Warren Buffett Stock Portfolio Analysis - 2009 Q2 13-F
No. Ticker Company Name Industry Remarks Current Price DCF Value Ben Graham Formula Multiples Valuation







American Express Company (American Express) is a global payments and travel company. The Company￿s principal products and services are charge and credit payment card products, and travel-related services offered to consumers and businesses around the world. The Company￿s Global Consumer Group offers a range of products and services, American Express Co (Financials are outside my circle of competence) including charge and lending (credit) card products for consumers and small businesses worldwide; consumer travel services, and stored value products, such as Travelers Cheques and pre-paid products. The Global Business-to-Business Group provides, among other products and services, business travel, corporate cards, and other expense management Bank of America Corporation (Bank of America) is a bank holding company and a financial holding company. Through its banking subsidiaries and various non-banking subsidiaries throughout the United States and in selected international markets, it provides a diversified Bank of America Corp range of banking and non-banking financial services and products through three business (Financials are outside my circle of competence) segments: Global Consumer and Small Business Banking, Global Corporate and Investment Banking and Global Wealth and Investment Management. Bank of America operates in 50 states, the District of Columbia and more than 40 foreign countries. Bank of America has * Gross, operating and net margins steadily increasing even in recessionary environment * FCF positive for more than 10 years * Inventory turnover consistent but margins have Becton, Dickinson and Company (BD) is a medical technology company engaged in the increased. Leads to higher efficiency and profit. manufacture and sale of a range of medical supplies, devices, laboratory equipment and * ROA and ROE increasing steadily diagnostic products used by healthcare institutions, life science researchers, clinical * Reduced debt Becton Dickinson & Co laboratories, industry and the general public. The segments in which the Company operates * Has plenty of FCF to pay down debt rather than issue include BD Medical, BD Diagnostics and BD Biosciences. On May 12, 2008, the Company stock or seek loans acquired Cytopeia Inc. * CROIC is very steady at 17%. Company makes 17c off every $1 of cash invested * FCF/sales = 12%. Converts 12c of every dollar in sales to FCF.









Burlington Northern Santa Fe Corp

Burlington Northern Santa Fe Corporation (BNSF) is a holding company. The Company, * Impressive FCF growth previous 4 years and especially through its subsidiaries, is engaged primarily in the freight rail transportation business. BNSF last year Railway Company (BNSF Railway) is the Company￿s principal operating subsidiary. BNSF * High capex but latest annual result was extraordinary Railway operates various facilities and equipment to support its transportation system, * lower sales and margins but improved efficiency in including its infrastructure and locomotives and freight cars. It also owns or leases other returns and turnover equipment to support rail operations, including containers, chassis and vehicles. Support * CROIC is on the low side at 3% facilities for rail operations include yards and terminals throughout its rail network, system * Top line growth is also above average at 14% locomotive shops to perform locomotive servicing and maintenance, a centralized network * Debt to equity ratio is above 200% which isn’t operations center for train dispatching and network operations monitoring and uncommon for capex heavy companies management in Fort Worth, Texas, regional dispatching centers, computers, telecommunications equipment, signal systems and other support systems. * Increase in gross margins but decline in operating and net margin * Increased cash levels but a huge amount CarMax, Inc. is a holding company and its operations are conducted through its subsidiaries. * Highest accounts receivables to date. Check whether it The Company is a retailer of used cars, which retailed 345,465 used vehicles during the fiscal is due to non paying customers or more lenient terms. year ended February 28, 2009 (fiscal 2009). As of February 28, 2009, it operated 100 used * No intangibles (as it should be with low to no moat car superstores in 46 metropolitan markets. In addition, it sold 194,081 wholesale vehicles, companies) during fiscal 2009, through on-site auctions. The Company purchases, reconditions and sells * No long term debt used vehicles. Approximately 85% of the used vehicles it retails are 1 to 6 years old with * Capex a little lower than the upper range fewer than 60,000 miles. It also offers a selection of used vehicles at each superstore that * Latest year cash from operations included higher are more than 6 years old or have more than 60,000 miles, if they meet similar quality amount of interest from securities and cash from standards. reduction inventory * Inventory turnover at the upper range * FCF and CROIC close to 0% The Coca-Cola Company is a manufacturer, distributor and marketer of nonalcoholic beverage concentrates and syrups in the world. Finished beverage products bearing its trademarks are sold in more than 200 countries. The Company markets nonalcoholic sparkling brands, which include Diet Coke, Fanta and Sprite. The Company manufactures beverage concentrates and syrups, which it sells to bottling and canning operations, fountain wholesalers and some fountain retailers, as well as finished beverages, which it sells primarily to distributors. The Company owns or licenses approximately 500 brands, including diet and light beverages, waters, enhanced waters, juices and juice drinks, teas, coffees, and energy and sports drinks. During 2008, the Company acquired the brands and Comcast Corporation is a provider of cable services, offering a variety of entertainment, information and communications services to residential and commercial customers. As of December 31, 2008, its cable systems served approximately 24.2 million video customers, 14.9 million high-speed Internet customers and 6.5 million phone customers, and passed over 50.6 million homes in 39 states and the District of Columbia. It operates in two segments: Cable and Programming. The Cable segment, which generates approximately 95% of the Company￿s consolidated revenue, manages and operates cable systems in the United States. The Cable segment also includes the operations of its regional sports networks. The Programming segment consists of its national programming networks, including E!, Golf Channel, VERSUS, G4 and Style. In June 2009, the Company acquired from Hearst its 50% interest in New England Cable News (NECN). Comcast owns 100% of NECN.







