Tuesday, 12 November 2013 - 20:00
Charts
Seed Weekly - Value Investing the Buffett Way: 1987 ? 1991
This is the third part in a series looking at Berkshire Hathaway’s annual reports. In it, Warren Buffett continues to demonstrate his simplistic approach of looking at Berkshire’s investment portfolio. Although asserting that the market is less attractive than the previous two decades, Berkshire’s managers have produced extraordinary results by doing rather ordinary things - but doing them exceptionally well.
The best business returns are usually achieved by companies that are doing something quite similar today to what they were doing five or ten years ago. Most sell non-sexy products or services in much the same manner as they did ten years ago (albeit in larger quantities, or at higher prices, or both). They may be making the most of an already strong business franchise, or concentrating on a single winning business theme.
Mr Buffett approaches a purchase as if it’s a private business. He advises that when investing, one should view oneself as a business analyst (and not solely as a market, macroeconomic, or security analyst). He looks for outstanding businesses at a sensible price rather than mediocre businesses at a bargain price. Buffett concentrates his investments in a few companies that are understood well. He does not have in mind any time or price for sale, instead he’s willing to hold a company indefinitely, granted that he expects the business to increase in intrinsic value at a satisfactory rate. He mentions that a stock is not necessarily an intelligent purchase purely because it is unpopular – i.e. being contrarian for the sake of it.
Mr Buffett states that declining share prices benefit investors, and rising prices hurt investors. “The most common cause of low prices is pessimism - sometimes pervasive, sometimes specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It's optimism that is the enemy of the rational buyer.” One should always be well positioned for prospective investments. “If you want to shoot rare, fast-moving elephants, you should always carry a loaded gun.” During 1989 Mr Buffett increased his holdings in Coca Cola.
Mr Buffett is not weary of missing out on some company that depends upon an esoteric invention (Xerox), high-technology (Apple), or brilliant merchandising (Wal-Mart). Exotic sounding businesses that hold out the promise of feverish change generally trade at the highest PE ratios. That prospect lets investors fantasise about future profitability rather than facing today's business realities. Mr Buffett notes that, “We will never develop the competence to spot such businesses early. Instead I refer to business situations that Charlie and I can understand and that seem clearly attractive - but in which we nevertheless end up sucking our thumbs rather than buying.”
A significant portion of Berkshires earnings were given to charity. During November 1988, Berkshire’s shares listed on the New York Stock Exchange. Mr Buffett’s wish was to attract long-term owners who, at the time of purchase, had no timetable or price target for sale but plan instead to stay with Berkshire indefinitely. Long term investors have been handsomely rewarded.
Kind regards,
Lourens Rabé
www.seedinvestments.co.za
info@seedinvestments.co.za
021 914 4966
Tue, 12 Nov 2013
Top News
South Africa's rand and government bonds weakened to their lowest in over two months on Tuesday on expectations that the United States would reduce monetary stimulus sooner than expected. Full story
Tanzania's current account deficit widened 26.1 percent in the year to September following a decline in receipts of aid and loans, its central bank said on Tuesday. Full story |
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A U.S. aircraft carrier set sail for the Philippines on Tuesday to accelerate relief efforts after a typhoon killed an estimated 10,000 people in one coastal city alone, with fears the toll could rise sharply as rescuers reach hundreds of isolated towns and villages. Full storyThe Congolese
government delegation has quit Ugandan-hosted talks with M23
rebels, saying Kampala's support for insurgents was to blame for
