Holding Stocks You Would Not Buy

One of the mistakes that I frequently make, and I am working to fix, is that I tend to only analyze assets as they are at the moment rather than taking into account what they will be–specifically, the invisible aspect of a corporation’s deal-making potential.

You may remember earlier this summer when I voiced disagreement with the professional analysts covering Anheuser-Busch that were projecting 9% annual growth at the giant brewmaker. I looked at the amount of costs already wrung out of the company, saw the anemic revenue growth, and figured there was no way earnings could grow at a rate of 9%.

What I didn’t factor into my analysis was this: The invisible, intangible deal-making ability of Anheuser-Busch executives to make an acquisition that would bolster earnings per share because the subsequent cost-cutting at the acquired company would be greater than any share dilution necessary to executive the deal. … Read the rest of this article!