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Monica Wolfe
Monica Wolfe
Articles (757) 

Buffett Highlights the GuruFocus Real Time Picks Update

October 11, 2013 | About:

The following information is a highlight of the real-time guru activity we saw this week. To view more information on these gurus, check out their guru portfolios. “Real Time Picks” reports the stock purchases and sells that Gurus have made within the prior two weeks. If a Guru makes a purchase or sell of a company in which they own a greater-than 5% stake, SEC regulations require them to report their transaction within two days. We saw notable real time activity from Warren Buffett, Mason Hawkins and John Rogers.

Warren Buffett

This week Buffet’s company, Berkshire Hathaway (BRK.A)(BRK.B), became 2.8% owner of Goldman Sachs (GS) by converting warrants he purchased when the investment bank was on the brink of failing in 2008.

In the original Goldman Sachs deal, Buffett invested $5 billion for the bank’s preferred stock and received $5 billion in common stock, strike price $115 per share. He had five years to exercise the warrants, which carried a 10% dividend.

Then, in March 2013, the two parties amended the deal from a cash settlement to a net share settlement. In other words, instead of giving Berkshire Hathaway the right to purchase 43,478,260 shares at an exercise price of $115 before Oct. 1, 2013, Goldman would instead give him the number of shares equal to the value to the difference between the average closing price of the 10 trading days leading up to Oct. 1, 2013 and the exercise price multiplied by the 43,478,260 shares the warrants granted.

This stake was smaller than it would have been in the initial deal, but did not require Buffett to spend any money to exercise the warrants. As disclosed on Oct. 8, the stake given in the amended deal totaled about 13.06 million shares, making Berkshire the six-largest external shareholder in the company.

In 2011, Goldman redeemed another 50,000 shares of preferred stock with a 10% cumulative dividend at a price of $110,000 per share that Berkshire purchased concurrently with the warrants. Goldman paid Buffett $1.64 billion in one-time preferred dividends at the time of redemption.

Goldman Sachs shares trade around $159.45 on Friday, up approximately 23% since Buffett made the deal with the company on Oct. 1, 2008.

To read more on Buffett’s transaction, read Holly LaFon’s article here.

Mason Hawkins

Hawkins cut his stake in Wendy’s Co (WEN). over the past week. The guru decreased his position in Wendy’s -46.09% by selling a total of 16,136,800 shares. He sold these shares at an average price of $8.14 per share, and since his sell the price per share is trading up about 5%.

Hawkins still holds on to 18,878,200 shares, representing 4.8% of the company’s shares outstanding. The sell dropped him down from an 8.9% stake in the company. Historically the guru has seen an average gain of 61% on shares bought, as shown in the graph below.

Hawkins’s historical holding history:


Wendy’s Co. owns, franchises and operates company-owned Wendy’s fast food restaurants. The company maintains over 6,500 restaurants in operation in the U.S as well as in 27 other countries and territories.

Wendy’s historical revenue and net income:


The analysis on Wendy’s Co. reports that the company’s revenue has been in decline over the past five years, its dividend payout is too high, their Piotroski F-Score is high and its P/S ratio is nearing a 10-year high.

Wendy’s has a market cap of $3.36 billion. Its shares are currently trading at around $8.54 with a P/E ratio of 232.40, a P/S ratio of 1.30 and a P/B ratio of 1.60. The company’s dividend yield is currently at 2.00%.

John Rogers

Rogers made a rather large increase in his position in Rosetta Stone (RST) last week. The guru upped his stake 138.19% by purchasing a total of 1,315,089 shares. He purchased these shares at an average price of $16.23 per share. The price is trading slightly down today at $16.18 per share.

John Rogers now holds on to a total of 2,266,743 shares of Rosetta Stone, representing 10.4% of the company’s shares outstanding. His update in the company makes him the largest guru shareholder of Rosetta Stone stock.

Rogers’ historical holding history of RST:


Rosetta Stone is a provider of technology-based language learning solutions. The company develops, markets and sells language learning solutions consisting of software, online services and audio practice tools under the Rosetta Stone brand. The company currently offers courses in 30 languages.

Rosetta Stone’s historical revenue and net income:


Recently Rosetta Stone announced $25 million share repurchase plan. The plan will purchase these shares of outstanding common stock over the duration of a two-year period.

The past quarter showed immense growth as its EBITDA jumped nearly 150% to $2.8 million.

Rosetta Stone has a market cap of $350.1 million. Its shares are currently trading at around $16.14 with a P/S ratio of 1.30 and a P/B ratio of 2.50.

John Rogers also made a smaller but still notable increase in the company Astro-Med (NASDAQ:ALOT). The guru upped his stake 13.01% by purchasing a total of 86,937 shares of the company’s stock. He bought these shares at an average price of $10.96 per share, and since then the price per share has increased about 6%.

Rogers now holds on to a total of 755,379 shares of Astro-Med, making him the largest guru shareholder and representing 10.14% of the company’s shares outstanding.

Rogers holding history of Astro-Med:


Astro-Med designs, develops, manufactures and distributes specialty printers and data acquisition and analysis systems, including both hardware and software. These products incorporate technologies used to acquire, store, analyze and present data in multiple formats.

Astro-Med’s historical revenue and net income:


Over the past quarter the company saw an increase in sales of 17.3% from the past year.

The Peter Lynch Chart suggests that the company is currently undervalued:


Astro-Med has a market cap of $86.7 million. Its shares are currently trading at around $11.58 with a P/E ratio of 68.30, a P/S ratio of 1.30 and a P/B ratio of 1.40. The company also currently holds a dividend yield of 2.40%.

Check out the most current GuruFocus Real Time Picks here.

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Rating: 3.3/5 (3 votes)


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