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August Buffett-Munger Bargain Newsletter Is Ready for Download

August 17, 2013
The Buffett-Munger Bargain Newsletter August issue is ready for download. This month's newsletter is about a company that has dominated its industry for half a century. The company is almost four times the size of its nearest direct competitor and generates ever-increasing amounts of excess cash. With the fundamentals unchanged, there is no reason why the company shouldn't dominate its industry for another decade or two. At seven times owner earnings, the price is right too.

“It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price… when buying companies or common stocks, we look for first-class businesses accompanied by first-class managements.”

- Warren Buffett (1989)

Can’t wait to know this stock’s name?

Get your copy of GuruFocus’s Buffett-Munger Bargain Newsletter now

What’s a Buffett-Munger Bargain?

A Buffett-Munger Bargain is a “wonderful company” selling at a “fair price”. To be a wonderful company a stock must pass Warren Buffett’s 7-point checklist:

1. Simple Business

2. Favorable Long-Term Prospects

3. Able and Honest Management

4. Consistent Earnings

5. Good Return on Equity

6. Little Debt

7. Very Attractive Price

What’s the Buffett-Munger Bargain Newsletter?

GuruFocus’s Buffett-Munger Bargain Newsletter picks one new “wonderful company” selling at a “fair price” every month. The pick is made using GuruFocus’s Buffett-Munger Screener and Warren Buffett’s 7-point checklist. A new issue goes out to subscribers on the third Friday of every month.

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Comments

denggi
Denggi premium member - 11 months ago
Hi, are there any like for like numbers to look at to strip out growth from addition of new franchises/locations? Something like SSS data used in retail business.
batbeer2
Batbeer2 premium member - 11 months ago
Hi Denggi

Good question.

I don't know of a good source for the exact numbers you are looking for. I do know, in fifteen years, the company has increased its owned share of the US business from 40% to approximately 85%.

In the grand scheme of things, the core/legacy business has been flattish. About 35 000 weekly meetings in 2002 and 40 000 now. That includes the franchises. You can find that in the 10-ks. The price of the product hasn't changed much so that should give you an idea of "SSS"

Some of the reported (GAAP) growth has come from the fact that franchisees pay 10% of revenue.

Once acquired, the company recognizes 100% of revenue... and also the cost.

BUT....

The Internet division now generates almost 30% of revenue. Up from less than 5% in 2002. That has been the driver of real growth. Financially, it seems internet subscription products have not come at the expense of the core/legacy business. It has been a source of additional revenue.

I think the two are linked. As digital becomes a greater part of the business, it makes sense to mop up the former local franchises. Through the internet, the route to the customer becomes more direct.

If you have any further questions, you can contact me by email.

This may be worth reading.

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