Professor Glen Arnold

Be in a position to buy inputs in a competitive market with many suppliers, but sell where you have pricing power: “‘Buy commodities, sell brands’ has long been a formula for business success. It has produced enormous and sustained profits for Coca-Cola since 1886 and Wrigley since 1891. On a smaller scale, we have enjoyed […]

A very simple way to observe the correctness of Buffett and Munger’s prior belief in the power of See’s to raise prices is to look at the amount of candy sold in 1972 and 11 years later in 1982, while also looking at the sales and profit numbers. The table shows the price of a […]

As soon as the purchase was agreed Huggins (now made President and CEO) and Buffett arranged a very simple remuneration package. It was discussed for a mere five minutes, never written on paper and lasted for decades. So much for the need for pay consultant, lawyers and pages of “Directors Remuneration Reports” so beloved of […]

Buffett and Munger were hesitant to buy See’s Candy in November 1971. After all, net tangible assets were only $7m and after-tax profits were about $2m. Thus the asking price of $30m seemed high to them from both the balance sheet perspective and the earnings perspective. Ira Marshall (Munger’s partner at the investment fund Wheeler, […]

Warren Buffett and Charlie Munger arranged for Blue Chip Stamps to buy See’s Candy in 1972. But it was a close run thing. Buffett, the follower of Benjamin Graham, was very concerned about the lack of balance sheet strength relative to the asking price, and refused to increase the price offered to anywhere near the […]

I’m going to continue the Warren Buffett story, focusing on his investment deals and principles, in the next few Newsletters (new subscribers might like to read the story from the beginning by using the search button – there are 40 or so posts). We have got to the point where Buffett has closed the Buffett […]

I sold Fletcher King (LSE:FLK) not because it was a bad business, but because of the bad point in the commercial property cycle. The balance sheet remains exceptionally strong, its profit history is encouraging and the managers are competent and reasonably cognisant of their obligations to minority shareholders. These positives mean that I will continue […]

While we should always keep in mind the resilience Fletcher King (LSE:FLK) has demonstrated in previous property downturns we also need to consider the worrisome words of a forty-year veteran, David Fletcher. In the 2016 Prelims, he started with a statement of stability, “The underlying business performed much in line with last year”. So the […]

In my report following last September’s Fletcher King (LSE:FLK) AGM I wrote, “The people around the table [directors and shareholders] had seen a few London property cycles and, I could be wrong, but I sensed a consensus that we are getting close to midnight here for speculators betting on rising prices, where all turns to […]

If you’re looking for a rapid recovery in turnover and profits for MS International (LSE:MSI) then look away now. If, however, you want to buy into a company with sound fundamentals through business cycles, run by talented managers, then you might find the news from yesterday’s AGM interesting. (Earlier Newsletters on MSI: 8th – 15th […]