the failure to sign a document due to officially end Congo's
latest rebellion. Full storyIranian Foreign Minister Mohammad
Javad Zarif rejected U.S. Secretary of State John Kerry's
pinning of blame on Iran for the lack of a deal on its nuclear
programme last week, saying splits between Western powers
prevented a breakthrough. Full story |
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Markets | Financial stocks kept a lid on
Britain's top share index on Tuesday after Goldman Sachs
downgraded Royal Bank of Scotland.. . . Full story | | U.S. stocks eased on Tuesday
before remarks by key Federal Reserve officials, which investors
will scrutinize for hints when the U.S. central. . . Full story | | Global equity markets and
government debt prices fell on Tuesday as investors speculated
on how soon the Federal Reserve may begin reducing its. . . Full story | | European shares edged lower on
Tuesday as a fresh set of weak corporate results put the brakes
on a rally that had pushed. . . Full story |
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| Gold hit a 3-1/2 week low on
Tuesday, falling for the fourth straight session as the dollar
strengthened and expectations increased that the. . . Full story | | Wall Street opened lower on
Tuesday, a day after the Dow ended at a record high as investors
shifted focus to how soon. . . Full story | | European shares fell on Tuesday,
drifting away from near five-year highs after a poor revenue
report from German chip maker Infineon highlighted weak. . . Full story | | European shares fell in early
trade on Tuesday, reversing the previous day's gains, with
Vodafone slipping after reporting a record fall in
quarterly organic. . . Full story |
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SA Business | South Africa's state pension fund is opposing the takeover of drugs firm Adcock Ingram by Chile's CFR Pharmaceutical because of concerns about foreign control and the share component of the deal, a source familiar with the fund's thinking said on Tuesday.. . . Full story | | The reasons that prompted investment flows into high-yielding emerging markets have not disappeared, but normalisation of U.S. monetary policy which has supported such markets is unavoidable, South African Reserve Bank Governor Gill Marcus said on Monday.. . . Full story |
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| The World Cup could be targeted again next year for demonstrations in Brazil against graft and poor public services but FIFA. . . Full story | | The World Cup could again be targeted next year for demonstrations in Brazil against graft and poor public services but FIFA. . . Full story | | Credit ratings organisations from
five countries are launching a new global agency, touting it as
an alternative to the Big Three agencies which. . . Full story | | Britain's Vodafone will
spend 7 billion pounds - more than expected and earlier than
expected - to increase the speed and coverage of. . . Full story |
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| South African discount retailer Mr Price on Tuesday posted interim earnings growth of 22 percent because of sales growth and said. . . Full story | | The platinum market in 2013 is
set for its biggest deficit in 14 years and continuing strong
industrial and jewellery demand may widen. . . Full story | | South Africa's state
pension fund is opposing the takeover of drugs firm Adcock
Ingram by Chile's CFR Pharmaceutical because of concerns about
foreign control. . . Full story | | South Africa's Treasury sold a total of 2.35 billion rand of its 2023, 2030 and 2041 government bonds on Tuesday.. . . Full story |
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Company News | The board of directors ("the Board") of SPAR advised shareholders that the CEO of the Company, Wayne Hook, will be stepping. . . Full story | | Shareholders are referred to the SENS announcement dated 21 October 2013 advising shareholders that Africa Wide Mineral Prospecting and Exploration (Pty). . . Full story | | Shareholders are advised that Ansys is currently in the process of finalising its interim results for the six months ended 31. . . Full story | | Old Mutual announced that terms have been agreed to sell Skandia Poland, part of Old Mutual Wealth, to Vienna Insurance Group. . . Full story |
