Kraft Foods begins exchange offer in Post deal

Considering Warren Buffett's 138 million share position in Kraft (KFT), Berkshire Hathaway stands to become a significant shareowner in Ralcorp.

"Under terms of an agreement reached in November, Kraft will first split off or spin off Post and its assets to shareholders through a subsidiary called Cable Holdco. The Post cereals business will then be combined with Ralcorp."

"As a result of the offer, Kraft said the number of its outstanding shares will be reduced." -Stock Article Link

Focus on Businesses, not on Technical Charts.

Warren Buffett spent eight years working with charts before discarding it as worthless.

"I realized that technical analysis didn't work when I turned the chart upside down and didn't get a different answer."

The billionaire discussed that strategy at the 2008 Berkshire Hathaway general meeting. When he was asked how to avoid the crowd mind-set, he said he simply followed Graham's three most important lessons:

1. Buy stocks with a margin of safety.
2. A stock is part of a business.
3. The market is there to serve you, not instruct you.

-Stock Article Link

Speaking of fundamental analysis, here's a bullish article on Syneron Medical (ELOS) calling it a screaming buy. -Stock Article Link

Warren Buffett's Current Stock Portfolio

Billionaire investor Warren Buffett's Berkshire Hathaway Inc. reported Thursday that it eliminated its stake in Ameriprise Financial Inc. and is cutting its stake in Iron Mountain Inc., while raising its stakes in Kraft Foods Inc. and Burlington Northern Santa Fe Inc.


For Berkshire Hathaway submitted May 14, 2008

Here's a comparison of stock shares quarter to quarter:

American Express Co. (AXP, no change)
Mar 31: 151,610,700

Ameriprise Financial,Inc. (AMP, reduced)
Dec 31: 661,742
Mar 31: none

Anheuser Busch Cos. Inc. (BUD, no change)
Mar 31: 35,563,200

Bank of America Corp. (BAC, no change)
Mar 31: 9,100,000

Burlington Northern Santa Fe (BNI, increased)
Dec 31: 60,828,818
Mar 31: 63,785,418

Carmax Inc. (KMX, increased)
Dec 31: 21,000,000
Mar 31: 21,300,000
Believed to be a Lou Simpson(GEICO) pick than from Warren.

Coca Cola (KO, no change)
Mar 31: 200,000,000

Comcast Corp CLA (no change)
Mar 31: 12,000,000

Comdisco Holding Co. (no change)
Mar 31: 1,537,866

ConocoPhillips (no change)
Mar 31: 17,508,700

Costco Wholesale Corp. (no change)
Mar 31: 5,254,000

Gannett Inc. (GCI, no change)
Mar 31: 3,447,600

General Electric Co. (GE, no change)
Mar 31: 7,777,900

Glaxosmithkline (GSK, no change)
Mar 31: 1,510,500

Home Depot Inc. (HD, no change)
Mar 31: 4,181,000

Ingersoll-Rd Company LTD. (IR, no change)
Dec 31: 636,600

Iron Mountain Inc. (IRM, reduced)
Dec 31: 4,663,900
Mar 31: 3,372,200

Johnson & Johnson (JNJ, no change)
Mar 31: 61,754,448

Kraft (KFT, increased)
Dec 31: 132,393,800
Mar 31: 138,272,500

Lowes Companies Inc. (LOW, no change)
Mar 31: 7,000,000

M & T Bank Corporation (MTB, no change)
Mar 31: 6,708,760

Moody's (MCO, no change)
Mar 31: 48,000,000

Nike Inc. (NKE, no change)
Mar 31: 7,641,000

Norfolk Southern Corp. (NSC, no change)
Mar 31: 1,933,000

Procter & Gamble Co. (PG, no change)
Dec 31: 105,847,000

Sanofi Aventis (SNY, no change)
Mar 31: 3,586,733

Sun Trusts Banks Inc. (STI, no change)
Mar 31: 3,204,600

Torchmark Corp. (TMK, no change)
Mar 31: 2,823,879

Trane (TT, no change)
Mar 31: 10,962,400

US Bancorp (USB, increased)
Dec 31: 67,581,926
Mar 31: 68,631,026

USG Corporation (USG, no change)
Mar 31: 17,072,192

Union Pacific Corp. (UNP, no change)
Mar 31: 4,453,000

United Parcel Service Inc. (UPS, no change)
Mar 31: 1,429,200

United Health Group Inc. (UNH, increased)
Dec 31: 6,000,000
Mar 31: 6,400,000

Wabco Holdings Inc. (WBC, no change)
Mar 31: 2,700,000

Wal-Mart Stores, Inc. (WMT, No change)
Mar 31: 19,944,300

Washington Post Co. (WPO, no change)
Mar 31: 1,727,765

Wells Fargo & Co. (WFC, increased)
Dec 31: 289,259,868
Mar 31: 290,654,868

Wellpoint Inc. (WLP, increased)
Dec 31: 4,500,000
Mar 31: 4,800,000

Wesco Finl Corp. (No change)
Mar 31: 5,703,087

Grand Total is $66,461,224. WOW!!

One on one interview with Warren Buffett

" WARREN BUFFETT, CHAIRMAN & CEO, BERKSHIRE HATHAWAY: I don't spend a lot of time thinking about the economy. Nevertheless, what I see would indicate to me that this is not a short-run phenomenon.....

It still has a ways to go. I mean, there's a huge inventory of houses around and they went up too far. In many areas they went up to crazy levels. The money isn't going to be enough, able to -- available to finance crazy prices anymore.....

I'm looking for a business I can understand. It has to be something that I can get my mind around. It has to have durable competitive advantage. It can't be a hula hoop company or something like that. It has to have a management that I trust and admire. And then it has to be at a sensible price and preferably it has to be big. And every now and then we get a chance to do that...."

-Stock Article Link

How to invest like Buffett

One of the ways Buffett learns so much is through reading. Munger told his audience last year, "If you had an observer ... he would find that Warren spent most of his time sitting on his [rear end] and reading." He advised further, "If you want to succeed, if you really want to be the outlier in terms of achievement, just sit down on your [rear end] and read -- and do it all the time."

In a recent Fortune interview, Buffett spoke to how he generates ideas: "I just read. I read all day. I mean, we put $500 million in PetroChina ( PTR). All I did was read the annual report." -Stock Article Link

Warren Buffett at the University of Missouri.

Warren Buffett gives a talk at University of Missouri.

"Develop your own talents," Buffett said via satellite from a television station in his hometown of Omaha, Neb. He added that oral and written communication skills are the most important tools a person can have coming out of college.

"If you have those abilities when you’re young, you jump out," the 77-year-old business giant said.

"I don’t need a" stock "quote to know I made a good investment," he said. "I like to look at the financial information … before I look at the price," and "when I find something … I reach for my checkbook." -Stock Article Link

Warren Buffett's Biography and Secrets video

Warren Buffet Biography and Warren Buffet's Secrets for making money.

Warren Buffet, Ben Graham, and other famous investing guru quotes

Warren Buffett Quotes:

"Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1."

"I am a better investor because I am a businessman; and I am a better businessman because I am an investor."

"A horse that can count to ten is a remarkable horse - not a remarkable mathematician."

"We don't get paid for activity, just for being right. As to how long we'll wait, we'll wait indefinitely!"

"Success in investing doesn't correlate with IQ - once you're above the level of 125. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing."

"The only reason that one may not understand a financial statement is because the writer does not want you to understand it."

"We're perfectly willing to trade off a big payoff for a certain payoff."

"Be Fearful when the World is Greedy and Be Greedy when the World is Fearful."

"It's not important how big one's circle of competence is; knowing its boundaries, however, is critical."

"I don't try to jump over 7-foot hurdles: I look around for 1-foot bars that I can step over."

"The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors."

"When a management team with a reputation for billiance joins a business with poor fundamental economics, it is the reputation of the business that remains intact."

"I choose to work with every single person I work with. That ends up being the most important factor. I don't interact with people I don't like or admire. That the key. It's like marrying."

"It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price"

Ben Graham Quotes:

"Investing is most intelligent when it is most businesslike."


Charlie Munger Quotes:

"To a man with only a hammer, every problem looks like a nail."

"All intelligent investing is value investing."

Peter Lynch Quotes:

"It's a real tragedy when you buy a stock that's overpriced; The company is a big success, and you still don't make any money."

Beyond the numbers...the competitive advantage

"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."-Warren Buffett.

Here is a nice article about Buffett's investing decisions based on valuing the competitive advantage of the company versus just the numbers.-Stock Article Link

Mohnish Pabrai gets the CNBC spotlight on Buffett

A take on Warren Buffetts famed investor letter, with Mark Hake, Hake Capital Mgmt.; Mohnish Pabrai, Pabrai Investment Funds; and CNBCs Maria Bartiromo......a bit of tension at the end.

Buffetts Bets

Warren Buffett says we are in a recession.

