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Re 1998 - When Buy and Hold the Greatest Business Did Not Work
Posted by: 20punches (IP Logged)
Date: December 19, 2013 01:47PM

Ebritt120: Thanks for commenting. It is true that taking care of the purchase price and you don't have to make a good sale to get good returns:)


Stocks Discussed: KO,
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Re 1998 - When Buy and Hold the Greatest Business Did Not Work
Posted by: ansgarjohn@twitter (IP Logged)
Date: December 19, 2013 04:05PM

Ning, the sell, and buy decision might be different because of capital gains taxes in the United States. A fund like Bestinver in Spain apparently buys and sells more, because the tax system is different. I believe not selling KO when it is slightly over intrinsic value has to do with the "deferred taxes" Buffett refers to in the Owner's Manual: "Berkshire has access to two low-cost, non-perilous sources of leverage that allow us to safely own far more assets than our equity capital alone would permit: deferred taxes and "float," the funds of others that our insurance business holds because it receives premiums before needing to pay out losses. Both of these funding sources have grown rapidly and now total about $32 billion. (written in 1996-9....$117b in 2013?)Better yet, this funding to date has been cost-free. Deferred tax liabilities bear no interest. And as long as we can break even in our insurance underwriting - which we have done, on the average, during our 32 years in the business - the cost of the float developed from that operation is zero. Neither item, of course, is equity; these are real liabilities. But they are liabilities without covenants or due dates attached to them. In effect, they give us the benefit of debt - an ability to have more assets working for us - but saddle us with none of its drawbacks."


Stocks Discussed: KO,
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Re 1998 - When Buy and Hold the Greatest Business Did Not Work
Posted by: AlbertaSunwapta (IP Logged)
Date: December 19, 2013 07:05PM

Good point on the share exchange for Gen Re.   Looking back I wonder if Buffett would have preferred to trade shares for something else.  :-). The derivative book was a bit of a downer for him.

You'll see here (link below) that he thought BRK was overvalued when he capitalized on it through the B share issuance.

[www.sec.gov]



Stocks Discussed: KO,
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Re 1998 - When Buy and Hold the Greatest Business Did Not Work
Posted by: 20punches (IP Logged)
Date: December 19, 2013 08:18PM

Ansgarjohn: Thanks for commenting. I'm not sure I get your point. Are you saying that Berkshire didn't sell KO because the money it used to purchase KO was from float? 


Stocks Discussed: KO,
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Re 1998 - When Buy and Hold the Greatest Business Did Not Work
Posted by: 20punches (IP Logged)
Date: December 19, 2013 08:23PM

AlbertaSunwapta: Agreed the derivative book made him sweat quite a bit. Also Gen Re messed up when 9-11 happened and Buffett specifically mentioned the risk of terrorists attack for the World Trade Center, which Gen Re was involved. Thanks for the link to the B-Share Prospectus. I have never read it but I remember reading Buffett saying the B-share was not undervalued at the time. 


Stocks Discussed: KO,
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Re 1998 - When Buy and Hold the Greatest Business Did Not Work
Posted by: Seanickson (IP Logged)
Date: December 21, 2013 05:15PM

Interesting that buffett sold wells in 1998 but not coke


Stocks Discussed: KO,
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Re 1998 - When Buy and Hold the Greatest Business Did Not Work
Posted by: 20punches (IP Logged)
Date: December 22, 2013 07:46PM

Seanickson: In my opinion, coke has a wider moat than wells. Coke is needed almost everywhere on earth and that per capita consumption has beeng growing and will most likely continue to grow. I can't imagian a bank being that dominant globally. 


Stocks Discussed: KO,
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Re 1998 - When Buy and Hold the Greatest Business Did Not Work
Posted by: Stephen (IP Logged)
Date: December 31, 2013 03:38PM

Nice article Ning."And if we refresh our memories from the Yacktman Asset Management interview, "  Can you provide a link to this interview? Thanks


Stocks Discussed: KO,
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Re 1998 - When Buy and Hold the Greatest Business Did Not Work
Posted by: 20punches (IP Logged)
Date: January 19, 2014 04:57PM

Thanks for the nice words, Sstamps508. Here is the link:

[www.gurufocus.com]

 



Stocks Discussed: KO,
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