Buybacks

12 Mar
Watch Out, Your Value Is Being Stolen
Book value might be the biggest not risk, but loss of value in the current market environment.

A full year of S&P 500 earnings evaporates every 3.5 years.

Fortunately, there is something you can do.

Introduction

Today, I’ll continue with my series on market risks. These are the main market risks I see and you can read more about them by clicking on the links provided:

Debt is being used recklessly.

Valuations don’t matter as growth is the key and profitability will come.

Book values are so old fashioned.

Stocks can only go up and corrections and bear markets don’t last long.

If you invest in index funds, you will do well.

In this article, I’ll focus on book values which are often an omitted metric, especially late into a bull market, but are extremely important. More →
By Sven Carlin Berkshire Hathaway Buybacks Corporate Earnings Investiv Daily Stocks Warren Buffett
02 Feb
Beware: Buybacks Are Destroying Your Value
I’ll explain how buybacks destroy your value.

It’s important not to own GE-like companies going into the next economic downturn, which is nearing.

$517 billion per year could be invested much better.

Introduction

If there is something I am against, it’s buybacks that are made at any price. Would you pay $3.5 million for a house when the building cost plus the land cost just $1 million? Probably not, but that is exactly what corporate managers do on a daily basis while they keep telling you how good of a thing they are doing. Buybacks might seem like a good idea, but it destroys your value in the long term. Let me explain what’s going on. More →
By Sven Carlin Buybacks Investiv Daily
26 Oct
Buybacks Destroy Blue Chip Stocks, GE Is A Prime Example
GE spent more than $21 billion on buybacks in 2016. The stock price is now down more than 30%, thus that $21 billion was thrown away.

Other S&P 500 companies aren’t much better and their time to reckon with financial engineering will come too.

The more buybacks a company does, the lower the market cap will be in 5-years, which is something managers don’t want to know.

Introduction

In December 2016, I wrote an article titled Is Your Value Being Destroyed? where I discussed how buybacks are destroying long term shareholder value.

My favorite example from that article was General Electric (NYSE: GE) because it seemed completely illogical to me that a company would sell valuable assets in order to increase buyback activity because this isn’t how you operate a business, this is pure short term financial engineering. More →
By Sven Carlin Buybacks General Electric Investiv Daily
29 Aug
Why Price To Book Is So Important
The stock market has been only going up in the last 8 years, and will probably continue to do so.

Nevertheless, it’s good to take a look at valuations and other financial metrics.

One metric that’s often disregarded but extremely important is price to book value.

Introduction

The stock market (S&P 500) didn’t go higher last month, which is, to be a bit sarcastic, very strange. More →
By Sven Carlin Buybacks Fundamental Analysis Investing Strategy Investiv Daily S&P 500
13 Jul
This Is What Could Happen To Berkshire Hathaway After Buffett
BRK’s companies aren’t reliant on Buffett when it comes to their performance.

Buffett leaving leads to two uncertainties, but the outcome of both are positive.

The power of BRK lies in the quality of its businesses and huge cash pile. At this point, even an idiot at the helm of BRK would do well.

Introduction

One of the biggest concerns surrounding Berkshire Hathaway (NYSE: BRK.A, BRK.B) is what will happen after Buffett and Munger.

To keep our karma positive, I’ll write this article under the assumption that Buffett gets an offer from Bill Gates to be the project manager of Microsoft’s (NASDAQ: MSFT) new multi-billion virtual reality Bridge game project. I think something like this could make Buffett leave BRK as I wish him many more decades of health. More →
By Sven Carlin Berkshire Hathaway Buybacks Charlie Munger Dividends Investiv Daily Warren Buffett
12 Jul
Want A Higher Return With Less Risk? This Company Is A Better “Buy & Forget It” Investment Than The S&P 500
Berkshire Hathaway offers similar diversification, a better book value, higher growth, and it doesn’t do stupid buybacks.

Share this article with those you know who are heavily invested in the S&P 500 and are buy and forget it investors, they’ll appreciate this and it might change their lives.

