Imagine you spent the past thirty-five years of your life working for Colgate-Palmolive. During your time there, you recognized the greatness of the company. You soaked up the history, knowing that the original William Colgate & Company founded on Dutch Street in 1806 to sell soaps and candles had resulted in a business that had been profitable for 87% of the time that the United States America existed. You know that the private owners collected their dividend checks through the War of 1812, the Civil War, and the 1896 introduction of toothpaste in a tube marked the point from which it would never again cut its dividend.
If this Colgate-Palmolive employee started investing $500 per month 35 years ago, and increased his contribution by 6% each year, the net result would be a $33,900,000 portfolio. When you find an excellent company, give it a long time, and constantly supply fresh … Read the rest of this article!
In 1998, Warren Buffett found himself in a predicament. He knew that many stocks had become overpriced, including many owned through Berkshire Hathaway. He also knew that selling those stocks would require a substantial tax payment to the U.S. government, and it would be difficult to find other things to purchase that would create more wealth in the long run once you adjusted for the lower pot of money available after taking the tax hit.
Instead, Buffett pulled off one of the most excellently structured deals of his career. Seeing that Berkshire Hathaway was trading at 2x book value, he issued 18% of Berkshire’s stock to purchase the reinsurer General Re. The brilliance of this move is that: (1) Warren Buffett created value out of thin air by transacting away some of his stock during one of the rare times under his helm when it was expensive; and (2) he … Read the rest of this article!
The Ave Maria Catholic Values Fund, which trades under the symbol AVEMX, is the best example of a socially responsible fund I have encountered. It has been a long-term owner of Lowe’s, which accounts for almost 4% of the overall portfolio, and Lowe’s has dragged the overall performance of the portfolio upward by delivering 17% annual returns over the course of its inclusion in the Ave Maria Funds.
The problem? It hasn’t been enough to keep the pace of a traditional benchmark like the collection of stocks in the S&P 500. In the past year, the S&P 500 has been up 7.4% while Ave Maria has been down 3%. In the past three years, Ave Maria is up 10.3% annually while the S&P 500 has advanced 17.3%. Over the past five years, Ave Maria is up 12% per year while the S&P 500 is up 17% per year, and the … Read the rest of this article!
A great quote from Leon Cooperman, the founder of the hedge fund Omega Advisors: “I am very knowledgeable and cognizant of what the S&P 500 represents; in 2015, it is an index of 500 companies, on average they are growing about five percent a year, and they yield about two percent, and they trade a little under three times their book value. They have got 35 or 36 percent of debt in their capital structure, and for those financial statistics you pay on average about 18x this year’s earnings. So, as a value investor, I look for either more growth, a lower multiple, or more asset value possibly mixed with more income yield. I want some combination that says Buy Me. My team and I spend all day long, seven days a week, 24/7 trying to look for things that are mispriced in the market.”
The S&P 500 is up … Read the rest of this article!
Between 2003 and 2010, Blackberry saw its profits climb from $0.10 per share to $8.28 per share. The stock, which traded around $10 in 2003, hit a high of $148 in the summer of 2008. In a five-year time period, Blackberry was able to turn every dollar into $14.80. It only required a bit over $67,000 in 2003 to become a Blackberry (then, known as Research in Motion) millionaire five years later.
Today, Blackberry trades around $10 per share. It is as if the past twelve years never happened. The company paid no dividend. And, worst of all, you saw a mini-fortune come and go before your very eyes. This year, Blackberry is expected to lose about five cents per share for a company-wide loss of $26 million this year. That’s actually a significant improvement from the $700 million loss Blackberry experienced in 2013. Both figures are far cries from … Read the rest of this article!