Carmax Inc







Coca-Cola Co

* Price and value have been consistent * Numbers throughout the past 10 years are excellent * Previous business spider graph, fair value estimate and automated KO dcf valuation







Comcast Corp

* FCF and CROIC are close. 10.9% and 9.4% respectively. This scenario occurs when a company has matured without much growth to be expected. * Excellent margins and very stable returns in both the 2001 and 2008 recession * Not over leveraged * Plenty of FCF to cover debt * Big decrease in tangible shareholders equity since 2005 * Intangibles more than double in 2007







Comdisco Holdings Company Inc

Comdisco Holding Company, Inc. (Comdisco Holding) was formed for the purpose of selling, collecting or otherwise reducing to money in an orderly manner the remaining assets of the Company and all of its direct and indirect subsidiaries, including Comdisco, Inc. The Company's business purpose is limited to the orderly sale or run-off of all its remaining assets. Comdisco Holding Company, Inc., as the successor company to Comdisco, Inc., emerged from bankruptcy effective August 12, 2002. Pursuant to the Company￿s first amended joint plan of reorganization, Comdisco, Inc. emerged as a wholly owned subsidiary of Comdisco Holding. Since emerging from bankruptcy proceedings, the Company has focused on the monetization of its remaining assets. Prior to the bankruptcy, Comdisco, Inc. provided technology services worldwide to help its customers maximize technology functionality, predictability and availability.

Using Ben Graham Net Net Spreadsheet, the liquidation value looks to be worth $8.38 while the current price is at $7.50. With most of the assets in cash, this would have been a pretty good liquidation play had the spread been wider. Since the company emerged from bankruptcy in 2002, it doesn’t seem like CDCO is in a hurry to sell the remaining assets.








ConocoPhillips (ConocoPhillips) is an international, integrated energy company. The Company￿s business is organized into six segments. Exploration and Production (E&P) * First time looking at the financials but now see from segment explores for, produces and markets crude oil, natural gas and natural gas liquids. the rear view mirror why Buffett announced it was a big Midstream segment gathers, processes and markets natural gas produced by ConocoPhillips mistake and others, and fractionates and markets natural gas liquids. Midstream segment consists * COP lost a HUGE amount of money in 2008 of its 50% equity investment in DCP Midstream, LLC. Refining and Marketing (R&M) segment * Increased debt to $27 billion purchases, refines, markets and transports crude oil and petroleum products. LUKOIL * Large impairments seem to be showing up each Investment segment consists of its equity investment in the ordinary shares of OAO LUKOIL. quarter wiping out shareholders equity Chemicals segment manufactures and markets petrochemicals and plastics and consists of * Good FCF numbers except for 2008. Will normalize for its 50% equity investment in Chevron Phillips Chemical Company LLC (CPChem). Emerging dcf value below Businesses segment includes the Company￿s investment in new technologies or businesses outside its scope of operations.







Costco Wholesale Corporation (Costco) operates membership warehouses-based offering its members products in a range of merchandise categories. It buys the majority of its * FCF isn’t as high as it used to be merchandise directly from manufacturers and route it to a cross-docking consolidation * Rock solid margins - proves management is on top of point (depot) or directly to its warehouses. The Company￿s depots receive container-based their game Costco Wholesale Corp shipments from manufacturers and reallocate these goods for shipment to its individual * Inventory continues to churn at a faster rate warehouses, generally in less than 24 hours. The Company￿s warehouse format averages * Average CROIC but somewhat consistent approximately 140,000 square feet. Its warehouses operate on a seven-day, 69-hour week. It carries an average of approximately 4,000 active stockkeeping units (SKUs) per warehouse in its core warehouse business. Many consumable products are offered for sale in case,







