WARREN BUFFETT’S LETTER – 2015 – 2017

Posted on January 7, 2019 by Jimit Zaveri under Bibliophile

Warren Buffett’s Letter 2015

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Similarly, India has a GDP growth rate of 7.20% and population growth of 1.10% which increase to the per capita growth by 6.10%. if we consider average per capita growth rate of around 5% for coming 20 years then it will reach the gain of 100%+. So that per capita will increase to $3927+ from $1963.55 currently, which will enhance the standard of living of our future generation.

Warren Buffett’s Letter 2016

Mr. Buffett has explained mistakes of acquiring businesses –

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Mr. Buffett on assets funding through debt-

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Mr. Buffett on fear –

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When we are fearful with our investment decisions then we focus on the each and every aspects which can result in the erosion of the capital. When I make an investment, I assume that from the next day of my investment; 1929 great depression will hit so whether I survive or not? Survival should be much more important to build a wealth which is not focused if we do not remain fearful with our investment.

Mr. Buffett on the repurchase of shares –

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Many companies are coming up with the repurchase of shares, we should consider that whether repurchase did at a discount to the intrinsic value or at a premium. If a company is paying a premium to repurchase shares then it will not benefits much to the shareholders. If any company make a decision to repurchase shares at a discount to the intrinsic value then we should look for the company. Many companies which are into commodity business or into the cyclical nature of the business also make a repurchase share during the worst time.

Examples of Buyback at discount to intrinsic value, cyclical companies buyback, companies which have done a buyback rather repay debt – SIMPLE IS BETTER – ISSUE -13 – BUYBACK

Warren Buffett’s Letter 2017

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If our investment does not provide us with protection against the inflation then we should not stay for a long term with a particular investment. Our first motive for making an investment should be protected against inflation and then create wealth for the long-term horizon.

Warren Buffett’s Letters

WARREN BUFFETT’S LETTER – 2008 – 2010

Posted on December 8, 2018 by Jimit Zaveri under Bibliophile

Warren Buffett’s Letter 2008

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When there is a pessimism into the market then we get an opportunity to buy a good business at a discounted value. But during a euphoric time period, good businesses are available at a sky-high value.

Indian companies examples

One of the wealth creator IT Company during an IT bubble

Infy INFY Chart

One of the wealth creator IT Company during an IT bubble

Wipro

One of the two-wheelers and commercial vehicle manufacturing company was available at a discounted value during pessimism of the year 2008

Eicher Eicher Chart

Warren Buffett’s Letter 2009

What is avoided by Mr. Buffett and Mr.Munger —

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Mr. Buffett on derivatives –

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Warren Buffett’s Letter 2010

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One of the infrastructure company

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One of the electric motors, generators, transformers manufacturing company

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Mr. Buffett on debt-

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Example – SIMPLE IS BETTER – ISSUE -4 – Mr. EMI V/S Mr. SIP

Mr. Buffett on crowd mentality-

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Mr. Buffett on Repurchase of shares –

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One of the Pharma Company of India which has sold one of the business segment into the FY2011 and company becomes a Cash bargain. The company has done a buyback at that time.

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The company has a total Cash balance of Rs.1770.28 crore + Upcoming cash due to the sale of the business worth of Rs.7136.00 crore = Rs.8906.28 crore. And the company was available at MCap of ~Rs.7830 crore. Entire continuing business was not given valued by the market.

One of the two-wheelers and commercial vehicle manufacturing company has done a buyback in the year 2009

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The company has a total Cash balance of Rs.1260.05 crore. And the company was available at MCap of ~Rs.608 crore. Entire continuing business was not given valued by the market.

One of the metal company in the year 2016 has come up with the buyback. In the year 2016, the price of iron ore was traded lower.

Iron ore NMDC 01 NMDC 02

Company had a cash balance of Rs.14806 crore in FY16 and PAT of Rs.2517 crore. Company was available at MCap of ~Rs.28440 crore. Entire continuing business ex-cash was available at 5.94x of PAT (MCap Rs.28440 crore – Cash Rs.14806 crore + debt Rs.1497 crore = Rs.15130.86 crore; EV Rs.15130.86 crore / PAT Rs.2517 crore = 5.94x).

Warren Buffett’s Letters 1957 – 2012

WARREN BUFFETT’S LETTER – 1983 – 84

Posted on June 3, 2018 by Jimit Zaveri under Bibliophile

WB Letter 1983

Berkshire Hathway made an acquisition of majority stake into Nebraska Furniture Mart. Mrs.Blumkin leave Russia for America when she was the age of 23. She had no formal education, no knowledge of English.

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Many retailers had pressurized to the furniture and carpet manufacturers to not to sell products to Mrs.B but Mrs.B has managed to run her business and also able to cut prices. She has to face many cases but she won all and received huge publicity.

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Mr.Buffett has explained the concept of intrinsic value in a very well manner.

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Mr.Buffett has explained how to look at the economic Goodwill with the example of the See’s Candy. He has an emphasis more on economic Goodwill rather than accounting Goodwill. Company’s ability to produce a higher return on assets compared to market then that excess return is economic Goodwill.

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Also mentioned that assets heavy businesses require additional capital for the further growth.

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Great business creates a fortune during an inflationary year where the company requires less tangible assets. And also companies having availability of the fund for acquisition of the new business. They do not have to depend on the bringing additional fund by either debt or issuing new share capital.

I have quoted example of 2 two companies into the automobile business and one company is in the paint business.

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HeroM

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Example 1 – 3 which are asset heavy businesses, where we can see that borrowing is compounding, non-availability of free cash flow and wealth of shareholders does not created or get erode, whereas in example 4 – 6 which are asset light or least asset businesses, we can see that borrowing reduced or increased at a lower rate and investments into the books has compound well, availability of free cash flow which resulted into the wealth creation for the shareholders.

But the management who is not disciplined then they will do a silly things such as –

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