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In late November, many Berkshire Hathaway shareholders were surprised to learn that the company reached an agreement to acquire the Omaha World-Herald in a $200 million transaction. Warren Buffett, Chairman and CEO of Berkshire, has commented on the difficulties facing the newspaper industry on numerous occasions but seemed bullish on the Omaha economy and prospects for the paper to deliver “solid profits” in the future. Berkshire has owned the Buffalo News for over three decades ...
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Note to readers:  The Rational Walk is pleased to announce the availability of an in-depth research report on Platinum Underwriters Holdings Ltd.  This is the first in a series of occasional research reports that will be offered for sale on The Rational Walk.  The introduction to the report appears below.  Update:  As of January 23, 2012, we are pleased to make the report available to readers free of charge.  The investment thesis remains substantially unchanged ...
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"The way to win is to work, work, work, work and hope to have a few insights." -- Charlie Munger Experienced investors know that in order to achieve long term success, it is necessary to read voraciously and to insist on personally reviewing primary sources such as SEC filings when considering investments. Outsourcing investment analysis, whether to a talking head on television or to a highly paid investment advisor, is almost never a satisfactory substitute ...
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Over the past eight months, a number of articles have appeared on The Rational Walk related to the Deepwater Horizon disaster and related investment opportunities.  Value investors know that times of stress and uncertainty create opportunities in the financial markets whether the turmoil is due to natural disasters, political unrest, or the fallout from accidents such as the Deepwater Horizon incident. Panic and Uncertainty Leads to Opportunities Mr. Market always sells entire industry sectors indiscriminately ...
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Microsoft reported a solid fiscal second quarter on Thursday with revenue and earnings that were generally above consensus estimates.  However, concerns over relatively tepid growth in the Windows segment overshadowed positive results elsewhere in the eyes of market participants leading to a nearly 4 percent drop in the stock price today. Since there are numerous articles already published detailing Microsoft's results for the quarter, we will focus the majority of our attention toward an examination ...
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Over the past decade, investors have learned that there is a significant difference between identifying a great business and making a great investment. A quick look at the charts of dozens of leading companies demonstrates the fact that a business can continue to progress nicely in terms of delivering earnings and cash flows to shareholders while the company's stock price can stagnate or decline. We have pointed out some prominent examples of this disappointing situation, ...
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In a letter to Apple employees released Monday morning, Steve Jobs informed his team that health issues have forced him to take a leave of absence from his day-to-day duties as CEO of the company. Tim Cook, who capably managed Apple in 2009 when Mr. Jobs had a lengthy medical absence, will again assume responsibility for day-to-day operations. Mr. Jobs will remain involved in "strategic decisions" for the company. No time frame was given for ...
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The official moratorium on deepwater drilling in the U.S. Gulf of Mexico was lifted in October 2010, but has been replaced with what can only be described as a quasi moratorium as new permits continue to languish in a byzantine approval process that has frustrated the industry.  Investors and industry participants have every reason to be confused.  On Monday, The Wall Street Journal reported that major players did not expect new permits to be issued ...
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The collapse of housing prices in the United States over the past four years has shattered numerous assumptions made by market participants, many of whom previously based their economic models on the idea that a nationwide decline in real estate prices would never occur. The impact of foreclosures and the "robo-signing" scandal has captured headlines recently but more subtle effects are even more widespread. While the human misery created by the housing collapse is impossible ...
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There has been much speculation this week regarding the reasons behind Warren Buffett's decision to hire Todd Combs to manage a portion of Berkshire Hathaway's investment portfolio.  Although short term stock price movements are meaningless, some observers have attributed Berkshire Hathaway's stock performance over the past two days to investor discomfort with the selection, although it is equally plausible that investors are simply refocusing on their discomfort with the overall succession issue. More information regarding ...
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This is the sixth in a series of articles covering “unpopular” larger companies.  Benjamin Graham believed that such companies may present opportunities for enterprising investors.  We discussed the Graham approach in more detail in a recent article. At the turn of the century, few observers could have possibly foreseen that Microsoft would become a favorite bargain purchase for value investors in 2010.  The dot com boom was in the process of peaking and any company ...
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One of Warren Buffett's early investments during his partnership years was a small Nebraska company that  manufactured windmills and farm equipment.  The story of Dempster Mill Manufacturing in Beatrice, Nebraska is documented in great detail in Andrew Kilpatrick's massive three volume set, Of Permanent Value:  The Story of Warren Buffett. Mr. Buffett began acquiring shares of Dempster in 1956 and had a controlling interest by mid 1961.  After gaining control, Mr. Buffett installed new management ...
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When Bill Gates promoted Steve Ballmer to the chief executive position at Microsoft over ten years ago, the company was flying high in terms of investor perceptions and had a cutting edge image placing it at the forefront of America's high tech boom.  Despite initial setbacks during the mid 1990s related to understanding the transformative power of the internet, Microsoft quickly recovered and expectations for the company's future were very high in early 2000.  Fast ...
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Ensco plc recently announced second quarter 2010 earnings of $126.3 million, or $0.89 per share.  As expected, the results were negatively impacted by lower utilization for the fleet as well as lower average dayrates.  Contract drilling revenues were $406.3 million compared to $449.4 million for the first quarter.  Second quarter 2009 contract drilling revenues were $497.3 million.  The company ended the quarter with $1.2 billion of cash and tangible book value of $5.4 billion, or ...
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