Reading List - United States / Negative Outlook

On Monday morning, S&P put the AAA credit rating of the United States at risk by placing the United States on negative outlook.  They key point in S&P's action is that the negative outlook is more of an outcome of poor behavior by both political parties in Washington DC versus the United States not being able to service debt effectively.  The rating agency feels with the political gridlock that exists, a solution will not be reached by 2013 to help solve the fiscal problems facing the United States.  Hopefully, this action by S&P will force policymakers in Washington to become serious about the issue.

The markets may have reacted the opposite as you might expect.  Investors sold risk in the form of equities, and Treasuries and the dollar rallied as a result.  The question investors must ask themselves: is this event a fundamental game changer?  If an investor feels given all of the problems in the United States, but the United States is still the best place to invest, this event may be a buy trigger versus a sell trigger.  If an investor feels like this is a game changer and most assets are denominated in US dollars, it may be time to diversify into commodities and emerging market stocks.

Will the negative outlook have a negative impact on the recovery?  The answer to this question is difficult.  Even given the low yields and other fiscal problems, investors still want to hold US Treasuries.  But, as a result of the negative outlook, this demand may slightly decrease and bond yields will increase.  SInce virtually every form of borrowing is based off of the US Treasury, it would indicate that corporate bond rates, mortgages, etc all should increase.  As a result, borrowing costs for firms and households should increase; increased borrowing costs may eat into the rally.  One outcome is that the Federal Reserve may need to continue to use the printing machine to help the United States get out of this fiscal mess.

At this point, it is way too early to tell whether this is a positive or a massive sell signal.  It is important to note that in any market conditions, investors can make money.  It is being able to identify those opportunities that truly separate the winners from the losers.  Given the title of this blog, "Value and Yield," it is prudent that investors play some sort of defense in this crisis by investing in dividend paying stocks.  These companies should be safe companies that can grow total dividends.  These companies should be a good hedge against downside risk and possible inflation.

What Downgrade? Pros Shrug Off Warnings from S&P (click here)
S&P US Ratings Cut Good for Long-Term (click here)
Wilbur Ross Interview (click here)

Reading List - April 17, 2011

I know I have not done a reading list for a few weeks, but I feel most of the news in the markets have been continuation of trends that have been highlighted before.  So, below are some of the more interesting articles of the past week or so.

Market disruptions

As I have tried to highlight in previous posts, there is plenty of uncertainty around the market's reaction of QE2.  Below is a link to a video from CNBC of two strategists debating this very point.  Bob Phillips, senior partner at Spectrum Management Group, highlighted a few key points:

• Prudential (ticker: PRU) is trading at around 10x earnings.  Company previously made some acquisitions, some in Japan.  Firm has strong management and is undervalued at current multiple.
• Disruption when QE2 ends.  Investors should raise approximately 20% of their portfolios in cash as part of the uncertainty.

Market Looks 'Worrisome' - Disruptions Ahead: Stock Picker (click here)

JPMorgan's Earnings

JPMorgan (ticker: JPM) had a good first quarter as actual earnings beat analyst estimates.  What is alarming is that total loans at JPMorgan actually went down.  Federal Reserve statistics point to a similar trend, but JPMorgan's earnings point to this actually being the case.  As a result of the contraction in credit, are we headed towards a double dip?

JPMorgan's Earnings Point to Double Dip (click here) 

Michael Burry from The Big Short

Michael Burry, the hedge fund manager who betted against subprime mortgages, recently made a speech at Vanderbilt.  Below are some links to another blog, Distressed Debt Investing, that covered the highlights of the Burry speech:

He was attracted to investing because he was evaluated on performance not whether or not he looked people in the eye or was socially adept

QE “seems” to be working but is really just a big gamble

Don’t tolerate blind faith, figure things for yourself

Doesn’t think large caps are as cheap as others do

Michael Burry: Notes from Vanderbilt Speech (click here)

Pension funds

Jim Leech, president and chief executive at the Ontario Teachers' Pension Plan.  Highlights included:

• Whatever you do, you need to have conviction.
• One has to look far and wide to find opportunities in this uncertain environment.  This plan is leaning to towards commodities.  Key holdings include Toronto Dominion, Transocean, and JPMorgan.
• Worried about commodities, but prepare for uncertainty by having a diversified portfolio.  Need to be part of a run, but cannot put too much risk in your portfolio.
• View on the US: still having housing issues, but long-term you cannot bet against the biggest economy.  Concerns include state debt levels and administrations will come to grips with the issue.  Federal Reserve (i.e. QE2) is in a tough position, but correctly chose there is no deflation.  Issue is now does QE2 fuel inflation and it is too early to tell if it has.
• One of the early adopters of hedge funds and investment has worked out.  Fund is a large private equity investor, but through direct positions rather than fund of funds.

