This is the first in a series of weekly posts aimed at establishing a process for becoming a better investor through deliberate practice, based on suggestions found in Moonwalking with Einstein
. I will post my analysis of the company, as well as a post-mortem of how the investment played out (if we’re studying a historical investment) and the next investment for analysis, next weekend. Please be sure to review why we’re doing this
and my suggestions/instructions
if you’ve yet to do so, and please leave your analysis in the comments of this
post before next weekend if you choose to participate.**** This is our first post on deliberate practice, so I thought we’d kick the process off with a bang, by studying from the master himself.
Many of you know that Dairy Queen is today a small part of the Berkshire Conglomerate. What you may not know is that Berkshire acquired it in 1997, and it was public up until it was acquired.
And, thus, our first deliberate practice challenge: Attempt to value Dairy Queen in the year before Buffett bought it.
Some additional notes before I provide the relevant links: so as not to bias yourself, I encourage you not
to look for any other press or filings related to the acquisition, other than the ones I provide below. I bet there’s almost zero chance that you know what Buffett actually acquired them for, so why risk the anchoring bias? I will provide all forms of follow up links in my post-mortem on the investment next weekend.
One last thing: Buffett successfully acquired DQ in late 1997, but I believe he also offered to buy them out (at a higher price!) in 1996. So, while I will give you the last 10-Q before Buffett bought them, feel free to value them exclusively on the two 10-Ks.
That said- here are the four relevant links.
Now try to guess what the company is worth! Good luck- look for my analysis and a post-mortem next weekend.
The Strategy of Ben Graham – Warren Buffett’s Mentor
From 1923 to 1957 Warren Buffett’s mentor, Ben Graham, followed a strategy of investing in net-nets. He said: “It always seemed, and still seems ridiculously simple to say that if one can acquire a diversified group of common stocks at a price less than the...net current assets alone…the results should be quite satisfactory. They were so in our experience, for more than 30 years.”
Today net-nets are rare. They are collected under GuruFocus’ Net-Net Screener. GuruFocus also publishes a monthly newsletter which recommends the safest net-nets. All of these are included in GuruFocus Premium Membership.
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