Buffett’s 2009 letter included a mea culpa, “It’s clear that I failed you in letting NetJets descend into this condition”. It lost $711m in 2009 and the aggregate loss over Berkshire's eleven years of ownership was $157m. And the Great Recession was only just getting going. There was plenty of room for regretting this investment decision.
His solution was to call in a Berkshire executive known for taking tough decisions, especially cutting back costs and staffing, David Sokol, who Buffett described as “the enormously talented builder and operator of MidAmerican Energy”. Sokol became CEO of NetJets in August 2009 when Richard Santulli, the founder, resigned. In Buffett’s 2009 letter Santulli was briefly mentioned as the “previous CEO”, as a stickler for safety and service and the “father” of fractional ownership, but no detailed explanation of Santulli’s resignation was given. Was he pushed after a period of massive losses? But note, while he had resigned as CEO he had agreed to stay on for a year as a consultant, so that didn’t sound like a “don’t darken the door again” type of resignation. On the other hand, there were rumours that Santulli had been resistant to downsizing the business and the redundancies that would entail. “Sources tell us he was forced out for failing to move aggressively enough to stem financial losses at the fractional-ownership giant. Others say he fell out of favor after rejecting calls to let go of senior managers who'd worked alongside him for years.” wrote Stephen Pope in Business Jet Traveler. Aviation International News’ Chad Trautvetter caught a whiff of the gossip “The speculation about whether or not the company founder left of his own volition was rampant in the immediate aftermath of the announcement, and several sources told AIN at the time that NetJets’ finances might have been a factor.” The speculative fever was not helped by Santulli’s use of the time-honoured phrase used in resignation statements, the one usually received with scepticism, “to spend more time with my young family and pursue other interests”. But there were plenty of people who were willing to take Santulli at his word. He had a passion for thoroughbred horses, three children and three dogs. So there were plenty of other aspects to his life which he had been sacrificing to some degree while struggling to turn NetJets to profits. Buffett seemed regretful and friendly in his August 2009 the release. “It is with reluctance that I accept Richard’s decision to step down. Richard Santulli is synonymous with the fractional jet ownership industry and his vision and energy has made NetJets the leader that it is today. All of Richard’s friends at Berkshire Hathaway wish Richard well in this transition.” In December 2009, Santulli became chairman of Loan Value Group (a mortgage market company) and in August 2010 he launched Milestone Aviation Group, a helicopter and business jet leasing company. He also further developed philanthropic activities, focusing on individuals with developmental disabilities; supporting public education for underserved youth; military personnel suffering the effects of a traumatic brain injury and post-traumatic stress, and the Andre Agassi Foundation for Education. He avowed “everything I have will be given away while I am alive, minus enough for my wife to live.” Can the business be saved? There was much comment around the question of whether the fractional business model was broken. Had it become too expensive relative to the alternative facing an executive of simply chartering a plane as needed? Were there too many planes chasing too few clients? Michael Riegel of AviationIQ, an advisory firm, declared in 2009 the fractional business model to be broken, “there are a lot o………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1
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With Berkshire Hathaway behind them the managers at Netjets really went for growth after the 1998 merger. Within two years revenue had more than doubled and customers held $2bn worth of planes. As early as 1998 Buffett asked Santulli “Who’s the competition in Europe?” to which he replied “No one.” Then Buffett pointedly said, “What do you need to make it stay that way?” (Aviation International News October 1, 1998)
Money flowed from Berkshire to achieve the ambition of dominating fractional ownership in both the USA and Europe. The task of building critical mass in Europe was well under way in 1999. Buffett wrote that he intended to support NetJets’ expansion all round the world “Doing that will be expensive — very expensive — but we will spend what it takes. Scale is vital to both us and our customers: The company with the most planes in the air worldwide will be able to offer its customers the best service. ‘Buy a fraction, get a fleet’ has real meaning at EJA.” (Buffett's 1999 letter to shareholders) The accelerator pedal was pushed even harder in 2000 with $4.2bn new planes on order. NetJets’ managers would have signed up for even more, but they were already taking about 8% of all business jets manufactured in the world and the makers could not keep up. The fast-talking salesman Buffett became NetJets’ number one salesman. From the off there was a fully fitted out cabin on display at the May