View from a Pension Fund (click here)

The Tale of the Swiss Bank Account

Its something that just needs to be seen...

The Secret World of Swiss Banks (click here)

Company Analysis - Procter & Gamble (PG)

To see full analysis, please click on link below.

Firm overview

The Procter & Gamble Company (P&G), incorporated in 1905, is focused on providing consumer packaged goods. The Company’s products are sold in more than 180 countries primarily through mass merchandisers, grocery stores, membership club stores, drug stores and high-frequency stores, the neighborhood stores, which serve many consumers in developing markets. It has on-the-ground operations in approximately 80 countries. As of June 30, 2010, P&G comprised of three Global Business Units (GBUs): Beauty and Grooming, Health and Well-Being and Household Care. Sales to Wal-Mart Stores, Inc. and its affiliates represent approximately 16% of its total revenue during the fiscal year ended June 30, 2010 (fiscal 2010). In August 2009, AnimalScan, LLC announced that it has acquired Iams Pet Imaging (IPI), LLC from The Procter & Gamble Company and ProScan Imaging. In October 2009, Warner Chilcott Plc completed the acquisition of the Company’s global branded prescription pharmaceutical business. In July 2010, Sara Lee Corporation completed the sale of its air care business to The Procter & Gamble Company.   Source: Reuters

Investment rationale

Investment rationale includes based on a P/E basis, the firm appears undervalued given forecasted growth, business risk, and financial risk.  When several metrics are looked at, the firm appears to benefit from a durable competitive advantage.  The firm has a strong dividend that appears, for the time being, to be sustainable.  Current dividend yield is 3.10%.  The current dividend provides downside protection, while providing a steady growing stream of income to income oriented investors.  The firm generates cash from operations and has a strong balance sheet.  The firm has strong margins that appear to be growing into the future as the firm's management seeks out operating efficiencies.  Given historical long-term growth and current trends in margins, the firm appears undervalued from both a risk-adjusted P/E and DCF basis.

Highlights

• Firm has strong gross margins.  Margins are >40% indicating durable competitive advantage.  Net profit is slightly <20%; net profit >20% indicates durable competitive advantage.  Growing margins indicate strength.  Firm seeks higher margins through operational improvements and efficiencies.
• Firm has strong liquidity position.  Free cash flow productivity is greater than 90% for all periods analyzed; this ratio indicates the firm generates 90% of net income into free cash flow.  Current ratio is <1; companies with a durable competitive advantage typically do not need a current ratio >1.  Firm has $11 billion credit facility that is a back-up for commercial paper issuance; commercial paper can be used to fund any short-term needs.
• Firm has strong balance sheet.  Debt-to-total capital ratio is below 50%; this level indicates firm is not overlevered.  The firm has a debt-to-equity adjusted for common shares of 20%; this is well below 80%.  An 80% level for this ratio indicates the firm has a durable competitive advantage. 
• Firm is efficient with capital.  ROCE is lower than it was 10 yrs earlier; primary cause is acquisition of Gillette, but ROCE is increasing each year.  Financial leverage index (=ROCE/ROA) is above 2 for each year analyzed indicating effective use of leverage.  The return on unlevered net tangible assets (Warren Buffett's ratio) increased each year and is over the 25% threshold.
• Current dividend payout ratio is under 50% allowing for future growth in the dividend.  Dividend grew at 11%, while total net profit grew at 17%.  Firm has ability to increase the dividend payout ratio.

