Office Depot has had an ugly business model for the past two decades. The company has only had one seven year stretch in its corporate existence (2000-2006) in which profits grew. Other than that, the company see-sawed along a trajectory of “two steps forward, three steps back, two steps forward” for most of its existence. Even Home Depot’s glory days, however, had more to do with financial engineering (borrowing debt to reduce the stock count through buybacks) rather than actually growing a healthy business.
Specifically, throughout the 2000 to 2006 period, profits had only grown from just under $300 million to $396 million, but the office supply company leveraged the balance sheet to … Read the rest of this article!
During the late 1980s and early 1990s, Warren Buffett built Berkshire Hathaway’s famous 400,000,000 share position in the largest beverage provider in the entire world, Coca-Cola (KO). At the time, he spent a little more than $1 billion of Berkshire Hathaway’s funds to make the initial investment, which has the same purchasing power as $1.8 billion today.
During this 30+ year time horizon, Berkshire Hathaway shareholders have seen the value of the $1 billion holding increase in value to $21.8 billion, but more subtly, they have collected $3.1 billion in total dividends during this time. In some respects, the dividend figures are understated in multiple ways.
First, they are understated to the extent … Read the rest of this article!