Eaton Corp

Eaton Corporation (Eaton) is a diversified power management company. The Company is engaged in the manufacturing of electrical components and systems for power quality, distribution and control; hydraulics components, systems and services for industrial and mobile equipment; aerospace fuel, hydraulics and pneumatic systems for commercial and military use, and truck and automotive drivetrain and powertrain systems for performance, fuel economy and safety. In July 2009, the Company announced that Eaton's Automotive and Truck Groups are being consolidated into one operating unit. The combined organization will be known as the Vehicle Group. On July 31, 2008, the Company acquired PK Electronics. On July 31, 2008, the Company completed the acquisition of the engine valves business of Kirloskar Oil Engines Limited. On October 2, 2008, the Company acquired Integ Holding Limited. In September 2009, Eaton acquired an additional 50% of the outstanding shares of Micro Innovation Holding AG.

* Looking back at my previous ETN stock analysis, looks like my assumptions were over conservative. * CROIC has been amazing past 10 years. Management is doing a great job of using its cash. * Plenty of FCF * Debt level has been the same past few years * 8c from every dollar of sales converts down to the bottom line * Good margins prove the business can make money during a hard recession * Regression of earnings compared over multiple timeframes is flat meaning that growth is coming from other than organic business. Shown by the goodwill balance which I also discussed in the previous ETN stock valuation.







Gannett Co Inc

* Horrific year in 2008 Gannett Co., Inc. is an international news and information company. In the United States, * Huge impairments of goodwill and PP&E the Company publishes 85 daily newspapers, including USA TODAY, and nearly 850 non* Printing equipment would also be of little value if daily publications. Along with each of its daily newspapers, the Company operates Websites resold offering news, information and advertising that is customized for the market served and * Totally contrarian investment integrated with its publishing operations. Newspaper publishing operations in the United * Declining sales since 2006 and so has earnings Kingdom, operating as Newsquest, include 17 paid-for daily newspapers, almost 200 non* Amazing CROIC despite performance. Excellent daily publications, locally integrated Websites and classified business Websites with national management reach. The company has three principal business segments: publishing, digital and * Business operations can generate FCF broadcasting. * Declining capex General Electric Company (GE) is a diversified technology, media and financial services company. Its products and services include aircraft engines, power generation, water processing, security technology, medical imaging, business and consumer financing, media content and industrial products. As of December 31, 2008, GE operated in five segments: Energy Infrastructure, Technology Infrastructure, NBC Universal, Capital Finance and Consumer & Industrial. In January 2009, the Company acquired Interbanca S.p.A., an Italian corporate bank. In April 2008, Oil & Gas completed the acquisition of the Hydril Pressure Controls business from Tenaris. In September 2008, the Company announced the sale of its Japanese consumer finance business to Shinsei Bank. During the year ended December 31, GlaxoSmithKline plc (GSK) is a global healthcare group, which is engaged in the creation and discovery, development, manufacture and marketing of pharmaceutical products, including vaccines, over-the-counter (OTC) medicines and health-related consumer products. GSK￿s principal pharmaceutical products include medicines in the therapeutic areas, such as respiratory, central nervous system, anti-virals, anti-bacterials, metabolic, vaccines, cardiovascular and urogenital, oncology and emesis. It has operations in some 114 countries and products sold in over 150 countries. The Company operates in two segments: Pharmaceuticals (prescription pharmaceuticals and vaccines) and Consumer Healthcare. On October 14, 2008, it acquired the Egyptian mature products business of Bristol Myers Squibb Company (BMS). In July 2009, BMS' branded generics business, which comprises a portfolio of 13 branded pharmaceuticals was acquired by the Company. In July 2009, GSK acquired Stiefel Laboratories, Inc. * Plenty of cash from all of its operations * High debt ratio and increasing past 2-3 years * Average CROIC of 3% * FCF/Sales is pretty good at 8% * Stable inventory turnover in line with past 10 years * Maybe a good company but not great







General Electric Co







Glaxosmithklineadr ADR rep 2 ord shs

* Lots of FCF but slow growth * Excellent CROIC above 30%. Able to make returns of over 30% from their use of cash. * Pharma companies also are able to drop the sales figures directly to the FCF line * High margins and returns as expected from drug companies * Big drop is tangible shareholders equity due to goodwill fr0m acquisition activity







