Professor Glen Arnold

At Berkshire Hathaway’s AGM in Omaha Buffett and Munger spend over six hours answering questions. I thought it might be worthwhile passing on some of these ideas. In May 2016 Buffett and Munger were asked about the search for businesses generating very high rates of return on capital.   They would like to find one after another, but […]

Eleven years ago Buffett offered a bet ($500,000 to go to charity) that no investment professional could select a set of at least five hedge funds that would over a period of ten years match the performance of the S&P500 after fees. He choose a low-cost Vanguard S&P fund as his contender. “I explained [in […]

Many of the UK companies I analyse “adjust” their earnings numbers by excluding certain items that they are forced to include in the proper – accounting body rules – income statement. Thus they draw up two sets of numbers and try to direct your attention away from the statutory version, and towards the one they […]

In Buffett’s latest letter to Berkshire Hathaway shareholders he provides guidance on what we should be looking for regarding the return a business makes in terms of profits relative to the capital devoted to it. We would all like to find businesses where managers are so brilliant or the economic franchise is so strong that […]

Eleven years ago Buffett offered a bet ($500,000 to go to charity) that no investment professional could select a set of at least five hedge funds that would over a period of ten years match the performance of the S&P500 after fees. He choose a low-cost Vanguard S&P fund as his contender. “I explained [in […]

In Buffett’s 2016 letter to shareholders he draws his shareholder’s attention to the distinction between “earnings power” and reported accounting earnings. He states “What We Hope to Accomplish: Charlie Munger, Berkshire’s Vice Chairman and my partner, and I expect Berkshire’s normalized earning power per share to increase every year. Actual earnings, of course, will sometimes […]

I recently wrote a series of Newsletters highlighting the extraordinary level of US shares (see 22nd – 27th Feb 2017).  Using the highly respected cyclically adjusted price earnings ratio, CAPE, based on ten years of earnings, the market has never been this high, except on two occasions – those years are 1929 and 1999. Warren […]

I’d like to draw your attention to important value investing principles highlighted in Warren Buffett’s most recent letter to Berkshire Hathaway shareholders. I’ll start with a discussion of what is a reasonable return for an investor, what is exceptional, and what is an unreasonable expectation. Buffett observes that the compounded annual gain in the S&P500 […]

I discussed Braemar last month and concluded that it was one for my Modified price earnings ratio portfolio (Newsletters: 24th March – 4th April). The latest annual results have just been published, giving the market a jolt, and sending the share down. So let’s see if it still qualifies for purchase. Cyclically adjusted price earnings […]

N Brown (LSE:BWNG) has gone through five years of upheaval: it has moved most of its custom to digital platforms; replaced most of the senior management and reduced the workforce; pushed into overseas markets, and; invested in a costly IT system. During this period of transition earnings per share fell from around 29p to only […]