Valuation

		Risk-adjusted discount rate
	Growth	8.8%	9.8%	10.8%	11.8%	12.8%
Downside	5%	$73.91	$62.78	$54.51	$48.12	$43.05
Base	9%	$95.39	$79.76	$68.23	$59.41	$52.47
Upside	11%	$108.89	$90.42	$76.84	$66.49	$58.37

Based on a risk-adjusted discount rate of 10.8%, the intrinsic value of PG is $68.23 per share.  Currently, this is 9.7% above where shares are currently trading.  The risk-adjusted margin of safety is 12.9%, or the appropriate purchase price is $59.40 per share.  The suggested market price is approximately $2.70 above where it is currently trading.  If there is a sell-off in the stock where it is somewhere in that range, I would purchase the shares.  In addition, the firm indicates a buy with a forward P/E of 14.22.  This is below the "Buy P/E" calculated; the "Buy P/E" is calculated at 19.85.  Given the expected 9% growth rate in addition to less risky business and financial profile, PG should trade at a premium.  As indicated earlier, the stock has a strong dividend.  Given the discount to its intrinsic value and adequate dividend yield, it would be prudent to buy PG on a selloff.

To see full analysis (click here) 

This information is for educational purposes only, and the opinions expressed do not constitute a recommendation to buy or sell. Author may have a position in the companies discussed, subject to change at any time. Information on this website obtained from reliable sources, but there is no guarantee of accuracy. Please consult your financial advisor before making investment decisions. Past performance is not indicative of future success.

Company Analysis - SYSCO (SYY)

To see full analysis, click on link below

Firm overview

Sysco Corporation, acting through its subsidiaries and divisions, is the largest North American distributor of food and related products primarily to the foodservice or food-away-from-home industry.  Sysco provides products and related services to approximately 400,000 customers, including restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers.  (Source: Form 10-K)

Investment rationale

Investment rationale includes based on a P/E basis, the firm appears undervalued given forecasted growth, business risk, and financial risk.  The firm should continue to benefit from an improving economy, as consumer desires to eat out should increase.  The firm has a strong dividend that appears, for the time being, to be sustainable.  The current dividend provides downside protection, while providing a steady growing stream of income to income oriented investors.  The firm generates cash from operations and has a strong balance sheet.  Although margins are low (but very consistent), the firm appears to have a durable competitive advantage.

Highlights

• Although margins are not strong, margins are consistent.  Firm has effective cost management and is working on improving efficiencies as part of the firm's growth strategy.
• The firm has a strong liquidity position; the current ratio is above 1.  Firm has positive operating cash flow and free cash flow.
• The firm has a strong balance sheet.  Debt-to-capital range is appropriate.  Debt coverage from operating cash flow is adequate (3 years of debt for one year of operating cash flow).
• The firm spends approximately 50% of earnings on CAPEX.  This most likely represents a durable competitive advantage for the firm.
• Return on common equity is approximately 30%; there were no large fluctuations.  ROCE over 30% indicates durable competitive advantage.
• Debt-to-common equity adjusted for treasury shares is below 80%.  Any ratio below 80% typically indicates a durable competitive advantage.
• The firm grew dividends at a higher rate than earnings growth.  Using net income, the dividend payout ratio is approximately 50%.  A payout ratio above 50% indicates the dividend may be unsustainable.  If firm grows dividends with income growth, the dividend should be safe.  Yield is in the range of 3.6%-3.7%; good yield for income investors.

Valuation

Using the FCFE approach, the firm's intrinsic value was calculated at $23.74.  This price assumes 7.5% growth rate for the first ten years and a 3% terminal growth rate.  The risk-adjusted discount rate is 11.48% (please see "Valuation assumptions).  Currently, the risk-adjusted margin of safety is 14.42%; using this margin of safety, the purchase price should be $22.62.  The stock closed at $28.70 on April 6, 2010.  Based on the discounted future cash flows of this firm, the stock is overvalued at $28.70.  Any big sell-off could create a buying opportunity.

Based on a similar methodology used to determine the discount rate and margin of safety, the "Buy P/E" is estimated to be 18.19, while the "Sell P/E" is estimated to be 23.13.  Based on 2011 EPS, the forward P/E is 14.9, or lower than the "Buy P/E."  Based on an earnings multiple basis, the firm is undervalued.

To see full analysis (click here)

This information is for educational purposes only, and the opinions expressed do not constitute a recommendation to buy or sell. Author may have a position in the companies discussed, subject to change at any time. Information on this website obtained from reliable sources, but there is no guarantee of accuracy. Please consult your financial advisor before making investment decisions. Past performance is not indicative of future success.

Bumps ahead?