Berkshire annual meeting (in 1998 it was a 737 Boeing Business Jet complete with bedroom, two showers, 14-hour range and 19 passenger seats). The scores of billionaires and hundreds of millionaires enjoying the Berkshire weekend events each year are prime targets for the NetJets sales teams. And Buffett started a tradition of always giving a mention in his annual letter. In 1999 he persuaded two of Berkshire’s outside directors to buy fractions. Then he announced a breakthrough, “And now, brace yourself. Last year, EJA passed the ultimate test: Charlie signed up. No other endorsement could speak more eloquently to the value of the EJA service.” (1999 letter) Munger, renowned for being careful with money, used to fly coach class, even when wealthy, so jumping to private jet travel was quite something. Buffett was bold enough to include in his letter a free-phone number “Give us a call at 1-800-848-6436 and ask for our “white paper” on fractional ownership” (1999 letter). The May 1999 meeting had initiated the sale of at least eight fractions. To promote NetJets Buffett would speak at dinners or business forums in places like Hollywood or London. And there was a famous advertisement with Bill Gates and Warren Buffett lounging on a jet enjoying a joke. Priceless publicity. Go for it In October 2000 Santulli spoke of Buffett’s attitude to growing the company, “One of the nicest things about being part of Berkshire is that if I said to Warren, ‘I’m going to go buy $1bn worth of planes,’ he would say, ‘Why are you asking me? Go do it.’” (Richard Santulli speaking to Robert P. Miles (2002) The Warren Buffett CEO). Planes were bought at scale – with large discounts on list prices - and fractions sold; in 2001 customers took delivery of more than 50 new jets, 7% of world output. But rapid growth was coming at a cost to profitability as the operating costs in the infant European market ran ahead of revenues and chasing after growth in the US raised operating costs there. In 2001 the chickens came home to roost. While revenues rose over 20% the business made a loss, despite an uplift of interest private jet flying after the 9/11 attack on the Twin Towers. By then NetJets looked after 300 planes in the US alone. But rivals' shares, when added together, accounted for almost half the market, and they were determined to remain price competitive, which left little room for profits. Buffett wrote that he expected “for a few years” only “modest profits” (2001). Despite this gloomy prospect Buffett insisted that the strategy was correct: “Maintaining a premier level of safety, security and service was always expensive…No matter how much the cost, we will continue to be the industry leader in all three respects. An uncompromising insistence on delivering only the best to his customers is embedded in the DNA of Rich Sa ………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1 his newsletter is instructive in two ways (a) the priorities in business deal-making (b) looking for the qualitative factors making a business attractive even when short term profits are non-existent.
Why sell? Goldman Sachs in 1998 wanted to realise a return on its 25% stake, or at least obtain a market value and trading for its shares, and so pressed Santulli, CEO and majority shareholder, to float the business on a stock market. Santulli was hesitant because he believed stock market investors would run scared of the volatility and poor profits while NetJets was in its fast-growth phase. If he could sell it to investors at all, the price was likely to be low, he thought. "I could never take this company public. Shareholders wouldn't be able to stomach the ups and downs of this business" he explained to journalist Stephen Pope (From a 1996 interview with Stephen Pope (2009) “Santulli’s Departure from NetJets”, Business Jet News October. ) And Santulli did not want “a 28-year-old analyst” telling him how to run his business. But maybe there was someone he knew who recognised the strength of its market position and its potential, and would be willing to pay a decent price while leaving him to grow the business? Selling Buffett a fraction In 1995 Frank Rooney at H. H. Brown (a Buffett investment described in Newsletters dated 12th - 19th August 2020)) had been extolling the virtues of his NetJets membership and suggested to Buffett that he meet Richard Santulli to investigate signing up. Buffett says, “It took Rich about 15 minutes to sell me a quarter (200 hours annually) of a Hawker 1000.” (Buffett's 1998 Letter). Warren and his wife Susan went to look at a plane at Teterboro, New Jersey “and Rich was there in a Hawker 1000, and my wife fell in love on the spot," Buffett recalled in an interview with Warren Berger, who then cheekily asked: “with Santulli or the plane?” Buffett laughed. "Believe me, I don't ever want to give her a choice between me and Rich. She would probably leave me in a minute." (Quoted in Warren Berger (2001) “Hey, You’re Worth It (even now)” Wired June 1) In the following three years the Buffett family flew 900 hours on 300 trips. They loved the service, finding it friendly, efficient and safe. Buffett liked it so much that he enthusiastically took part in a testimonial advertisement long before he knew there was a