As promised recently we are updating/cleaning the investor resource pages on a regular basis. Last week we updated the resource pages of:
Below is a partial excerpt from Bruce Greenwald’s page followed by link to the page, which can also be found under Value Investors tab on the top of the page.
On Warren Buffett Purchase of BNI: “It’s a crazy deal. It’s an insane deal. We looked at Burlington Northern at $75 and I’ll give you the exact calculation we did. You don’t have a high earnings return. They are paying 18 times earnings, but it’s really much worse than that. They report maintenance cap-ex very carefully. They report depreciation and amortization, and they report only about 70% of the maintenance cap-ex. So they are under-depreciating, and their profit numbers are lower than the true profit numbers – and in a bad way, because the tax shield for the depreciation is undergone too. Their profitability is much lower than it looks.”
“Buffett’s paying 18-times [at $100/share] and at $75 he was paying 16-times. Our calculation is he was paying 21-times…”
“It looked to us like an oil play. He has a history of making bad oil play decisions. And that was at $75/share, we thought there were better oil plays. At $100/share we think he [Warren Buffett] has lost his mind.”
See full page here.