Given the turmoil in the Middle East and the earthquake in Japan, many market observers expected the market to have a bigger pullback.  Instead, the market appears to be resilient to any "Black Swan" event.  Instead, many keen market observers are beginning to put up the warning flags that big risks are ahead for investors. 

For example, HSBC is cutting its growth targets and increasing inflation targets.  The key area of concern is the large increase in commodity prices; never in history has there been this large of an increase in commodity prices following a protraction.  The high commodity prices will lead to higher input prices and higher prices will begin to erode the confidence of both firms and households.  HSBC sees the scenario play out this way with oil prices: higher oil prices will lead to a reduction in disposable income which will lead to a decrease in capital spending which will lead to a decrease in imports which will lead to a decrease in world trade.  In other words, there will be a redistribution of wealth from high spending economies (i.e. the U.S. and Europe) to the high saving economies (i.e. developing economies).

As commodity prices continue to rise, Federal Reserve Governor James Bullard is calling for the Federal Reserve to draw up an exit plan of QE2.  His rationale is the economy is doing alright, thus QE2 is no longer needed.  Market observers are unsure of the impact of withdrawing QE2 will have on the global equity and commodity markets.  Both of these markets have been benefactors of the low interest rates and cheap dollar that QE2 has produced.

While many investors are unsure of what the true effect of no longer having QE2 will be on the markets, two key investors are not investing in the dollar or U.S. Treasuries.  The two key investors are Warren Buffett and Bill Gross.  When asked about investing in U.S. Treasuries, Mr. Buffett responded by saying that in five-, ten-, or twenty-years down the line, the dollar's purchasing power will be eroded by the monetary policy being currently pursued.  As a result, Mr. Buffett has begun to move out of U.S. fixed income assets.  The assets remaining in his portfolio have short duration (i.e. short maturity).  The price of short duration securities are less impacted by an increase in interest rates that long duration securities.  Increasing inflationary expectations will increase interest rates, thus negatively impact the price of bonds.  Bill Gross, the other key investor, has sold off all Treasuries in the portfolios he manages.

So, where does that leave investors? 

To be perfectly honest, I do not believe there is a safe place for an investor to be.  As a result, I would be hesitant to hold the US dollar and would prefer to be long the Euro and other emerging market currencies for the long-term  The dollar is facing uncertainty as the leadership in Washington do not seem to want to tackle both old and new problems head on.  Continued overspending will lead to more borrowing, and force the dollar to continue a downward trend.  In the long-term, commodities will contine to rally.  As a result, there will be increased investment in emerging economies.  This will cause those currencies to continue appreciating against the dollar.  Central bankers in those economies will need to react and will begin to increase interest rates.  This will be a positive for the currencies of emerging economies, but will be a negative to the dollar.

As a result of a declining currency, average U.S. investors will need to hedge their investments.  As I have stated before on this blog, I would begin to invest in high-quality U.S. stocks with strong franchises and high developing market exposure.  First, companies with strong franchises will be able to pass on higher costs to consumers.  Second, companies with strong developing market expsoure will benefit from a weaker dollar.  Since the products of these companies will priced in dollars, products sold by U.S. based companies will look cheaper as a result of the weak dollar, thus increasing demand.  In addition, when the non-US dollar sales are converted back into U.S. dollars, these sales will be worth more as it will take more U.S. dollars to purchase these other currencies.  The net impact on these companies should be higher sales and profit, in addition to higher cash flow.  Higher cash flow will enable these companies to increase dividends and repurchase shares. 

As a sidenote, look for companies that will have the ability to grow dividends at a higher compounded rate than inflation.  In this case, investors will increase their purchasing power.

Reading List - March 28, 2011

New tech bubble?

Many Wall St. observers are worried that the recent wave of interest by Wall St. into social media websites is going to spell doom for the industry.  Although there are some similarities to the tech bubble of the late 1990's, there are several differences.  First, tech companies in the late 1990's often did not have a business model.  The social media websites of today often have growing revenues and viewed as actual real, growing businesses.  Second, the pool of capital that is chasing these social media websites is much larger.  As a result, the fall will be quicker if in fact a "social media bubble" is forming.

The risk in the industry right now is there are so many players placing bets on such a small amount of companies.  Facebook is clearly the biggest and most recognizable, but others such as Groupon and Zynga continue to have capital poured into them.  As a result, private equity firms, investment banks, and hedge funds are investing in losers or simply paying too much. 