Home Depot Inc

The Home Depot, a home improvement retailer. The Home Depot stores sell an * Struggled with the housing bust assortment of building materials, home improvement and lawn and garden products, and * Low growth provide a number of services. The Home Depot stores average approximately 105,000 * Slowed down opening new stores dramatically if you square feet of enclosed space, with approximately 24,000 additional square feet of outside look at capex further garden area. During the fiscal year ended February 1, 2009 (fiscal 2008), the Company had * Plenty of FCF 2,233 The Home Depot stores located throughout the United States, including the * Average CROIC, FCF/Sales, Revenue growth, earning Commonwealth of Puerto Rico and the territories of the United States Virgin Islands and growth Guam, Canada, China and Mexico. On January 26, 2009, the Company announced the closing of its EXPO, THD Design Center and Yardbirds stores. Ingersoll-Rand plc, formerly Ingersoll-Rand Company Limited, along with its subsidiaries, is a * Big increase in goodwill in 2008 diversified, global company that provides products, services and solutions to enhance the * FCF positive yet erratic at times. Median of 11% FCF quality of air in homes and buildings, transport and protect food and perishables, secure growth homes and commercial properties, and enhance industrial productivity. The Company has * Excellent CROIC. Buffett sure does a good job of four segments: Air Conditioning Systems and Services, Climate Control Technologies, picking effective management at the helm Industrial Technologies and Security Technologies. The Company generates revenue * Consistency in ROA and ROE when looking at multiple primarily through the design, manufacture, sale and service of a diverse portfolio of timeframes industrial and commercial products that include brand names, such as Club Car, Hussmann, * Revenue growth on the low side Ingersoll-Rand, Schlage, Thermo King and Trane. On June 5, 2008, the Company completed the acquisition of Trane Inc. Iron Mountain Incorporated (IMI) provides information protection and storage services. These services can be divided into three service categories: records management services, * Lost more FCF than it made throughout the past 10 data protection and recovery services, and information destruction services. The Company years offers both physical services and technology solutions in each of these categories. Media * None or very low FCF growth, CROIC, returns formats can be divided into physical and electronic records. Physical records include paper * Steady increase in sales but can’t convert it to FCF documents, as well as all other non-electronic media such as microfilm and microfiche, * Doesn’t look like a Buffett pick at all master audio and videotapes, film, X-rays and blueprints. Electronic records include email and various forms of magnetic media such as computer tapes and hard drives and optical disks. IMI derives most of its revenues from the storage of paper documents and storage- a Johnson & Johnson is engaged in the research and development, manufacture and sale of range of products in the healthcare field. Johnson & Johnson has more than 250 operating companies. The Company operates in three segments. The Consumer segment includes a range of products used in the baby care, skin care, oral care, wound care and women￿s Good to excellent everything as I mentioned in the JNJ healthcare fields, as well as nutritional and over-the-counter pharmaceutical products. The analysis. Pharmaceutical segment includes products in the therapeutic areas, such as anti-infective, antipsychotic, cardiovascular, contraceptive, dermatology, gastrointestinal, hematology, immunology, neurology, oncology, pain management, urology and virology. The Medical Devices and Diagnostics segment includes a range of products distributed to wholesalers, Kraft Foods Inc. (Kraft) is engaged in manufacturing and marketing packaged food products, including snacks, beverages, cheese, convenient meals and various packaged grocery * Margins decreasing for more than 7 years straight products. During the year ended December 31, 2008, the Company have operations in more * Inventory turnover has been improving than 70 countries and sell the products in approximately 150 countries. The Company * No FCF growth manages and operates, through two commercial units: Kraft North America and Kraft * Makes 22c of every $1 invested (CROIC=22%) International. Kraft North America operates in the United States and Canada. On August 4, * Growth is minimal 2008, the Company completed the spin-off of its post cereals business. The brands of the * Increasing debt Company span five consumer sectors: snacks, beverages, cheese, grocery and convenient meals. * Better growth opportunity that Home Depot * Good FCF growth but CROIC is very low at 2%. Better Lowe￿s Companies, Inc. is a home improvement retailer. As of January 30, 2009, the than nothing but not effective with utilizing capital. Company operated 1,638 stores across 50 states and 11 stores in Canada. Its 1,649 stores * Good revenue and earnings growth represent approximately 187 million square feet of retail selling space. The Company serves * Gross margins increasing to date homeowners, renters and commercial business customers. Homeowners and renters * Debt down to average levels primarily consist of do-it-yourself (DIY) customers and do-it-for-me (DIFM) customers who * Tangible book value increasing utilize the Company￿s installed sales programs, as well as others buying for personal and * ROE and ROA declining past 2 years family use. Commercial business customers include those who work in the construction, * Sales flat since 2007 repair/remodel, commercial and residential property management, and business * The macro idea that people will continue to repair and maintenance professions. The Company offers a line of products and services for home improve houses still doesn’t work well in a recession. decorating, maintenance, repair, remodeling and property maintenance. * If I had to choose LOW or HD, I would go for LOW. Or be like Buffett and get both.