possibility of buying the company. But he did say to Santulli that if he ever did want to sell then please give him a call. A short discussion and then a deal That call came in May 1998 by which time revenues were close to $1bn, up from $100m in 1995. Santulli wanted Buffett’s advice on him caving-in to Goldman Sachs’ insistence that his company be taken public. Buffett’s response: “Well, what if I buy the company”. The deal was made in less than three weeks with minimal examination of accounts. More important to Buffett than detailed due diligence is the character of the person selling shares to him. He says the key question he asks on every deal is whether the seller “would take the money and go sit on a beach or stay and run the company”(Forbes (1998) “Flying Buffett” September 20, 1998). Santulli easily convinced Buffett that he would remain the driving force behind the firm. "I still think of it as my company," Santulli told Forbes shortly after the merger. Buffett has another question he always asks: Is this service worth the money to people? Regarding NetJets he concluded, “the answer in my book………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1 n 1984 Richard Santulli bought a small loss-making private jet hire company called Executive Jet Aviation, EJA. He thought it might be useful as a dumping ground for aircraft coming off leasing deals, his main business. Little did he know that he would soon invent a completely new type of business, one that was so successful that Warren Buffett would pay $725m to buy it only 14 years later.
As the new owner of an airplane company Santulli thought he ought to buy himself a private jet – it seemed only fitting - and EJA could look after it for him. But being a mathematician he sat down and worked through the numbers on outright ownership. Taking into account the limited hours he’d actually be flying – less than 50 per year – it just didn’t make any sense at all. He’d be better off chartering a plane each time he needed one. But then he thought of better option: buy a plane with a group of friends. Three friends joined Santulli to discuss the plan. It made good financial sense to share the one plane; they could all see that and were willing. But then the trouble started. One said that if they got a plane then he would insist on having it every Tuesday and Thursday. Another said he wanted it when he needed it, which might well be a Tuesday or Thursday. Deadlock. After the failed meeting Santulli pondered the problem: shared ownership combined with guaranteed access when you wanted your airplane. If he could crack that he would have it made. An intellectual challenge It was a mathematical puzzle. The key input needed to solve it was to use the extensive database containing every trip EJA had taken over the previous 20 years (the military types that previous ran EJA kept good records). Looking at flying patterns he found a high degree of predictability in terms of origin, destination, day of the week, time of day, mechanical breakdowns, etc. It took nearly six months to figure it out, but the solution turned out to be for every 20 planes sold in fractions NetJets had to buy for itself five and one-quarter planes to put in its corporate fleet to fill gaps where two or more co-owners wanted to use their plane at the same time. NetJets could then supply a substitute plane of the same or better specification at only a few hours notice. This would allow a 98% availability (There are economies of scale here. So if 800 planes are sold to clients the core fleet need only be 80, i.e. 10%.). NetJets could charter planes for the remaining 2% of occasions. NetJets would take care of everything from maintenance to pilot training. All the client had to do was tell the customer service people where they wanted to go when. Takeoff EJA launched the NetJets programme in 1986. Initially, potential clients were sceptical, thinking there are bound to be numerous occasions when they needed a plane but none were available. Santulli simply told them it was all worked out and NetJets could indeed guarantee availability. If they still didn’t believe it worked then after six months they would be entitled to all their money back. Santulli says he realised that unless NetJets were “absolutely perfect for the first 10, 15, or 20 customers, the whole deal was going to blow”. To make sure it didn’t blow he bought eight Cessnas. These were not to be sold on to clients but were the back-up planes for the 25 he expected to sell in fractions of in one-sixteenths (50 hours of flight time), one-eighths, one-quarters, one-halfs (400 hours). Thus, if the selling effort was successful, the fleet would amount to 33 planes. Turbulence But it took time. Only four planes were sold in the first year. It didn’t pick up – only four were sold in the second, and in the third. Then the 1989 recession struck, and no fractions were sold. Santulli lost $35m - $40m because he ha ………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1 When asked about the influence of the French Revolution, the late Chinese premier Zhou Enlai is reputed to have said: 'Too early to say.' It’s much the same with Buffett’s August 1998 investment in NetJets, at $725m. For the next 11 years it made an aggregate loss of $157m.
