2010年6月4日学术报告通知.pdf
2010年6月4日学术报告通知.pdf
Vs. VALUE ACCOUNTING, FINANCE, etc. Need to Learn: Be conservative. Use P/E ratio and other metrics. In other words: PRICE NO NEED TO LEARN COMPLICATED FORMULAS about Derivatives. 5 Benjamin Graham Invest only in Large, Prominent and Conservatively Financed Companies. Does This Strategy Work? 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Years from initial investment 15% 10% 5% VALUE INVESTING Buffett is the CEO of Berkshire Hathaway 0 5000 10000 15000 Growth of $1000 After 25 or Intermediate Years at Different Rates of Return First Principle Buffett uses He said, “We will never, never rest.” 4 20000 25000 30000 35000 How Successful is Buffett? 2 I [am] vigilant about maintaining a healthy debt to equity ratio. I am therefore less threatened by the 'ups and downs' in the market or the volatility of the global economy. He says: “Seeking growth while maintaining stability” has always been my motto – In response to a question from Mr. Buffett: He was so happy there that he later named his business "Apple." Li-Ka-shing Quit school at age 15 to take care of family after his father died EXCEPTIONAL SALESMAN Facts: Annualized return over 45 years: 20%+ (off the chart) His parents died when he was young. He was born in a family of poor farmers. Wang Chaunfu 1 Spent one summer in an apple orchard - He was born to a teenage mother. He was adopted. EXCEPTIONAL INNOVATOR How About Steve Jobs? _____________________________________________________________ Why Study Exception Like Buffett? (a) To Learn (b) It is Interesting Dollars 6 3 Average Price toTenyearAverageEarnings 1937 1929 1905 1897 1889 1881 7 10 Lowest Highest M/B stocks Lowest 15.9 P/E of 18 – Not a value investment Buffett’s Latest Purchase: BNSF 1 2 3 4 5 6 7 8 9 Highest P/E stocks 9.4 10.4 12.1 11.8 11.3 12.9 14.4 14.2 13.8 NO. Why? Should you invest in companies like Apple, or Microsoft, etc. 10 Buffett: It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price. Usually not cheap but they are also not expensive. Coca Cola Proctor and Gamble American Express Wal-Mart Think about Stocks owned by Buffett: Value Investing + Growth Investing Table6.1 Berkshire'sPerformancevs.theS&P500 AnnualChange Berkshire's stock Book performance S&P500 relativeto 10year valueper Stock price Returns S&P500 periods share (1) (2) (3) (2)(3) 196979 20.5% 15.9% 3.1% 12.8% 197988 28.2% 40.4% 16.2% 24.2% 198998 29.0% 31.0% 19.2% 11.8% 199908 6.4% 3.3% 1.4% 4.7% 40years 196908 20.7% 21.8% 8.9% 12.9% 10 1 2 3 4 5 6 7 8 9 16.0 9.5 11.5 12.3 12.6 12.0 12.5 13.5 13.5 14.5 Return Portfolio (% per number year) Return (% per year) Portfolio number Returns on portfolios of stocks based on market-to-book (M/B) ratios Table 3.1 - Evidence that Value Investing Works Returns on portfolios of stocks based on P/E ratios Berkshire’s Growth over Last 40 Years 1945 Buffett Investing = 1953 2001 0 5 10 15 1913 20 1921 25 1961 30 1969 35 1977 40 1985 45 PricetoEarningsRatioFrom1881to2009 1993 50 2009 11 8 P/E at the time of purchase: 17 Table 4.1 - Growth in Coca-Cola's Earnings (and Book Value Before Berkshire’s Purchase Growth in earnings per Year share 1979 11.9% 1980 0.9 1981 6.1 1982 9.1 1983 3.8 1984 16.1 1985 8.2 1986 20.3 1987 17.4 1988 17.2 10-year average 11.1% Why Coca-Cola was purchased in 1988? Buffett: If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes Understand the business well and be good in forecasting. (Invest only in what you know.) You need to think about the future growth. Growth Investing 12 9 8.12 4.03 Dairy Queen (similar to McDonald’s) Manufacturing Electricity Companies 16 17 2008 2006 2004 12.5 11.1 8.9 6.7 5.6 2000 2002 4.0 1998 8.5 7.1 5.9 4.6 3.9 3.1 7.3% 11.9% 10.9% 6.2% -4.0% 6.7% Table 7.1 - GEICO's Revenues, Float and Operating Profits (Dollar amounts in billions) Operating profits as a percentage of Revenues Float revenues Berkshire’s Auto Insurance Use Other People’s Money: (BUT …) Railroad Let us discuss these briefly. Many Facets to Think About. Here are some: 14 managers whom we like, admire and trust. Our goal is to acquire either part or all of businesses that we believe we understand, that have good, sustainable underlying economics, and that are run by Who are you? Insurance Some Berkshire Businesses Many Entrepreneurs (Furniture Stores, Jewelry Stores, etc.) Tony Nicely Ajit Jain David Sokol Charles Munger Buffett-style Investing: Simple but not Easy. 13 Some Berkshire Managers (CEOs) 12.0% 0.36 0.25 0.5 4.18 0.35 6.5 11.21 0.28 0.28 9.0% 15.0% 21.2% Returnonequity 1.12 0.55 Debt/Totalassets 1.61 0.79 5.29 5.73 0.5 1.02 11.28 10.71 EarningsperShare Netincome Shareholders'equity 9.16 32.89 29.29 16.39 Totalassets Debt(interestbearing) 26.79 21.21 12.94 Revenues Table6.3 BYD'sSelectedFinancialData inmillionsofChineseYuan(RMB) exceptearningsperShareandratios. 2008 2007 2006 2005 Where does growth come from? 18 15 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 AmoutwithTaxDeferment 22 2002 2001 2000 Operating Profits as a % of identifiable assets Revenues Total assets Operating Profits 17% 15% 10% 19% 15% 16% 15% Tiffany and Co. 1999 1998 1997 1996 $1,461 1,169 1,018 922 $1,343 1,057 827 739 $257 161 133 109 20% EBIT/TA (%) Earnings before interest and taxes (EBIT) 5.4% $2,203 5.5% 2,086 6.1% 1,737 $13,971 12,628 10,644 8.5% 1,698 7,279 6.8% 1,331 6,727 8.5% 1,591 6,145 8.1% 1,253 4,968 8.3% 1,004 4,973 5.3% 616 4,013 Total revenues 2006 2005 2004 2003 (Dollar amounts in millions) Operating Profits as a % of identifiable assets 2007 Property, plant, equipment, and other assets, net $36,290 33,917 30,942 16,037 15,597 14,862 14,177 8,987 8,008 Goodwill 5280 5,591 5,548 4,156 4,307 4,306 4,258 3,639 3,673 Total assets: $41,570 39,508 36,490 20,193 19,904 19,168 18,435 12,626 11,681 2008 Table 12.1 - Berkshire Hathaway Energy Sector (MidAmerican Energy Holdings) Berkshire's Jewelry Business 1999 1998 1997 1996 Revenues $486 420 398 392 Identifiable assets at year end $258 234 219 267 Operating profits before taxes $51 39 32 28 Table 10.1 – Profitability of Berkshire’s Jewelry Business Compared to Tiffany’s (Dollar amounts in millions) Think Reliability of Profits in the Long Run Year 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 All otherbusinessesexceptinsurance Think Profitability (Not Profits) -10% -5% 0% 5% 10% 15% Newspaper Operating Profit as a Percentage of Sales 19 20% 25% 30% 35% 40% Newspapers M= Monopoly = Money Use Monopoly (Moat) You make better decisions. And, Amountwithouttaxdeferment FinalAmountwithandwithouttax defermentfromInitial$10,000 InvestmentinS&P500from1984to 2008 One Advantage: Taxes Dollars Invest for the long term