Investing Like It's 1999 (click here)

Is the market undervalued? oversold?

Many Wall St. traders expected the market to have gained too much steam recently, and predicting a sell off in the 7-10% range.  Instead, with all of the turmoil in Arab world and earthquake in Japan, the markets have sold off less than 5%.  In addition, several key investors like Bill Miller have stated the market is undervalued whether it be against the past, or against factors like inflation.  Inflation is the key as policymakers look to curb inflation, and debate the merits of programs like QE3.  Excerpt:

We are no longer in an environment where confirmation of the sustainability of economic recovery reduces risk premiums and generates a revaluation of cheaply priced assets,” Barclays told clients. “Instead, asset prices are closer to fair value and stronger growth is now accompanied by signs of higher inflation and an increased probability of policy tightening.

Indeed, those final two words are likely to be key as the market looks for gains in a modestly steadying economy. The real bet, then, may not be on whether growth has reached a plateau but whether stocks can keep rolling once the Federal Reserve ends its easing program and takes off the training wheels. The market has never been the beneficiary of such monetary largesse before, so cutting the cord could be a shock greater than any of the global storms that have come along.

Stocks Are Cheap, Right? (click here)

Paulson's Legendary Parties

In the depths of the recession, John Paulson was criticized for his lavish parties.  It appears the "legend" of these parties now appear on NBC's 30 Rock...

'30 Rock' and Paulson's Big (Fictional) Party (click here)

Reading List - March 21, 2011

AT&T Announcement

On Monday, it was announced AT&T would like to acquire T-Mobile.  Deutsche Telecom, current owners of T-Mobile, want to exit the U.S. market.  This deal will continue to receive scrutiny going forward, and will continue to receive attention regarding the issues of financing and the anti-trust ramifications.  Expect more posts in the future.  Below is an article from DealBook that I think does a good job highlighting the deal and deal's total costs.

AT&T's Full Cost for Getting T-Mobile (click here)

I try to be slighly contrarian in my thinking, so articles like the one below perk my interest.  The article is about the bridge loan JPMorgan is providing to AT&T, as the loan is the large single takeover loan ever provided by one bank.  Key reasons why JPMorgan decided to go it alone include: 1) excess reserves, short-term loans; 2) dominating the replacement of the bridge loan as AT&T will need to repay the loan with proceeds from a debt or equity issuance; 3) flight to safety as AT&T is too big to fail; 4) indication of a credit bubble.

In my opinion, all of the articles above seem very credible and make very good sense from JPMorgan's viewpoint.  By being involved in an oligopoly, AT&T is a very safe company and JPMorgan will be able to earn a higher rate of return on large amount of excess cash than it currently is.  Furthermore, as the economy and credit markets continue to improve, JPMorgan is trying to get the "swagger" back and show it is now the "big dog" on Wall St. 

How to Think About JPMorgan's $20 Billion AT&T Loan (click here)

Fed Stress Tests

On Friday, it was announced that several large U.S. banks passed stress tests.  Big banks included JPMorgan, Goldman Sachs, and U.S. Bank to name a few.  As a result of these stress tests, these banks can begin to pay dividends and re-engage in share repurchase programs.  In my opinion, the outcomes of these stress tests are both good and bad. 

On the good side, it is great these banks can begin to start paying dividends again.  Going into the financial crisis, banks like Bank of America were dividend darlings.  When the crisis broke, dividends were greatly reduced or suspended entirely.  Allowing banks pay higher dividends should be a positive for the sector, as more institutional and retail money should flow to take advantage of the higher yields.

On the bad side, I am weary of the share repurchase program.  These programs often do not work and deplete capital.  Going into the financial crisis, most banks engaged in share repurchase.  Banks continued to repurchase shares at the peak, and only then issue shares at the trough.  Not a good use of shareholder capital!  Share repurchase programs often depleted owner's equity and cash the banks need to act as a cushion during the crisis.  I just hope bank's are more prudent in all areas during this next cycle.

Thumbs up to dividends, thumbs down to share repurchase programs!

A Test Where the Banks Had the Questions and Answers (click here)
With Fed Consent, Banks Raise Dividends and Buy Back Stock (click here)

Citi - reverse stock split and dividend re-instatment

Many investors feel Citi (C) is a buy, but there are still many issues at the bank.  Monday's announcement of a reverse stock-split and re-instatment of the dividend are more symbolic gestures.  Citi announced that there will be a 10-for-1 reverse stock split.  In other words, for every 10 shares of C that an investor owns, they will now own one share.  I would like to elaborate more on the reverse stock split.