By 2010 the investment was certainly looking like a dud. But then the turnaround began, resulting in annual profits regularly north of $200m. If this pattern continues Berkshire should end up with a decent amount of money from NetJets. But it was an awfully long time coming, and during that time billions of Berkshire’s cash or debt guarantees were taken from other investment prospects to expand NetJets. It is no great surprise that Buffett declared in his 2011 letter that “A few years ago NetJets was my number one worry: Its costs were far out of line with revenues, and cash was hemorrhaging. Without Berkshire’s support, NetJets would have gone broke.” The opportunity cost of this investment in the first years of the twentieth century was considerable. Future Buffett historians may conclude that although the money put in has been recovered it was a poor investment choice. But we’ll have to wait and see - maybe it’ll start producing $1bn of cash year after year for Buffett to invest elsewhere. It certainly overwhelmingly dominates its niche market of fractional aircraft ownership so there is potential there - if the niche grows and if price competition is restrained. A couple of big “ifs”. There are some important lessons for all investors in this case study - not least that even Warren Buffett can make mistakes, hence the need for a portfolio approach - which I'll reveal over a few newsletters. Another point to watch out for is: market dominance - NetJets had 50 - 60% of the market - does not guarantee profits . (Much depends on contestability or direct rivalry. Also much depends on the depth of customer demand - how many people do you know that want to pay for a private jet flight?) The business model Before the NetJets model was invented if you were a time-poor executive or wealthy person wanting to fly you had three choices. First, you could book like everybody else on a scheduled airline flight. Even with First-class treatment there are obvious downsides such as being limited in destinations and timing. Also, the hub-and-spoke system can be a trial of endurance, even without flight delays. Second, you could buy your own private jet. But this becomes expensive especially if the depreciating asset spends most of the time in hanger. And it is a lot of hassle to maintain, insure, staff etc. Also, most private planes cannot fly intercontinental. As a rule of thumb buying your own plane is not worth it unless you are going to be in the air around 400 hours per year. The third possibility is to charter a private plane trip by trip to take you where you want to go with minimal fuss. The downsides here are the higher cost per mile and the limited availability of planes in the right place. Richard Santulli, a former mathematics academic and Goldman Sachs alumni, thought of a better way for people who did not need a plane every day, which he called fractional ownership. With this you buy a portion – say one-quarter or one-eighth – of a jet. You are then entitled to 200 or 100 flying hours per year. In addition to the up-front cost of purchase which could be a million or two, you pay a monthly management fee to cover things like pilot salaries and training, insurance and hanger space ($5,000 - $20,000 per month for a smallish plane (7 seater)). You also pay extra for each hour flown to cover fuel, maintenance, landing fees, cleaning and catering ($1,300 and upwards per hour)). NetJets makes sure that your plane or one equally as good is available at anyone of thousands of airports when you want it (just give them at least 4-6 hours notice depending on aircraft type). Santulli thought that if Netjets got big enough, with hundreds of planes, then there would be blanket coverage of a continent so customers could rely on the guarantee of plane availability even at busy times such as Thanksgiving without the hassle and expense of owning their own plane. And these planes could fly to smaller more convenient airports than scheduled planes. The final element of the formula was that after five years the fraction owner can ask NetJets to repurchase it at a fair-market price, usually about 80% of the original list price. Before Richard Santulli bought the company Business aviation in the 1960s w………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1 Buffett's advice - focus on intrinsic value, not market movements (which are led by quacking ducks)18/12/2020 It isn’t jumps in stock market prices of his investments that Buffett measures himself by. He focuses on increases in intrinsic value. A very rough and ready proxy for annual changes in intrinsic value is movements in net worth (book value). For example, in just the twelve months of 1998 Berkshire’s net worth balance sheet gain was $25.9bn, which translates to a per share book value rise of 48.3%.