Ingersoll-Rand plc







Iron Mountain Inc







Johnson & Johnson







Kraft Foods Inc







Lowe's Companies Inc







M&T Bank Corp



Moody's Corp

M&T Bank Corporation (M&T) is a bank holding company. As of December 31, 2008, the Company had two wholly owned bank subsidiaries: M&T Bank and M&T Bank, National Association (M&T Bank, N.A.). The Banks offer a range of commercial banking, trust and (Financials are outside my circle of competence) investment services to its customers. M&T Bank operates branch offices in New York, Maryland, Pennsylvania, Delaware, New Jersey, Virginia, West Virginia and the District of Columbia. M&T operates in six segments: Business Banking, Commercial Banking, Commercial Real Estate, Discretionary Portfolio, Residential Mortgage Banking and Retail Moody￿s Corporation (Moody￿s) is a provider of credit ratings and related research, data and analytical tools, quantitative credit risk measures, risk scoring software, and credit portfolio management solutions and securities pricing software and valuation models. The (Financials are outside my circle of competence) Company operates in two segments: Moody￿s Investors Service (MIS) and Moody￿s Analytics (MA). The MIS segment publishes credit ratings on a range of debt obligations and the entities that issue such obligations in markets worldwide, including various corporate and governmental obligations, structured finance securities and commercial paper NRG Energy, Inc. (NRG) is a wholesale power generation company. NRG is engaged in the * Had a big year in 2008 ownership, development, construction and operation of power generation facilities, the * Big margins increase in 2008 and since 2005 transacting in and trading of fuel and transportation services, and the trading of energy, * Increase in short term and long term debt capacity and related products in the United States and select international markets. As of * Company is able to make money but its returns are ont December 31, 2008, NRG had a total portfolio of 189 active operating generation units at 48 he low side. power generation plants, with an aggregate generation capacity of approximately 24,005 * Mean ROA and CROIC of 2.7% and 5% respectively. megawatt, and approximately 550 megawatt under construction, which includes partners￿ Lower than competition interests of 275 megawatt. In addition, NRG has ownership interests in two wind farms * FCF isn’t consistent. representing an aggregate generation capacity of 270 megawatt, which includes partner * Huge increase in capex in 2008 interests of 75 megawatt. On April 28, 2008, NRG completed the sale of its 100% interest in * Large amount of taxes deferred. Tosli Acquisition B.V. In May 2009, Reliant Energy, Inc. completed the sale of its Texas retail * Still converts 12% of sales into FCF business to NRG.





NRG Energy Inc







Nalco Holding Co

* Needs to improve efficiency. 40+% margins but negative net income or low single digits at best isn’t good Nalco Holding Company (Nalco) is the provider of integrated water treatment applications * Decrease in intangibles suggests bad acquisitions and to prevent corrosion, contamination and the buildup of harmful deposits. The Company has mistakes by management a sales and service team of 7,000 technically trained professionals serving more than 70,000 * Long term debt is steady customers in a range of end markets, including aerospace, chemical, pharmaceutical, * Been buying back stock petroleum, steel, power, food and beverage, medium and light manufacturing, marine and * FCF isn’t reliable. Lots of cash come from “other” pulp and papermaking industries as well as institutions such as hospitals, universities and income hotels. Nalco operates in three business segments: industrial and institutional services, * Low returns, cash and earnings growth energy services and paper services. * Doesn’t look like something Buffett would buy