In a normal environment, a firm wants to have a stock-split if they expect the firm's shares to continue to peform well.  This is predicated on the belief there is a "sweet spot" for the share price.  The "sweet spot" varies, as I have heard all sorts of ranges.  I believe a safe assumption of the "sweet spot" is a range of $20 per share to $100 per share.  So, if shares rise to $110, management will often have a 2-for-1 stock split.  The idea behind this is that investors like to own shares when they trade at certain prices.  Shares of companies like Google or Apple that trade in the hundreds of dollars may be "too expensive" for investors.

What does the reverse stock split signal to the markets?  When a company has a reverse stock split, it is essentially is a signal to management the firm is not confident the firm can return to the bottom edge of the "sweet spot" on market conditions alone.  Management "engineers" this sweet spot using a reverse stock split.  As a result, researchers have found companies that undergo reverse stock splits often lag the market.

Citigroup Plans Dividend and Reverse Stock Split (click here)
Reverse Stock Splits Don't Bode Well (click here)

One interesting sidenote is the reverse stock split should reduce volatility for Citi shares.  The key reason behind this is that traders often make money on trading low priced shares like Citi in two ways.  The first way is through the spread, and the second way is through rebates. 

Let me illustrate.  For example, I'm a trader who owns 1 million shares of Citi.  The bid is $4.50 and the ask is $4.51.  I continuously buy and sell shares making money "on the spread," or the $0.01 difference between the bid and ask price.  In the case of 1 million shares, total profit is $10,000.  As the article states, it is not always as easy as this.  Because I'm acting as a market maker and providing liquidity in this situation, most U.S. exchanges will reward me for this through what's called a "rebate."  Typically, it is 15 mils, or 0.15 of 1 penny.  If I trade those million shares, I can earn up to $1,500 per day by providing liquidity.  So, as a trader, I can make money on both the spread and providing liquidity.

Why is Citi so suitable for this trade.  According to Tradeworx Founder Manoj Narang,

“Suitability” comes from low price and high volume. Low price is desirable because rebates are done on a PER SHARE basis, rather than on a percent-of-price basis. Thus, stocks with low price have a very high rebate as a percentage of their volatility (i.e. very high reward:risk ratio).

Citigroup exemplified both of these characteristics—extremely high share volume and extremely low price—in a way no other stock does. This was really a one-time anomaly created by the financial crisis, so it is not likely to be replicated in the future.

Trading in Citi is a Whole Sub-Industry (click here)
High Frequecy Trading: Can Any Stock Replace Citigroup (click here)

Warren Buffett Watch

On Japan...Warren Buffett believes that Japan is still a "buy."  Rare, one-time events like the earthquake and tsunami that struck Japan only create buying opportunities.
Why Buffett Thinks Japan is a Buy (click here)

Goldman Repayment...Because Goldman Sachs passed the Fed's stress tests, Goldman Sachs will repurchase the $5 billion preferred stock investment, at 10% per year, from Mr. Buffett.  In all of Berkshire's history, this has to be one of the most lucrative deals.  In his annual letter to shareholder's, Mr. Buffett made reference to the fact he will not be happy when Goldman wants to repurchase the preferred shares.  In addition, Mr. Buffett holds warrants to buy $5 billion of Goldman shares at $115 until 2013.  As the article states, this would net a profit for Berkshire of about $2 billion.
Warren Buffett Gets an Unwanted Call from Goldman Sachs (click here)

On Future Deals...In the market Monday, the market was partially up due to the comments made by Mr. Buffett that he is still on the lookout for acquisitions.  The acquisition of Lubrizol earlier this month depleted approximately $9 billion of cash from Berkshire Hathaway.  Any new deal will likely be smaller as Berkshire will need to raise additional capital for any larger deals.  Key reasons is Mr. Buffett does not like issuing equity (as he feels Berskhire is trading below its intrinsic value) and prefers to keep approximately $20 billion of cash on balance sheet.  He addressed both of these issues in his most recent letter to shareholders.
Warren Buffett Still on the Lookout for Deals (click here)

25 Guys to Avoid on Wall St.

No comment...

25 Guys to Avoid on Wall St. (click here)