He restated, however, his view that over the long-run the U.S. economy will do fine and that each generation will live better than the one before it.

Buffett also told CNBC's Becky Quick that while stocks are "not cheap" now, they're not extreme, either. He says he's waiting for when stocks become "very cheap." He does, however, "find more things to look at now than I did six months or a year ago." The best opportunities he sees right now are in bonds rather than stocks. -Stock Article Video

Warren Buffett Answers Your Emails on Squawk Box: Transcript (Part 1)
Warren Buffett Answers Your Emails on Squawk Box: Transcript (Part 2)
Warren Buffett Answers Your Emails on Squawk Box: Transcript (Part 3)
Warren Buffett Answers Your Emails on Squawk Box: Transcript (Part 4)
Warren Buffett Answers Your Emails on Squawk Box: Transcript (Part 5)
Warren Buffett Answers Your Emails on Squawk Box: Transcript (Part 6)
Warren Buffett Answers Your Emails on Squawk Box: Transcript (Part 7)
Warren Buffett Answers Your Emails on Squawk Box: Transcript (Part 8)
Warren Buffett Answers Your Emails on Squawk Box: Transcript (Part 9)
Warren Buffett Answers Your Emails on Squawk Box: Transcript (Part 10)
Warren Buffett Answers Your Emails on Squawk Box: Transcript (Part 11 and Final)

Warren Buffett's latest Annual Report 2007

"You only learn who has been swimming naked when the tide goes out – and what we are witnessing at some of our largest financial institutions is an ugly sight...

That party is over. It’s a certainty that insurance-industry profit margins, including ours, will fall significantly in 2008. Prices are down, and exposures inexorably rise...

Charlie and I look for companies that have a) a business we understand; b) favorable long-term
economics; c) able and trustworthy management; and d) a sensible price tag...

The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers.....

we evaluate their performance by the two methods we apply to the businesses we own. The first test is improvement in earnings, with our making due allowance for industry conditions. The second test, more subjective, is whether their “moats” – a metaphor for the superiorities they possess that make life difficult for their competitors – have widened during the year." -Warren Buffett

Stock Annual Report Link

Warren Buffett interview with the Financial Post

Warren Buffet, CEO, Berkshire Hathaway Inc. in an exclusive interview with the Financial Post.

Warren Buffett's meeting at UT Austin

Students from Emory's Goizueta Business School and McCombs School of Business at UT Austin were invited to come visit Warren Buffett for a Q&A session.

"I have 2 views on diversification. If you are a professional and have confidence, then I would advocate lots of concentration. For everyone else, if it’s not your game, participate in total diversification. The economy will do fine over time. Make sure you don’t buy at the wrong price or the wrong time. That’s what most people should do, buy a cheap index fund and slowly dollar cost average into it. If you try to be just a little bit smart, spending an hour a week investing, you’re liable to be really dumb.

If it’s your game, diversification doesn’t make sense. It’s crazy to put money into your 20^th choice rather than your 1^st choice. “Lebron James” analogy. If you have Lebron James on your team, don’t take him out of the game just to make room for someone else. If you have a harem of 40 women, you never really get to know any of them well.

Charlie and I operated mostly with 5 positions. If I were running 50, 100, 200 million, I would have 80% in 5 positions, with 25% for the largest. In 1964 I found a position I was willing to go heavier into, up to 40%. I told investors they could pull their money out. None did. The position was American Express after the Salad Oil Scandal. In 1951 I put the bulk of my net worth into GEICO......

Over the past 50-60 years, Charlie and I have never permanently lost more than 2% of our personal worth on a position. We’ve suffered quotational loss, 50% movements. That’s why you should never borrow money. We don’t want to get into situations where anyone can pull the rug out from under our feet.......

As Bertrand Russell says, “Success is getting what you want, happiness is wanting what you get.” I won the ovarian lottery the day I was born and so did all of you. We’re all successful, intelligent, educated. To focus on what you don’t have is a terrible mistake. With the gifts all of us have, if you are unhappy, it’s your own fault.......

The most powerful force in the world is unconditional love. To horde it is a terrible mistake in life. The more you try to give it away, the more you get it back.....

