Professor Glen Arnold

Warren Buffett buys a second shoe manufacturer

Aug 14 2020 @ 11:05
Lowell Shoe Inc. was the second firm to go into Berkshire Hathaway’s Shoe Group. Warren Buffett was encouraged to buy it because he had witnessed the first shoe company bought, H. H. Brown, performing well in the the six months after purchase on July 1, 1991. Turnover was $104m and after-tax earnings $8.6m.   Then in its first […]
 

Why did Warren Buffett buy a shoe manufacturer?

Aug 13 2020 @ 10:59
When the creator of the specialist boots and shoes company H. H. Brown died in December 1990 aged 92 his family concluded that it was best if the company were sold. Frank Rooney, CEO and son-in-law, took up the task of finding a buyer with the help of Goldman Sachs and their pack of material […]
 

Warren Buffett's Shoe Group: a case study in success and failure

Aug 12 2020 @ 10:48
This story covers what Buffett himself declared as his “most gruesome error”. Within a few short years the value of $433m paid for the third company bought to build Berkshire Hathaway’s Shoe Group, Dexter, had evaporated completely.  It wouldn’t be quite so painfully seared on Buffett’s mind if he had paid cash. Okay, that’s $433m […]
 

Samuel Heath - Return on net tangible assets

Aug 05 2020 @ 10:54
Samuel Heath (LSE:HSM) has been consistently profitable, but has it produced good returns on net tangible assets? Also, given the strong link between a company’s return on net tangible assets over the long stretch and share performance will it be enlightening to estimate intrinsic value using return on net tangible assets data? To answer these […]
 

Samuel Heath - Owner earnings and intrinsic value

Aug 04 2020 @ 10:26
It is important to examine Samuel Heath (LSE:HSM) with an income metric better than conventional profits after tax. Normal earnings fail to properly consider the annual cash outflows which end up being spent on more fixed assets and on working capital items (inventory and receivables in particular) just to support the current strategic market position, […]
 

Samuel Heath – the people

Jul 31 2020 @ 10:56
Samuel Heath (LSE:HSM) is a Birmingham metalworker turning lumps of brass into bathroom fittings and door handles – and charging high prices for top quality. For two hundred years has been dominated by the Heath family. Even today 79% of the shares are “not in public hands”, with most of those owned by various family […]
 

Samuel Heath – Financial distress risk

Jul 30 2020 @ 03:00
While Samuel Heath (LSE:HSM) has an impressive history of profits for a £5m market capitalisation company (see yesterday’s newsletter) it is going into a period when sales may fall by over one-third. Will it survive? I’ll look at its balance sheet where the largest burden is the pension deficit. The pension liability needs analysis to […]
 

Samuel Heath – a deep value investment?

Jul 29 2020 @ 10:15
Samuel Heath (LSE:HSM) is a very old Birmingham manufacturer of brass bathroom hardware (taps, etc) and door handles. It makes those pricier items you see selling through posh bathroom showrooms, etc.   It listed on the stock market way back, in 1890. Since then it has not grown very much, sticking to one factory in the […]
 

Caffyns - Financial distress risk

Jul 24 2020 @ 07:15
Caffyn’s (LSE:CFYN) has a good history of profits from selling cars and renting property.  It has also managed its property assets well over the years. But now is crunch-time – profits from these activities are likely to disappear for some time.  The question for this newsletter is whether Caffyns is in a strong position to […]
 

Caffyns sold – at a loss

Jul 23 2020 @ 07:26
Last week I sold my shares in the Southeast car showroom company Caffyns  (LSE:CFYN) at a significant loss on the £5.01 I paid in August 2017. I have received 52.5p in dividends over the three years but sold the shares for only £2.39 so the loss is 42%. The two main attractions for holding are […]
 
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