NIKE, Inc. (NIKE) is engaged in the design, development and worldwide marketing of footwear, apparel, equipment, and accessory products. NIKE sells athletic footwear and * Great company, leader, innovator, huge moat athletic apparel. It sells its products to retail accounts, through NIKE-owned retail, including * Drop in margins in 2008 but increased inventory stores and Internet sales, and through a mix of independent distributors and licensees, in turnover over 170 countries around the world. Running, training, basketball, soccer, sport-inspired * Low debt with plenty of cash casual shoes, and Kid￿s shoes are its footwear categories. It also markets shoes designed * Can pay off debt with FCF easily for aquatic activities, baseball, cheerleading, football, golf, lacrosse, outdoor activities, * Don’t have to go in detail with numbers. They are just skateboarding, tennis, volleyball, walking, wrestling, and other athletic and recreational too good. uses. It sells a line of performance equipment under the NIKE brand name, including bags, socks, sport balls, eyewear, timepieces, electronic devices, bats, gloves, protective equipment, golf clubs, and other equipment designed for sports activities. Norfolk Southern Corporation (Norfolk Southern) controls a freight railroad, Norfolk * Looks to be a better company than BNI Southern Railway Company. Norfolk Southern Railway Company is primarily engaged in the * Good top line growth rail transportation of raw materials, intermediate products and finished goods primarily in * Decrease in gross profit but managed to increase net the southeast, east and Midwest and, via interchange with rail carriers, to and from the rest margins of the United States. Norfolk Southern also transports overseas freight through several * Lots of FCF and excellent FCF growth Atlantic and Gulf Coast ports. The Company provides logistics services and offers an * Low end for CROIC at 4% intermodal network in the eastern half of the United States. Norfolk Southern and CSX * Debt can be handled with FCF rather than taking on Corporation (CSX) jointly own Conrail Inc. (Conrail), whose primary subsidiary is additional debt Consolidated Rail Corporation (CRC). The Procter & Gamble Company (P&G) is focused on providing branded consumer packaged goods. The Company￿s products are sold in over 180 countries worldwide primarily through mass merchandisers, grocery stores, membership club stores, drug stores and in high* Wrote about PG briefly in the Best Stocks to retire list frequency stores, the neighborhood stores, which serve consumers in developing markets. * FCF growth above 18% As of June 30, 2009, the Company was organized into three Global Business Units: Beauty; * CROIC at 60%! Mindblowing. Health and Well-Being, and Household Care. The Company had six business segments under * Only negative is big drops in tangible shareholders United States Generally Accepted Accounting Principles (GAAP): Beauty; Grooming; Health equity Care; Snacks and Pet Care; Fabric Care and Home Care, and Baby Care and Family Care. In * Stable margins. Net margins even increased in 2008 August 2009, AnimalScan, LLC announced that it has acquired Iams Pet Imaging, LLC from * Good stable dividend The Procter & Gamble Company and ProScan Imaging. In November 2008, the Company completed the divestiture of its Coffee business through the merger of its Folgers coffee subsidiary into The J.M. Smucker Company.







Norfolk Southern Corp







Procter & Gamble Co







Sanofi-Aventis is a pharmaceutical group engaged in the research, development, manufacture and marketing of healthcare products. The Company's business includes two main activities: pharmaceuticals and human vaccines through sanofi pasteur. In its pharmaceutical activity, Sanofi-Aventis specializes in six therapeutic areas: thrombosis, cardiovascular, metabolic disorders, oncology, central nervous system (CNS) and internal Sanofi Aventis ADR medicine. The Company offers vaccines in five areas: pediatric combination vaccines, Each Representing One influenza vaccines, adult and adolescent booster vaccines, meningitis vaccines, and travel Half Of One Ord Shs and endemic vaccines. On September 1, 2008, Sanofi-Aventis acquired the Australian company, Symbion CP Holdings Pty Ltd (Symbion Consumer). On September 25, 2008, it acquired Acambis plc. In January 2009, the Company sold its French plant of Colomiers to French pharmaceutical company Unither. In April 2009, the Company acquired Mexican generic company, Laboratorios Kendrick.

# Stats look good but some metrics are quite erratic # FCF growth is up and down # Top line isn’t so consistent # FCF and earnings growth is relatively low # Has outstanding returns and converts it to plenty of FCF # Debt is not an issue







SunTrust Banks Inc



Torchmark Corp

SunTrust Banks, Inc. is a diversified financial services holding company whose businesses provide a range of financial services to consumer and corporate clients. The Company operates in four business segments: retail and commercial, wholesale banking, mortgage, (Financials are outside my circle of competence) and wealth and investment management. On May 1, 2008, the Company completed the acquisition of GB&T Bancshares, Inc. (GB&T). On May 30, 2008, the Company sold its interests in First Mercantile Trust Company (First Mercantile), a retirement plan services subsidiary. On September 2, 2008, the Company sold its fuel card business, TransPlatinum Torchmark Corporation (Torchmark) is an insurance holding company. Torchmark through its subsidiaries provides a variety of life and health insurance products and annuities to a broad base of customers. Torchmark is the holding company for a group of insurance companies, which market primarily individual life and supplemental health insurance, and to (Financials are outside my circle of competence) a limited extent annuities, to middle income households throughout the United States. Its primary subsidiaries are American Income Life Insurance Company (American Income), Liberty National Life Insurance Company (Liberty), Globe Life And Accident Insurance





US Bancorp (Del)

U.S. Bancorp operates as a financial holding company and a bank holding company. U.S. Bancorp provides a range of financial services, including lending and depository services, cash management, foreign exchange, and trust and investment management services. It also engages in credit card services, merchant and Automated Teller Machine (ATM) processing, mortgage banking, insurance, brokerage and leasing. U.S. Bancorp￿s banking subsidiaries are engaged in the general banking business, principally in domestic markets. The subsidiaries provide a range of products and services to individuals, businesses,

