that constantly encounters major change also encounters many chances for major error. Furthermore, economic terrain that is forever shifting violently is ground on which it is difficult to build a fortress-like business franchise. Such a franchise is usually the key to sustained high returns.”   –Warren Buffett, 1992 Shareholder […]

Industry-Insurance

Markel (MKL): A Compounding Machine

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“Our financial goals are to earn consistent underwriting profits and superior investment returns to build shareholder value” – Markel 2013 Annual Report Markel is an outstanding business currently in its 85th year of operations. It is an excellent insurance company with a history of underwriting profits. It is also a superb investment company with a history of above average investment returns. Markel had an outstanding year in 2013, basically doubling the size of its insurance business and investment portfolio in […]

Investment Ideas & Company Research

Coach (COH): An Overview of the Numbers

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I was reading the news one morning last week and noticed that Coach reported earnings that disappointed and the stock was off 8%. I’ve never really looked at Coach and don’t know much about the company, but I glanced at some of the numbers and was impressed by how strong the business appears to be. Although I prefer investing in stocks that are cheap and obviously undervalued, I’m always looking at great businesses to study them and learn more about […]

Uncategorized

Some Notes on Strayer’s Cost Cutting Plans

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Strayer had their quarterly earnings announcement yesterday morning and there were a couple interesting announcements. Someone asked me for a comment on the report. I listened to the call this morning and here are some notes along with my basic comment in reply… Here are some notes: Enrollments for fall term 2013 decreased 17% to 43,192 (last year it was 51,727) Continuing student enrollment decreased 14% New student enrollment decreased 23% Revenues continue to fall—down 11% in Q3 2013 Earnings […]