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| Shareholders are advised that a subsidiary of the Company, Ixia Trading 532 (Pty) Ltd. ("the Seller") entered into an agreement, dated 4 October 2013, with City Deep 4X4 Commercial Spares (Pty). . . Full story | | The following Supplementary Offering Circular has been approved by the UK Listing Authority and is available for viewing:
Supplementary Offering Circular dated 8 November 2013 (the "Supplementary Offering Circular") to. . . Full story | | RBPlat has undertaken a detailed strategic review of its operating activities and long-term capital expenditure ("capex") commitments. A deteriorating Platinum Group Metals ("PGM") pricing environment and associated industry cost escalations together. . . Full story |
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Company Results | Revenue for the interim period ended 30 September 2013 shot up by 46% to R5.1 billion (2012: R3.5 billion). Operating profit. . . Full story | | Revenue for the interim period increased by 4.5% to R2.5 billion (2012: R2.4 billion). Operating profit rose slightly by 0.6% to. . . Full story | | | | |
World Markets (Spot Prices)
Name | Time | RP | Move | % Move | JSE Overall | 17:00 | 45448.28 | -39.90 | -0.09% | JSE Top 40 | 17:00 | 40727.80 | -30.53 | -0.07% | JSE Gold | 17:00 | 1329.60 | 26.28 | 2.02% | JSE Financial | 17:00 | 33100.03 | 96.41 | 0.29% | JSE Industrial | 16:51 | 59340.91 | 21.27 | 0.04% | JSE Indust 25 | 17:00 | 52083.62 | 62.39 | 0.12% | JSE Resource | 17:00 | 52325.40 | -351.34 | -0.67% | DJ Futures | 19:56 | 15675.00 | -48.00 | -0.31% | DJ Ind | 19:56 | 15736.43 | -46.67 | -0.30% | SP 500 | 19:56 | 1766.25 | -5.64 | -0.32% | Nasdaq | 19:56 | 3911.68 | -8.11 | -0.21% | FTSE 100 | 18:35 | 6726.79 | -1.58 | -0.02% | DAX | 19:08 | 9076.48 | -31.38 | -0.34% | CAC40 | 19:08 | 4263.78 | -26.36 | -0.61% | Nikkei | 09:12 | 14588.68 | 318.84 | 2.23% | Shanghai | 09:30 | 2126.77 | 17.30 | 0.82% | Hang-Seng | 10:30 | 22901.41 | -168.44 | -0.73% | All Ords | 07:52 | 5386.80 | 6.00 | 0.11% | NZSE 50 | 06:48 | 4915.67 | -6.50 | -0.13% |
| | Name | Time | RP | Move | % Move | Gold $ | 19:59 | 1275.38 | -6.41 | -0.50% | Gold R | 19:58 | 13243.78 | 13243.78 | 0.00% | Gold R/kg | 19:56 | 425963 | -1802 | -0.42% | Silver $ | 19:59 | 20.8490 | -.4810 | -2.26% | Platinum $ | 19:59 | 1431.75 | 4.45 | 0.31% | Palladium $ | 19:59 | 739.25 | -12.00 | -1.60% | R157 | 16:02 | 6.35 | .14 | 2.17% | R186 | 16:02 | 8.30 | -.04 | -0.54% | R204 | 16:02 | 7.29 | .05 | 0.76% | R207 | 16:02 | 7.56 | .00 | 0.00% | Brent Crude | 19:56 | 106.37 | 1.25 | 1.19% | Rand / Dollar | 19:59 | 10.3828 | 0.0068 | 0.07% | Rand / Pound | 19:55 | 16.4961 | -0.0731 | -0.44% | Rand / Euro | 19:55 | 13.9636 | 0.0420 | 0.30% | Rand / NZD | 19:58 | 8.5392 | -0.0254 | -0.30% | Rand / AUD | 19:55 | 9.6604 | -0.0592 | -0.61% | Yen / Dollar | 19:59 | 99.5230 | 0.3650 | 0.37% | Euro / Dollar | 19:55 | 0.7434 | -0.0022 | -0.30% | Dollar / Euro | 19:59 | 1.3441 | 0.0036 | 0.27% | Pound / Dollar | 19:55 | 0.6281 | 0.0029 | 0.46% |
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Click here for the Sharenet Spot Price page
The JSE Today
Trading Statistics
Date | Adv. | Decl. | Unch. | Actives | Volume | Value | Trades | Orders |
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12/11/2013 | 147 | 198 | 80 | 425 | 220,698,116 | R13,657,589,968 | 148093 | 1567563 | 11/11/2013 | 164 | 204 | 65 | 433 | 213,483,207 | R12,595,361,367 | 145073 | 1190236 | 08/11/2013 | 115 | 251 | 70 | 436 | 245,920,787 | R14,002,162,494 | 153280 | 1582616 | 07/11/2013 | 177 | 168 | 82 | 427 | 197,199,964 | R12,887,639,271 | 149523 | 1795078 | 06/11/2013 | 228 | 131 | 80 | 439 | 216,720,664 | R13,756,139,369 | 144228 | 1365324 |
* Includes all listed instruments on the JSE