(Financials are outside my circle of competence)




USG Corp

USG Corporation (USG), through its subsidiaries, is a manufacturer and distributor of building materials, producing a range of products for use in new residential, new nonresidential, and repair and remodel construction, as well as products used in certain industrial processes. The Company is organized into three reportable segments: North American Gypsum, Building Products Distribution and Worldwide Ceilings, the net sales of which accounted for approximately 46%, 38% and 16%, respectively, of its consolidated net sales during the year ended December 31, 2008. North American Gypsum manufactures and markets gypsum and related products in the United States, Canada and Mexico. Building Products Distribution consists of L&W Supply, a specialty building products distribution business in the United States. USG￿s Worldwide Ceilings segment manufactures and markets interior systems products worldwide.

* Rose with the housing market. Dropped with the housing market. * The capex numbers show in hindsight how USG had high capex at the peak of the housing bubble. * Been losing a lot of cold hard cash in the process - FCF * Tiny gross profits from good revenue * Turnover back down to 10.9 compared to 12.2 from the previous year * Even if I ignore 2008 numbers and imagine looking at the company in 2006 or 2007, numbers still aren't great. No reliable data or numbers to calculate intrinsic value. Only thing I can say with certainty is that the tangible book value is at $14.14. * Good tangible book value growth. Shows that growth is organic. * Top line growth is impressive. Median of 33% in the past 5 years. * CROIC is just below 2%. Only makes 2c off every $1 of cash invested. * FCF growth isn't much to consider unless you compare it to capex. * Seems like earnings and FCF is realized 3 years after the capex outlay. * Consistent reduction in debt. * Rising margins since 2004 to highest levels. * NSC still looks to be the better company.







Union Pacific Corp

Union Pacific Corporation (UPC) is engaged in the transportation business. The Company￿s operating company, Union Pacific Railroad Company (UPRR), links 23 states in the western two-thirds of the United States. Union Pacific Railroad Company￿s business mix includes agricultural products, automotive, chemicals, energy, industrial products and intermodal. UPRR has approximately 32,012 route miles, linking Pacific Coast and Gulf Coast ports with the Midwest and eastern United States gateways and providing several corridors to Mexican gateways. The freight traffic consists of bulk, manifest and premium business. Bulk traffic consists of coal, grain, rock, or soda ash in unit trains. Manifest traffic is individual carload or less than train-load business, including commodities, such as lumber, steel, paper and food. The transportation of finished vehicles and intermodal containers is part of the premium business.







United Parcel Service Inc

* Huge moat. United Parcel Service, Inc. (UPS) is a package delivery company. The Company delivers * Stock price affected by high oil price. packages each business day for 1.8 million shipping customers to 6.1 million consignees in * Reducing capex past 2 years. How will it affect future over 200 countries and territories. During the year ended December 31, 2008, UPS delivered results? an average of 15.5 million pieces per day worldwide, or a total of 3.92 billion packages. Its * Past 5 years hasn't been great for UPS. Went no primary business is the time-definite delivery of packages and documents worldwide. UPS where. operates in three segments: U.S. Domestic Package operations, International Package * Good stable CROIC at 11% operations, and Supply Chain & Freight operations. U.S. Domestic Package operations * Earnings YOY isn't good. Shows a decline. include the time-definite delivery of letters, documents, and packages throughout the * Margins are good but there are huge overhead costs as United States. International Package operations include delivery to more than 200 countries expected. 75+% gross margin but only 6-9% net margin. and territories worldwide. Supply Chain & Freight includes its forwarding and logistics * Big rise in debt operations, UPS Freight, and other related business units. * Still better than FDX







UnitedHealth Group Incorporated (UnitedHealthcare) is a diversified health and well-being company. The Company operates in four segments: Health Care Services, OptumHealth, Ingenix and Prescription Solutions. The Health Care Services segment consists of UnitedHealthcare, Ovations and AmeriChoice businesses. OptumHealth serves approximately 60 million individuals with its diversified offering of health, financial and ancillary benefit services and products that assist consumers in navigating the healthcare UnitedHealth Group Inc system and accessing services. Ingenix offers database and data management services, software products, publications, consulting and actuarial services and business process outsourcing services. Prescription Solutions offers a suite of integrated pharmacy benefit management services to approximately 10 million people, through approximately 60,000 retail network pharmacies and two mail service facilities as of December 31, 2008. On May 30, 2008, it acquired Unison Health Plans. WABCO Holdings Inc. is a provider of electric and electromechanical products for commercial truck, trailer, bus and passenger car manufacturers. The Company manufactures and sells control systems, including advanced braking, stability, suspension, transmission control, and air compressing and processing systems. The Company operated as the vehicle controls systems business division within American Standard Companies Inc. On July 31, 2007, the Company was spun off from American Standard Companies Inc. Subsequent to its spin off American Standard Companies Inc. changed its name to Trane Inc. (Trane). On June 5, 2008, Trane was acquired in a merger with Ingersoll-Rand Company Limited. On June 3, 2009, the Company increased its equity investment in its joint venture,