Operating Profit 23 20 5.50% Average 1986 1987 1988 1989 1990 1991 1992 1993 1994 $40.3 48.6 58.0 58.5 61.3 61.4 70.5 77.5 79.3 20% 13% 15% 18% 19% 19% 19% 22% 25% 25% Table 13.1 - Scott Fetzer Earnings and dividends Return to Berkshire as a percentage of initial Scott Fetzer investment Year Earnings Earnings (Dollar in millions) (b) ROE (or ROA) If so, what should managers focus on? (a) Managers 23.10% Pre-tax earnings per Per-share share (non-insurance Investments (‘000) businesses) $50.6 $0.8 47.0 1.3 52.7 2.2 62.2 1.9 66.9 2.1 74.1 2.4 80.6 3.6 90.3 4.0 77.7 3.9 Recall: Where do profits come from? Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2000-2008 compounded growth rate Table 5.2 - Data for Valuation Berkshire Hathaway Always Compute Intrinsic Value 24 21 $1,619 1,932 1,999 2,153 2,718 2,776 20.5% 18.4% 21.9% 21.8% 21.6% 17.8% 21.4% Dividends versus Repurchases? Why? Berkshire does not pay any dividends. 28 25 4.4 1.8 3.5 Conoco Phillips Johnson and Johnson Kraft 1.2 1.9 9.0 Tesco U.S. Bancorp Wells Fargo & Co 5.7 9.1 Coca-Cola Procter & Gamble 5.3 Burlington Northern Santa Fe 1309.6 265.9 45.0 138.2 63.1 84.9 142.9 40.5 36.4 13.5 1.8 31.8 19.0 9.9 14.4 83.9 8.3 30.8 8,153 Burlington Northern Santa Fe 13,848 9,907 Kraft 17,597 AnheuserBusch 7,602 4,317 6,518 13,314 55% 53% 66% 76% 1.0% 0.7% 70.7% 13.7% 15.7% 17.0% 58.7% 20.5% 84.6% Net Repurchases income Repurchases as a percentage 2004-2008 2004-2008 of net income (Dollar amounts in millions) $26,587 $9,164 34% American Express Coca-Cola Name of the company Buffett Likes Companies Buying Their Own Shares 9.0% 7.3% 9.8% 9.4% 8.8% 8.5% 10.2% Dividends: $298 424 436 466 485 594 $4,090 4,334 4,660 5,274 5,723 5,834 Table 22.1 - Berkshire Holdings and their capital intensities Total Berkshire's PPE as a Assets Property, common stock percentage of plant and investments as of the TA (capital equip-ment comp of 12/31/2008 intensity) (PPE) (TA) market value Company (Dollar amounts in billions) American Express $2.8 $126.1 $2.9 2.3% P.P.E. (Property, Plant and Equipment) Is it good to have a lot of assets? Average 2001 2002 2003 2004 2005 2006 Table 13.2 - Shaw Industries: profitability and growth after Berkshire's acquisition of Shaw Earnings before Taxes Earnings Identifiable as a % of assets at before identifiable Year-end Earnings Taxes as Revenues (million assets at year a % of before Taxes (million end dollars) dollars) (million dollars) revenues Year Profitability (Shaw Industries) 29 26 1,531 $49,897 16,338 16,515 7,500 5,047 $2,497 S. Equity Deferred taxes Term debt and other liabilities Other current liabilities Total current liabilities Notes payable Liabilities and Equity 2,283/30,779 27 Always Compute Intrinsic Value Write notes when you make decisions 30 Why do people sell shares when the market goes down? or Who Are You? Know Thyself. 30,779 $49,897 6,033 2,786 8,103 8,087 $2,212 When the stock market goes down, which one are you? = 7.4% What to do to avoid your biases? (ii) (i) Psychology Are you bored? = ROE: Net Income divided by Shareholders’ Equity Other assets Fixes assets Goodwill and other intangibles Inventory Accounts and notes receivable Assets Cash and equivalents Balance Sheet 12/31/08 (in millions) Table 24.2 - Berkshire's Manufacturing, Service and Retailing Operations Use Formulas Intelligently: