Whilst market’s fret about slowing growth (“Ready for a Growth Scare?”) – Warren Buffett sits back with a smile. His company – Berkshire Hathaway – rallied to fresh record high this week after the company reported a record high quarterly profit. Its market value is now over $1.1 Trillion. So how did Buffett build this incredible cash machine? I’ll outline three (basic) reasons… all of which you can emulate.
Warren Buffett
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Buffett: “Often, Nothing looks Compelling”
Saturday Feb 22nd was circled on my calendar. It was the day Warren Buffett shared his annual shareholder letter. If you want to become a better long-term investor – it’s worthwhile reading every one of his 59 letters (from 1965). With respect to valuations he offered this: “We are impartial in our choice of equity vehicles, investing in either variety based upon where we can best deploy your (and my family’s) savings. Often, nothing looks compelling; very infrequently we find ourselves ‘knee-deep’ in opportunities.”
Why Did Buffett Add to SiriusXM?
Recently Warren Buffett increased his stake in SiriusXM (SIRI) to over 32% of all available stock. However, with the company losing subscribers – where revenue and earnings in decline – why would the Oracle of Omaha increase his ownership? Two reasons: (a) first its return on invested capital and free cash flow; and (b) the value offered. This post explains both the quality and value arguments for Buffett choosing to increase his exposure to this unloved stock…