* Healthcare is a great industry for cash flows. * Highly profitable business but has a lot of economic factors involved * Universal healthcare is just uncertainty which provides a better deal for investors * Outstanding FCF, CROIC and profitability return numbers * Huge drop in tangible shareholders equity * Try looking at the smaller healthcare companies.







WABCO Holdings Inc

Too short inconsistent history to provide reliable comments







Wal-Mart Stores Inc

* FCF doubled compared to past year. Highest its ever been. Wal-Mart Stores, Inc. (Walmart) serves customers and club members more than 200 million * No change in margins. WMT doesn't need to lower times per week at more than 8,000 retail units under 53 different banners in 15 countries. margins. The Company operates in three business segments: Walmart U.S. and Sam￿s Club in the * Highest inventory turnover rate ever in 10 years at 8.9 United States, and Walmart International in 14 countries and Puerto Rico. In January 2009, (although COST has better turnover) the Company acquired 57% of D&S S.A. * Tangible book value consistently up. * Good top line and bottom line growth. * Rock solid. The Washington Post Company is a diversified education and media company. The * Media has been one of the worst industries in the past Company￿s Kaplan, Inc. (Kaplan) subsidiary provides a variety of educational services, both year. Especially with everyone believing that newspapers domestically and outside the United States. The Company￿s media operations consist of thewill become extinct. ownership and operation of cable television systems, newspaper publishing (principally The * Fiscal 2008 saw a big decline in everything. Sales, Washington Post), television broadcasting (through the ownership and operation of six profit, cash, book value, ROE, ROA television broadcast stations) and magazine publishing (principally Newsweek). The * Management still used its cash effectively with a CROIC Company￿s operations in geographic areas outside the United States consist primarily of of 12.2% Kaplan￿s foreign operations and the publication of the international editions of Newsweek. * FCF positive with stable capex. During the year ended December 31, 2008, these operations accounted for approximately * Capital expenditures have been steady for 4-5 years 13% of the Company￿s consolidated revenues, and the identifiable assets attributable to now. foreign operations represented approximately 13% of the Company￿s consolidated assets, * Tells me that most of the current $280mil in capex is during 2008. due to maintenance rather than growth. Wells Fargo & Company (Wells Fargo) is a financial holding company and a bank holding company. The Company is a diversified financial services company providing retail, commercial and corporate banking services through banking stores located in 39 states and the District of Columbia. It provides other financial services through subsidiaries engaged in (Financials are outside my circle of competence) various businesses, principally wholesale banking, mortgage banking, consumer finance, equipment leasing, agricultural finance, commercial finance, securities brokerage and investment banking, insurance agency and brokerage services, computer and data WellPoint, Inc. (WellPoint) is a health benefits company serving 35 million medical members, as of December 31, 2008. The Company is an independent licensee of the Blue Cross and Blue Shield Association (BCBSA), an association of independent health benefit * Again, Buffett likes to buy in pairs. plans. It serves its members as the Blue Cross licensee for California and as the Blue Cross * Much like UNH. Great cash flow, great numbers. and Blue Shield (BCBS), licensee for Colorado, Connecticut, Georgia, Indiana, Kentucky, * By the numbers, I prefer UNH. Maine, Missouri (excluding 30 counties in the Kansas City area), Nevada, New Hampshire, * Dependent on macro factors. New York, Ohio, Virginia, and Wisconsin. In a majority of these service areas, it does business as Anthem Blue Cross, Anthem Blue Cross Blue Shield or Empire Blue Cross Blue Shield. The Company also serves its members throughout businesses, through its direct or Wesco Financial Corporation is engaged in three principal the country as UniCare. WellPoint indirect wholly owned subsidiaries: the insurance business, through Wesco-Financial Insurance Company (Wes-FIC) and engages in the property and casualty insurance business, and The Kansas Bankers Surety Company (KBS) purchased by Wes-FIC in 1996 and provides (Financials are outside my circle of competence) specialized insurance coverages for banks; the furniture rental business, through CORT Business Services Corporation (CORT), which traces its presence to the combination of five regional furniture rental companies in 1972 and was purchased by Wesco in 2000, and the







Washington Post Co







Wells Fargo & Co




WellPoint Inc







Wesco Financial Corp


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