Over the 34 years since Buffett had taken a substantial stake in that down-at-heel textile maker, Berkshire Hathaway, its per share book value had grown from $19 in 1964 to $37,801 in 1998 (it is now over $300,000), a rate of 24.7% compounded annually. Even this underestimates the achievement because “intrinsic value still far exceeds book value.” (Buffett’s emphasis on “far”). In other words, the balance sheet net asset figure does not adequately capture the value of the discounted owner earnings expected to accrue to Berkshire from its collection of excellent economic franchises and high-class businesses in future years. “Gains in book value are, of course, not the bottom line at Berkshire. What truly counts are gains in per-share intrinsic business value. Ordinarily, though, the two measures tend to move roughly in tandem.” (1997 letter to Berkshire shareholders) While Buffett remained focused on intrinsic value, he found himself in 1998 surrounded by people caught up in the psychology of a stock market mania, later called the dot-com bubble, where shares were pushed up by punters hoping for increasing numbers of eyeballs looking at a particular Silicon Valley company’s website. Despite the great gains in Berkshire’s share price as it was swept along with the naïve excitement, he never lost sight of the real origins of value, that is, the soberly assessed likely cash to flow to shareholders in the long run. Don’t preen yourself if a general market rise lifts you up In his 1997 letter to shareholders Buffett pointed out the error in thinking you, as an investor, had done well when in reality all that had happened was the market was on a tear. When, in ………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1 At the end of this newsletter I set down what I think are the key lessons for modern day investors (speculators need not read - this is about businesses and understanding them not about financial markets and their ups and downs). First I'll finish the story of Al Ueltschi, the founder of FlightSafety, by looking at how he used much of his $2bn.
In the 1970s Juan Trippe asked a favour of Ueltschi, who was more than willing to do what he could to repay all the kindnesses received from his mentor. The favour was simply to have lunch with Trippe’s daughter, Betsy, and a friend of hers, Dr. David Paton. It seemed modest enough, but that meeting was the start of something big. Dr. Paton was the was head of the Ophthalmology Department at Baylor College of Medicine in Texas. He had a dream to use the technology and knowledge held in the rich world to help the poorest be free of eye disease. There are hundreds, if not thousands, of eye specialists in western hospitals and clinics eager to help but unable to reach those most in need. Paton had come up with a plan: put the eye specialists in an airplane and fly it to where the patients are and where local medical professional could be mentored by the world’s best. At the lunch he and Betsy quizzed Ueltschi first on whether it would be possible to put a hospital inside an aeroplane. “I told them I wasn't sure, but if the airplane was big enough, it seemed like it could work.” Ueltsch responded. That led to the second question: Where do you go to get such an airplane? And they added for good measure, “for a discount of approximately 100 percent”. Ueltschi wasn’t sure, but thought there might be a manufacturer or an airline that would donate one. And there and then, Ueltschi volunteered to get an airplane for free, and to oversee the modifications to make it a Flying Eye Hospital. (He later took on the chairmanship of the continuing effort to keep it airborne). He called every airline and manufacturer he knew. Eventually, United Air Lines, offered an old DC-8 parked in the Las Vegas desert. It dripped hydraulic fluid and leaked fuel but was fixable. Then the search began for microscopes, fuel, operating room equipment, etc. The charity established after that lunch is called ORBIS International. Its DC-8 lasted around 10 years, flying to some of the most impoverished places on earth carrying volunteer doctors and other medical staff restoring the eyesight of thousands of children and adults. It was replaced in 1994 with a DC-10, and, in 2008, United Airlines and FedEx donated a replacement for that one. The fourth generation Flying Eye Hospital, a DC-10 donated by FedEx, was unveiled in 2016 complete with back-up generator, water-t...... ....Learning points
Even capital intensive businesses can be good investments - Buffett's observations on FlightSafety1/12/2020 Warren Buffett prefers to make outstanding rates of return on capital in businesses that do not require much of a capital base, such as See’s Candy or Scott Fetzer. FlightSafety, on the other hand, needs to invest $19m or more in one simulator. When you have over 300 simulators and need to replace them regularly with more advanced models, then you have a large amount of money being ploughed back into the business. For example, in 2000 alone $248m was invested in simulators.
