Wednesday, August 26, 2009

Biglari: The Young Buffett

Interesting read in the Wall Street Journal this morning on Sardar Biglari. For those that are not familiar with this young 31 year old CEO, let me bring you up to date. Biglari runs several investment partnerships or (hedge funds) out of San Antonio Texas. The most notable is The Lion Fund. Biglari is what's known in the investment community, as a shareholder activist. He buys a large stake in the company and often ends up as a director on the board, pushing for change or turn-around. In the case with Steak n Shake ($SNS) he became CEO. Biglari runs his partnerships much like Warren Buffett's early years when Warren ran Buffett Partnership between 1956-69. Biglari also runs the old Western Sizzlin Steakhouse ($WEST), and at some later date plans to roll them into one company. According to the most recent shareholder filings, Biglari added to his already large position in Steak n Shake purchasing an additional 107,500 shares. Biglari is a value investor who has studied the readings of Benjamin Graham "Security Analysis" (1934) and "The Intelligent Investor" (1949) as well as the legendary Warren Buffett.

Posted via email from stockmanmarc's posterous

Friday, August 21, 2009

Value Investor Mohnish Pabrai - The Dhandho Investor

For those of you that are not familiar with Mohnish Pabrai, he is a devout disciple on the teachings by Warren Buffett and Ben Graham. Mohnish runs a fund identical to Warren Buffett's original Buffett Partnership which was the predecessor of Berkshire Hathaway. Pabrai wrote a book about 2 years ago titled the Dhandho Investor. The word Dhandho which is pronounced dhun-doe is a Gujarati(a state in India) word. Dhan comes from the Sanskrit root word Dhana meaning wealth. Dhana-dho, literally translated, means "endeavors to create wealth".
Pabrai is a focus investor usually holding about 12-18 stocks in his portfolio. Pabrai likes to put no more than about 5% to 10% in each stock. Currently Pabrai holds 17 stocks in his portfolio with about 235 million under management. Ternium
$TX, Harvest Natural $HNR, Teck Cominico CL B shares, Berkshire Hathaway $BRKB and Fairfax Financial Holdings $FFH are his 5 top holdings. The current 13F filings show that Pabrai bought a large position in Brookfield Properties $BPO while closing out his position in Sears Holdings $SHLD .
For those of you that have not read the Dhandho Investor, you should, it is simple to understand and makes a lot of sense.

Posted via email from stockmanmarc's posterous

Tuesday, August 4, 2009

A Smaller Version of Berkshire Hathaway: Markel Corporation

Markel Corporation markets and underwrites specialty insurance and have been doing business since 1930. They are not a big well known company except in the value investing community. This might be due to them being in a rather boring industry- insurance. Wall Street seems to push everything in vogue and the retail investor seems to follow along. Berkshire Hathaway was not well known either 25-30 years ago, and Warren Buffett had already been involved with Berkshire for nearly 20 years. I must admit when I first heard of Berkshire back in the mid 1980's it was trading around 1500 a share. The only reason I noticed it, was that it had a high price tag or so I thought at the time. Hear it is almost twenty-five years later and another high priced insurance stock has got my attention. Well actually I've known about this one for a few years now. Did I say high priced at $342.00 dollars a share. Well for some of you new folks the stock price does not have anything to do with true value of the company. The reason why you see Berkshire Hathaway(BRKA,BRKB)and Markel(MKL)trading so high is because they don't split the stock, like most companies often do.

As stated in the title Markel Corporation is a smaller version of a Berkshire Hathaway. It operates in the same fashion as well. That is it's primary busi
ness is insurance. Most insurance companies have whats called float. Float is the money taken in (insurance premium) less the claims paid out. The difference or "float" is reinvested in fixed income and equities. Of course we all know that Buffett has been a master of this...taking the float and buying well known financially strong companies such as Coca Cola(KO), Johnson & Johnson(JNJ), Proctor & Gamble(PG), Wells Fargo(WFC) and Kraft Foods(KFT). Markel has also done quite well over the last twenty years by doing the same thing. Since August of 1990 Markel has risen over 2100% while Berkshire has risen over 1500%. Currently Markel is trading at $MKL a share. They have over 132 million per share in cash and a debt/equity ratio .34. Markel has over 70 companies in its portfolio with Berkshire Hathaway(BRKA, BRKB), United Parcel Service(UPS), Diageo(DEO), and Carmax(KMX) being some of the larger holdings.

What others are saying about Markel: 5 Star Stocks Begging To Be Bought

Author currently long as of this writing BRKB,WFC,JNJ,MKL,KFT,KMX

Monday, August 3, 2009

4 Of Warren Buffett's Smaller Holdings

Four of Warren Buffett's smaller holdings have made some big gains off the bottom, along with the overall market. What's interesting is that most focus on his largest holdings which are Coca Cola $KO, Wells Fargo $WFC, American Express $AXP, Burlington Northern $BNI, Johnson & Johnson $JNJ, Procter & Gamble $PG, and Kraft Foods $KFT. Below in the graph's you see 4 smaller positions that Berkshire Hathaway owns. Three of these companies IR, NRG & KMX have gained 100% or better off their lows, while ETN has gained 76%, all four far out pacing the market averages, with the Dow Jones Industrial returning 44% and the S&P returning 50%.

4 Smaller holdings from Warren <span class=
Looking at some of his smaller holdings might give us a glimpse at what he is buying in his personal account which is not published anywhere. All-in-all Buffett owns over 90 different companies in which over half of these are wholly owned by Berkshire Hathaway $BRKA, $BRKB.