If you are lucky on health and lucky on your spouse, you are a long way home. Getting turned down by HBS was one of the best things that could have happened to me, bad luck can turn out to be good.....

after I graduated from school, I used Moody’s and S&P manuals as my sources of information. I went through them page by page. I was like a basketball coach looking for 7-footers. I still have to find out if he’s coordinated, and can stay in school. But if someone comes up to me that’s 5’6” and says, “Wait ‘til you see me handle the ball”, I say “No thanks”. On page 1443 of Moody’s, I found Western Insurance Securities. It had earned $21.66 per share 2 years ago, and earned $29.09 last year. Over the past year the stock was selling for between $3 and $13 per share. I still had to do the work to make sure the earnings were valid. The markets will get it right eventually. But they are there. You don’t have to find too many. Finding 10 of these opportunities in your lifetime will make you so rich. But you can’t be wrong. You can’t have any zeroes. A list of big numbers multiplied by zero will equal zero. You can’t go back to “Go”.....

Almost always good things come from good behavior. Don’t keep score in life. Tom Murphy does not keep score. He keeps doing 20 things for me and I can only hope to return the favor. Keeping score is terrible in marriage and terrible in business. I put myself in the seller’s shoes. With most humans there is a great desire to reciprocate. If you do something for them, they will do 2X for you. How rare is it to work during lunch hours and be the first one there in the morning. You’ll get noticed if you do something extra. It’s good to have a willingness to pitch in when you aren’t going to get credit for it...."

Stock Article Link

Buffett's sees value in stocks

"It's a good thing to see," he said. He also agreed with Buffett's assessment that stocks are mostly fairly valued. "We could definitely test some more lows going forward but there was a pretty good drop-off there again and I think people are trying to take advantage of it to get some quality stocks at cheaper prices." -Stock Article Link

Warren Buffett bullish on the Canadian Dollar

"I think those Canadian dollars are very likely, even from this level, to be worth more than the U.S. dollar five or 10 years from now than they are today" said Warren Buffett -Stock Article Link

Virtual stock books to read, the way of the future

Google books has plenty of copyrighted preview of great books. Here are a few I have found.

The 5 Keys to Value Investing

The Little Book That Beats the Market- By Joel Greenblatt

The Warren Buffett Way

How to Think Like Benjamin Graham and Invest Like Warren Buffett

One up on WallStreet - By Peter Lynch

Common Stocks and Uncommon Profits and Other Writings - By Philip Fisher

Warren Buffett continues his appetite with BNI

Berkshire Hathaway has bought Burlington Northern Santa Fe (BNI) shares on 11 of the 12 trading days through last Tuesday, January 22.

Berkshire may have bought even more yesterday or today but there is sometimes a lag of one to two days between a purchase and its disclosure.

Here's the history of Berkshire Hathaway buys since January..

18-Jan-08	*996,100	BNI	Purchase at $76.97 per share. (Cost of $76,669,817)
17-Jan-08	*205,800	BNI	Purchase at $77.83 per share. (Cost of $16,017,414)
16-Jan-08	*44,200	BNI	Purchase at $76.55 per share. (Cost of $3,383,510)
15-Jan-08	*807,400	BNI	Purchase at $77.69 per share. (Cost of $62,726,906)
14-Jan-08	*141,400	BNI	Purchase at $78.18 per share. (Cost of $11,054,652)
10-Jan-08	*46,100	BNI	Purchase at $77.78 per share. (Cost of $3,585,658)
9-Jan-08	*435,700	BNI	Purchase at $77.12 per share. (Cost of $33,601,184)
8-Jan-08	*240,000	BNI	Purchase at $77.89 per share. (Cost of $18,693,600)
7-Jan-08	*29,600	BNI	Purchase at $76.55 per share. (Cost of $2,265,880)

Warren Buffett buys more Burlington Northern shares

Warren Buffett buys $55.9 million more shares of railroad company Burlington Northern Sante Fe (BNI). His average price was $77.38. Currently it's $78.11. After the transactions, Berkshire Hathaway's stake increased to 61,580,218 shares, or 17.6%. -Stock Article Link

Warren Buffett interested in investing in South Africa

According to the Berkshire chairman: "I told at least 30 of the South Africans I met at the function that we have an 800 number - they can call me, collect if necessary if they find us an investment opportunity. We even discussed one (potential acquisition) that might make a lot of sense. They might be long shots right now, but we would love to invest in South Africa."-Stock Article Link

One stock I liked from South Africa is Sasol (SSL), an integrated oil and gas company. The company operates coal mines; produces synthesis gas through coal gasification and natural gas reforming, using its proprietary technology. I wanted to recommend it at $29 but it got away from me at $32. Now it's $50!

Another one that comes to mind is Telkcom (TKG ), the communication service provider. Here's an interesting article about the mobile boom in Africa -Stock Article Link