Value Investment 101 – Google Vs.Berkshire Hathaway

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As a value investor, I am sometimes asked what I mean when I’m talking about focusing on the core characteristics of a company or industry. Today, I should evaluate the fact that they were discussing with a friend about those very few people who saw individual stocks – and imagine that my reader Ben Graham’s proportionate ownership level in a business would have to be evaluated. The method will provide some information for “fly on the wall”.

This kind of consideration is considered as an example of how the investor can fully understand; We do not make any claims or recommendation to buy or sell any stock or safety, or the information you read is up to the date you view this article. Besides, tell me that I am very much respected for Google’s founders, Sergey Brin and Larry Page. He has definitely improved the world and created an enterprise that allows numerous businesses to generate revenue from the web, which increases the GDP of the country and is probably increasing the quality of life.

This comment does not respect them, but it is a waste of Wall Street bookmarks that focus on the motions rather than the basics.

Berkshire Hathaway v. Google: Numbers

Larry Page and Sergey Brin, the founders of Google, are big fans of Berkshire Hathaway. As a simple practice, compare two companies. How much of a company (the current market value in capitalization) will have to buy all the shares of the common stock in the same market, every investor has actually done for your money?

With Berkshire Hathaway you are buying a business in the traditional sense, (which is very little or no debt, the insurance reserves have real responsibilities, but a fair amount of reporting went into the debt statistics of the subsidiaries, which are not guaranteed by the corporate parents. This means that in any case it can not be held responsible for that amount, GAAP borders should notify them), Wells Fargo, Coca-Cola, Wal-Mart Art and $ 47 billion in such businesses because of Washington’s $ 45 billion in post-cash and $ 8.5 billion in net income.

Perhaps, most importantly, this income arises from over 96 different campaigns, which are not usually correlated. This means that if the severe storm 9.0 earthquake or New York California experienced an catastrophic loss due to an insurance group, candy companies and furniture businesses are still going to produce cash and freight.

On the other hand, Google, you are paying almost the price for the business, even if you’ve only got a company that has net earned $ 1.5 billion or with a negligible debt, and $ 9 billion in cash on the balance sheet. Most relevant, all of its income comes from the paid search list from the source.

Why does the market give a very high rating on the Internet generation, and the price of Berkshire is more reasonable? Google’s development is not less than explosive. However, about 63 times the current earnings – to ensure a strong P / E ratio – $ 8.5 billion – it will still be short of liquid assets and salesable securities even if the firm has made a home warren Buffett to increase your benefits on the Berkshire level, and there are varied No revenue sharing, which will make changes in competitive landscape more dangerous; One of the main concerns is that when you think that Google works in an industry that can be a dramatic consumer throughout the night.

At this point, the growth began to slow down, many would compress, which means that even though the earnings will increase by 600% in the next few years, if that law is a large number of subjects – ultimately to make their own anchors – The result will be market capitalization like today, which has not increased the price of the stock for a long time.

The person can cheat

In other words, Berkshire Hathaway seems to be cheaper and safe than $ 4,500 per share, $ 420 per share. People expect for a short-term price momentum – there is nothing more to stop override stock getting more, Benjamin Graham’s main difference is that Berkshire Hathaway investor can feel confident that he is grateful at a respectable rate when Google’s own catastrophic financial real-time potential, decades A part of the frozen business became the owner of a company that could increase the rate of losses by decreasing the rate of losses or reducing capital Lowering should be disappointed, otherwise it is not expected.

Personally, I could not understand those who came to the business for enthusiasm – delete your kick from a theme park or game; The goal of investment should be to make a guaranteed rate of maximum interest rate compensation

The Mini Berkshire Hathaway – is MKL’s Stock a Good Buy : Video

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