Introduction

The predominant investing paradigm is to invest in the S&P 500 because of its low risk and good diversification, and because it has done well in the past. Given this, most buy and forget investors simply put their money into the S&P 500.

Now, what if there was an investment that offered the same level of diversification, less risk, and a higher return? It would be logical for the buy and forget it investor to immediately invest in such an investment vehicle. More →
By Sven Carlin Berkshire Hathaway Buybacks Investiv Daily S&P 500
26 May
Corporate America’s Focus Isn’t On Shareholder Value Creation
Earnings haven’t grown in the last 10 years. What is corporate management doing?

A temporarily higher stock price isn’t good for the majority of investors, especially those investing for the long term and retirement.

Buybacks are idiotic, management pays $ 3million for a home they can build for $1 million.

There is only one company that does smart buybacks.

Introduction

There’s a huge problem affecting corporate America that nobody is seeing because most people think in positives and negatives, and can’t think on an relative scale. What do I mean by this? Well, when shareholders judge management, they look at whether the bottom line is positive and in line with what the competition is doing. Nobody is assessing whether it could have been much better.

We expect only the best from our favorite athletes and we hope our children develop to their full potential but when it comes to corporate management, we remain mostly silent and accept whatever they throw at us. More →
By Sven Carlin Berkshire Hathaway Buybacks Corporate Earnings Dividends Investiv Daily S&P 500 Warren Buffett
09 May
Investment Research: The Challenge of Finding Attractive Investments
Bargains can be found through book value, special situations, 52 week lows, merger arbitrages, bankruptcies, etc.

It’s necessary to be a contrarian to be a value investor, though it might be painful for a while.

With experience, it will take less and less time to assess a stock and whether it has the potential to be a good investment.

Introduction

Last week we discussed Klarman’s view on the best business valuation methods. You can find the article here. Today we’ll discuss his approach to investment research.

Studying fairly priced securities won’t get you far because you’re competing with thousands of others who have researched those companies and, especially in the current market environment, if there is anything worth owning, it will probably be expensive. Therefore, to find bargain investments, an investor has to look where others aren’t looking or refuse to look. More →
By Sven Carlin Buybacks Commodities Contrarian Herd Behavior Investing Strategy Investiv Daily Seth Klarman
05 May
The Market Is Dumb And Getting Dumber
The number of analysts is declining, stocks don’t react to earnings nor news anymore, and the underlying economic environment is rigged.

However, as investors, we have to always look at risk and reward as there is always a way to profit.

Protecting yourself from market ignorance doesn’t even cost much.

Introduction

I would define a dumb investor as one who doesn’t think about risk in relation to reward, and therefore I fearlessly say: the majority of investors are behaving in a pretty dumb way.

This is a heavy statement, especially considering markets have performed nothing short of spectacularly in the last 8 years. As evidence, the S&P 500 is up three-fold since 2009 and continues to strongly march ahead. More →
By Sven Carlin Buybacks Corporate Earnings ETFs FED Interest Rates Investiv Daily S&P 500
29 Dec
Is Your Value Being Destroyed? Sven Tells You How To Spot It
Buybacks and dividends continuously exceed earnings creating a financialized corporate environment and leaving less money for innovation and investments.

Such a situation isn’t sustainable in the long term.

We’ll close with an example of somebody willing to spend $21.5 billion of shareholders’ money to increase his salary by a few million.

Introduction

The end of each quarter is an excellent time to analyze what’s going on with buybacks and dividends. FactSet’s comprehensive analysis of quarterly buybacks and dividends for the S&P 500 is a great place to start.

It’s of extreme importance to know what it is that management is doing with your money and if they are increasing or decreasing shareholder value. Today, we’ll analyze the situation and give you a few hints to enable you to easily analyze if the managers of the stocks you own add or subtract value with dividends and buybacks. More →
By Sven Carlin Buybacks Dividends Investiv Daily Warren Buffett