Index Summary Index Name | RP | Move | % Move | Top 40 | 40,727.80 | -30.53 | -0.07% | Industrial | 59,340.91 | 21.27 | 0.04% | Mid Cap | 59,118.33 | -77.71 | -0.13% | Small Cap | 50,037.23 | -134.97 | -0.27% | Resource 20 | 52,325.40 | -351.34 | -0.67% | Industrial 25 | 52,083.62 | 62.39 | 0.12% | Financial 15 | 12,520.60 | 33.07 | 0.26% | Financial & Ind. 30 | 55,293.08 | 103.10 | 0.19% | All Share | 45,448.28 | -39.90 | -0.09% | Oil & Gas | 38,217.17 | 152.87 | 0.40% | Mining | 31,716.83 | -279.95 | -0.87% | Gold Mining | 1,329.60 | 26.28 | 2.02% | Platinum Mining | 52.89 | -.28 | -0.53% | GENERAL MINING | 9,085.76 | -114.19 | -1.24% | Oil & Gas Producers | 20,548.66 | 82.19 | 0.40% | Basic Materials | 28,061.67 | -226.25 | -0.80% | Chemicals | 23,508.37 | 87.26 | 0.37% | Forestry & Paper | 28,342.01 | -131.26 | -0.46% | Industrial Metals | 23,172.06 | 36.35 | 0.16% | Industrials | 42,985.40 | -257.52 | -0.60% | General Industrials | 128.04 | -.71 | -0.55% | Consumer Goods | 56,330.60 | -91.51 | -0.16% | Automobiles & Parts | 8,659.29 | -58.88 | -0.68% | Household Goods | 271.82 | 7 | 2.54% | Health Care | 75,308.45 | 156.05 | 0.21% | Beverages | 181.55 | -.43 | -0.24% |
| | Index Name | RP | Move | % Move | Food Producers | 70,200.20 | -320.22 | -0.45% | Personal Goods | 1,037.12 | -2.89 | -0.28% | Consumer Services | 10,135.76 | 51.49 | 0.51% | General Retailers | 61,687.15 | -74.43 | -0.12% | Travel & Leisure | 5,672.51 | -20.27 | -0.36% | Media | 204.17 | 2.08 | 1.03% | Support Services | 2,610.53 | -12.34 | -0.47% | Telecommunications | 9,440.33 | 65.22 | 0.70% | Financials | 33,100.03 | 96.41 | 0.29% | Banks | 55,929.50 | 70.45 | 0.13% | Non-life Insurance | 48,492.19 | -125.06 | -0.26% | Life Insurance | 32,387.16 | 218.79 | 0.68% | General Financial | 3,195.08 | 40.17 | 1.27% | Technology | 44,291.85 | 49.18 | 0.11% | SHARIAH TOP40 | 3,865.25 | -9 | -0.22% | FTSE/JSE SHARIAH ALL | 3,976.93 | -10 | -0.26% | COAL MINING | 19,002.95 | -306 | -1.59% | FTSE JSE Fledgling | 6,259.68 | 3 | 0.05% | FTSE/JSE Alt X | 1,117.71 | 9 | 0.82% | SA LISTED PROPERTY | 494.65 | | -0.43% | CAPPED PROPERTY | 423.52 | | -0.40% | RESOURCE | 28,613.28 | -189 | -0.66% | DIVIDEND PLUS | 216.21 | 1 | 0.54% | FTSE/JSE RAFI 40 | 9,013.98 | -4 | -0.04% | Capped Top 40 | 21,509.26 | -8 | -0.04% | Capped All Share | 23,004.97 | -18 | -0.08% | JSE TABACO | 7,226.10 | -38 | -0.53% |
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Click here for the Sharenet Index Summary page
Latest Consensus Changes** Code | Company Name | Status | Updated | TFG | THE FOSCHINI GROUP LTD | HOLD | 11/11/2013 | AVI | AVI LTD | HOLD | 09/11/2013 | NTC | NETCARE LIMITED | BUY | 09/11/2013 | CFR | COMPAGNIE FIN RICHEMONT | HOLD | 08/11/2013 | NPN | NASPERS LIMITED | BUY | 08/11/2013 |
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Results Expected** Expected | Company Name | Fin. Date | 13/11/2013 | AFDAWN | August 2013 (Interim) | 13/11/2013 | AMECOR | September 2013 (Interim) | 13/11/2013 | ANGLD | September 2013 (Q) | 13/11/2013 | ANGLD-A | September 2013 (Q) | 13/11/2013 | ANGLD-B | September 2013 (Q) |
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Recent Dividends** Share Name | Dec-Date | LDT | Pay-Date | Amount | VODACOM | 11/11/13 | 22/11/13 | 02/12/13 | ZAR 3.9500 | ASTRAL | 11/11/13 | 17/01/14 | 27/01/14 | ZAR 2.2200 | TONGAAT | 11/11/13 | 24/01/14 | 06/02/14 | ZAR 1.5000 | INVICTA | 11/11/13 | 29/11/13 | 09/12/13 | ZAR 1.0200 | LEWIS | 11/11/13 | 17/01/14 | 27/01/14 | ZAR 2.1500 |
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Ex Div** Share Name | Dec-Date | LDT | Pay-Date | Amount | REMGRO | 18/09/13 | 08/11/13 | 18/11/13 | ZAR 2.0100 | OCTODEC | 23/10/13 | 08/11/13 | 18/11/13 | ZAR 0.7890 | PREMIUM | 23/10/13 | 08/11/13 | 18/11/13 | ZAR 0.6620 | OASIS | 18/10/13 | 08/11/13 | 18/11/13 | ZAR 0.4308 | PINNACLE | 05/09/13 | 08/11/13 | 18/11/13 | ZAR 0.4100 |
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Upcoming AGMs** Code | Company Name | Date | Status | GRT | Growthpoint Properties Ltd. | 12/11/2013 | Confirmed | YRK | York Timber Holdings Ltd. | 12/11/2013 | Confirmed | YRKP | York Timber Holdings Ltd. | 12/11/2013 | Confirmed | WBO | Wilson Bayly Holmes - Ovcon Ltd. | 13/11/2013 | Confirmed | WBOP | Wilson Bayly Holmes - Ovcon Ltd. | 13/11/2013 | Confirmed |
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