But this does not make it a bad business in which to invest. It may not be sensational, but it can produce high rates of return. Its durable competitive advantage, due to its “best in class” reputation, means that customers will pay high fees for each hour of training. As Buffett says, “Going to any other flight-training provider than the best is like taking the low bid on a surgical procedure.” (2007 letter). This gives it good business economics, and therefore it is able to factor in high operating profit margins. Some illustrative numbers On its purchase date (costing $1.5bn), December 23, 1996, FlightSafety had $570m in fixed assets. With those it generated $111m of pre-tax operating earnings. Between then and the end of 2007 Buffett says depreciation charges cumulated to $923m (written off profits), but capital expenditure was much larger as simulators capable of imitating a wide range of new airplanes were acquired totalling $1,635m. In 20………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1 In the year before Berkshire bought it (at the end of 1996) for $1.5bn FlightSafety International produced $111m in pre-tax earnings. Buffett was right in thinking that its strong market position would lead to a significant rise in profits. By 2007 pre-tax earnings were $270m. At this time the company could have been sold on to someone else at much more than Berkshire paid.
But Buffett had made a solemn commitment to Ueltschi and his staff that Berkshire would never sell. Also, a sale wouldn’t make sense when the economic franchise was even stronger in 2007 than it was in 1996, and the managers even better. Pre-tax profits over the first thirteen years of ownership amounted to about $2.5bn. By 2009 annual profits were over $300m and rising. Berkshire gained another $3.5bn or so of pre-tax profits over the next decade. Even after tax is deducted that is over 150% of what was paid for the company in that decade alone. And still Berkshire gets to own it, receiving, year-in-year out, the hundreds of millions of dollars of cash it generates. Operational management In terms of managing the business, Ueltschi said that nothing changed after 1996, and that is just the way he wanted it. He said “Warren Buffett…he’s not the type of guy that would try to break something up. Some of these big companies, they buy the company then there is big stuff they want to change: they put their name on it, they want to change everything. All the people that worked there for years, that built this thing up – and they’re in there because it’s their life’s blood and they believe it – they lose all their enthusiasm because there’s somebody from the big office comes in and tells them how to run it. And these people know how to run it. I’ve got some of the finest people in the world working at FlightSafety and they all are dedicated, they’re loyal, respectful and they’re honest and the do everything to take care of the customer.” (Al Ueltschi in an interview with Robert P. Miles (2002) The Warren Buffett CEO) Buffett once asked a group of Columbia University students, “do you think Al Ueltschi, who owns $1 billion in Berkshire stock, is going to want to keep running his business if I’m over his shoulder making decisions?” There were other benefits for Ueltschi in being part of the Berkshire fold, including avoiding Wall Street analysts constantly asking how much money FlightSafety was were going to make next quarter and why it didn’t make more last quarter. “Now we run the company for the long term without worrying about the next quarter. That’s one of the best things about working with Warren.” Ueltschi pointed to Buffett’s amazing leadership ability, saying the letters of the word represent the qualities he possesses: L is for loyalty E for enthusiasm ………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1 First: A tip to simplify portfolio construction to manageable proportions – favour low-change industries
Buffett and Munger made life simpler for themselves by investing in businesses and industries unlikely to experience major change. “The reason for that is simple: we are searching for operations that we believe are virtually certain to possess enormous competitive strength ten or twenty years from now. A fast-changing industry environment may offer the chance for huge wins, but it precludes the certainty we seek.” (Warren Buffett’s Letter to Berkshire Hathaway shareholders 1996) This advice does not mean searching out areas where there will be no change at all. That wouldn’t work because all businesses are subject to some change. But it does mean looking for areas where the fundamental economics (pricing power relationships) are unlikely to alter. Buffett highlights the example of See’s Candy where change has clearly come. The range of candy has changed, as has the machinery used in production and some of the methods of distribution. But people today buy See’s candy for the same reasons they did in 1972 when the company was bought by Berkshire and these reasons are not likely to change over the next 50 years (in California there is long established devotion to See’s Candy – no Californian would want to give their girlfriend, wife or mother a lower quality candy). Another example: Coca-Cola. It is continually looking to improve the way it carries out its operations to gain efficiencies. New technology will help, new advertising methods on the internet will help. But…… ………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1 |
Glen ArnoldI'm a full-time investor running my portfolio. I invest other people's money into the same shares I hold under the Managed Portfolio Service at Henry Spain. Each of my client's individual accounts is invested in roughly the same proportions as my "Model Portfolio" for which we charge 1.2% + VAT per year. If you would like to join us contact Jackie.Tran@henryspain.co.uk investing is about making the right decisions, not many decisions.
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