Professor Glen Arnold

Wells Fargo - when Warren Buffett bought in many thought it was a mkistake

29 Nov 2019 @ 09:51
The numbers in millions I used in yesterday’s newsletter are pretty well the real numbers, but you need to convert the millions to billions for Wells Fargo in 1990. It had lent out $49bn and owed depositors and others $46.5bn.  Common stockholders’ equity was about $2.5bn. It had 455 branches, 19,500 staff and had made around […]

Investing in Wells Fargo - Buffett's lessons for us all

28 Nov 2019 @ 11:36
In between completing the proof reading of the latest edition of The Financial Times Guide to Investing (in all good book shops in January!) I’ve been contemplating Warren Buffett’s rationale for investing in Wells Fargo. Looking at Buffett’s investments can teach us a lot about the thinking process we value investors should go through to arrive at […]

Connect Group – a dangerous-looking balance sheet, but good cash flow

18 Nov 2019 @ 10:08
Connect Group (LSE:CNCT) has not had an attractive-looking balance sheet for many years. It had/has very high levels of intangible assets, especially goodwill, due to paying excessive prices for acquisitions. Even after including those doubtful “assets” in its balance sheet it could barely report a positive net current asset value.  On top of that, it […]

Connect Group – the Tuffnells business

15 Nov 2019 @ 10:11
In 2014 the big idea at Connect Group (LDSE:CNCT) was to diversify into parcel delivery and at the same time gain synergy with the early morning News Distribution business by buying Tuffnells for £139m. Here are the performance numbers for Tuffnells under Connect’s ownership – not pretty reading for shareholders who forked out £139m. Now the […]

Connect Group – The Smiths News business

14 Nov 2019 @ 12:03
Connect Group (LSE:CNCT) has a business which produces profits and lots of cash flow year after year called Smiths News.  SN is a duopolist alongside Menzies delivering newspapers and magazines to shops.  They tend to stick to their own territories in allocating their vans – it is pointless having two rivals sets of vans passing […]

Connect Group – Potentially high-reward, potentially high-risk

13 Nov 2019 @ 10:03
Connect Group (LSE:CNCT) has one business generating an operating profit north of £36m.  For a £71m market capitalisation company that is a substantial amount. And this operating profit, from the Smith News newspaper and magazine distribution business, has been consistently high (2014: £40.8m, 2015: £23.2m, 2016: £34.1m, 2017: £36.1m, 2018: £25m, 2019: £36.3m). Smiths News […]

Should investors desire rising share prices or falling ones? Warren Buffett's thoughts

08 Nov 2019 @ 14:31
In these febrile times it worth remembering some wise words of Warren Buffett concerning the value investor’s attitude to falling share prices.  Truly disciplined value investors celebrate when shares fall in price.  I’m currently writing the first chapter of third volume of The Deals of Warren Buffett which is on the purchase of shares in Wells Fargo […]

Character Group – Owner earnings analysis and Intrinsic value

05 Nov 2019 @ 10:20
Conventional earnings numbers generally do not adequately allow for the fact that with some companies profits cannot be taken out if the company is to maintain its unit volume of output, spend enough to maintain its economic franchise (e.g. on working capital, new machinery, marketing, service quality, employee training, etc.) and invest in all value […]

Character Group – a valuation based on return on net tangible assets

04 Nov 2019 @ 12:55
Today we’ll look at return on net tangible assets, and approach the valuation of Character Group (LSE:CCT) from this angle. To start with there are a lot of numbers – to show my workings – but this all boils down to an exceptionally high average Return on Net Tangible Assets of 87%. Profits, assets and […]

Character Group – an overseas venture

01 Nov 2019 @ 10:06
Character Group (LSE:CCT) has recently spread its wings by buying a controlling stake in a company which operates a similar business model in Scandinavia.  This could be the start of a trend, where more European toy companies are purchased by Character being motivated by the potential of synergies in attracting brand owners by offering a larger […]
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