DooDiligence

www.cornerofberkshireandfairfax.ca/forum/berkshire-hathaway/berkshire-ability-to-use-cash/msg324055/#msg324055

Yesterday

Happy Christmas everyone, felt elf hat's are fun. Light up for Hanukkah, with a cool crocheted yarmulke. It'll warm up soon for Ramadan, hope there's no need for taqiyah. The previous prose, has a quirky sounding flow, but eventually it'll rhyme, just give it some time.

-----)side note vs above I've looked briefly at EW a few times (including after some comments of yours). It makes sense that this company has done very well over the long term (that's easy to say now) and it is reasonable to expect that the future will look like the past. The Fogarty and the Swan Ganz catheters were landmarks and they seem to be a the right place with their newer valves (really fascinating stuff). I understand that they had developed peripheral blood vessel stent technology which they sold to Bard and that ended up eventually in BDX's portfolio. It seems that management felt that they had not achieved sufficient scale for profitability. Some could say that this looks now like a nifty-fifty stock after such growth and such recognition of growth. Obviously, the best time to buy these kinds of stocks is during downturns but that's obvious mostly in hindsight. If you have a long term mindset, if your return objectives are relatively reasonable and if the future ends up similar to the past, a PE of 61.1 can make sense. https://www.macrotrends.net/stocks/charts/EW/edwards-lifesciences/pe-ratio http://csinvesting.org/wp-content/uploads/2015/03/valuing-growth-stocks-revisiting-the-nifty-fifty.pdf Congratulations for this pick and good luck for the future. -----)Back to a better health... I bought this in 2013 when they were fighting a patent infringement lawsuit over TAVR with Medtronic. www.dicardiology.com/article/us-jury-finds-medtronic-corevalve-infringes-edwards-transcatheter-valve-patent I was working in Brasil at the time & spent a month reading up on heart function & watching youtube videos on valve replacement. There was also a group of attorneys trying to find a lead plaintiff for a shareholder lawsuit against Edwards, claiming they had overstated the potential for TAVR. I thought this was bogus as Mussalem had clearly stated that the product was indicated for at risk patients only, who couldn't tolerate having their chests cracked open for a traditional valve replacement, and that the procedure would add upwards to 2 years to their lives. I also guessed correctly that TAVR would slowly get expanded indications. They spent considerably less than MDT to get into this space. www.statnews.com/2019/03/19/the-astounding-19-year-journey-to-a-sea-change-for-heart-patients/ I felt like I understood it well enough & bought in. No lead plaintiff was found in the shareholder suit & they prevailed over MDT. As I said before, the LEAP Calls zoomed up within a year of purchase & I sold them to reduce cost basis in the equity to nearly nothing. Since then, I've sold off some shares to reduce the position & what's left is still many times over what I initially paid. I acknowledge the role of luck. --- The moral of the story: My mistake with MO was a direct result of the success with the EW LEAPS. I had waited for years in search of a similar setup & thought I'd found one. Amateur speculator. --- I hope for just one more plate of acorns over the next decade (maybe BRK). --- Sorry for the thread highjack but I get so few occasions to outline a successful investment which was truly based on a measure of due diligence (instead of doo doo diligence). To actually wing another one for a future gain & share it here (before the gain) would be rewarding.

An interesting aspect is that all attempts aiming for cost containment that have been tried have not been successful so far. A strategy would be to try more of the same with an expected different result, another strategy would be to reframe the foundations which is basically not possible. Still, using the heart stent example below, it appears that the system may be ready for some significant (and constructive) changes. If you play with the link provided by Spekulatius, you can find that the cost to insert heart stents (cost of procedure and estimated cost of stent) is a large multiple compared to other countries. Because of innovation, it is understandable that the cost may be superior but clearly not enough to be a multiple. Also, it is becoming increasingly clear (evidence-based, multiple references available upon request including a large international study just published last November) that stents mostly do not result in significant benefits in chronic and stable heart disease. Despite this, in all countries but especially in the US (by a large margin), stents continue to be inserted without any restraint. Finally, some groups, who are aligning incentives, are designing ingenious protocols to replace invasive procedures and expensive drugs. We are only at the forefront of this wave but it is coming. If I'm right, you may want to adjust sales and profitability for those involved in the stent market: Medtronic (MDT), Cardinal Health (CAH), Abbott (ABT), Boston Scientific (BSX), Becton Dickinson (BDX), Terumo and MicroPort Scientific on the OTC market. https://www.eurekalert.org/pub_releases/2019-08/kp-kpr082719.php I thought you had left Edwards Lifesciences out in order to spare me any angst, so I did some digging & when I couldn't find anything conclusive, I sent an email to investor relations asking if they were still producing the LifeStent line. I was told that they sold that line to Bard in 2007 & do not have any material revenue from stents. That reinforces my opinion of EW management. I look forward to owning this indefinitely.

I have used this short put strategy a few times & it worked out well. I'll probably do it again in order to back into a position where I already own 1/2 to 2/3 of the equity that I want. I've also sold covered calls with success. --- Thanks as well to Gregmal for your input. --- I'm not much of a short term trader. My crystal ball is murky, at best, even after reading this, https://www.amazon.com/Long-term-front-running-template-market-speculation/dp/1973323400 I'm generally comfortable riding an issue up & down except in the case of MO where I felt they were taking the business in a bad direction. I've read a lot of analysis by people I respect which leads me to believe that MO will turn out OK but I think I'll pass on vice in the future. edit: It's just too gut wrenching.

I am in total agreement. I bought MO $52.50 Jan 2020 Calls in late July of 2018 (equity was at $58) for a premium of $8. They went up slightly after purchase & then plummeted along with the equity. If I would've just bought the equity, I would've been able to hold on for what will probably hopefully be a gain over the next few years. I also bought MO $50 Jan 2021 Calls in late Nov of 2018 (equity was at $53 BTFD) for a premium of $7.50. I have watched a similar but less drastic drop in these options & a slight recovery since. If I'm lucky the 2021 Calls will get me close to breakeven on the option debacle. I was trying to replicate my luck years before with Edwards Lifesciences Calls, where the options nearly paid for my equity. This was an expensive, but not debilitating, lesson & I believe that from now on I'll leave the long Call trading to the experts.

https://www.wareable.com/ar/apple-augmented-reality-ar-smartglasses-3501 "Back in early 2017, Robert Scoble said an anonymous Carl Zeiss employee told him the company was working with Apple on a light pair of augmented reality smartglasses. Carl Zeiss experiments on lenses for augmented reality, so if this is true it's likely that's where Apple's lenses could come from." "In terms of the glass itself, that will likely come from Corning, a big Apple supplier. Corning actually patented something called a Wide Field Display in late 2018, which is used for AR and enables a field of view between 40 and 70 degrees. A good number of AR glasses sport a field of view of 45 degrees, so that's not too bad, but it could be better." --- https://www.macrumors.com/2017/06/26/apple-acquires-sensomotoric-instruments/ I Googled "Vinyard Capital Corp" thinking it might provide more info & found nothing. --- Combining AirPods & iGlasses, Apple could own our heads. For me, the AirPods are unfortunately still inferior to the Bose SoundSport. Incorporating AirPod technology into the iGlasses would eliminate one of my complaints (2 tiny gadgets which can easily be lost). Add an Apple watch into the mix & who needs a handset?

No deal until Trump is finished gorging on market swings.

El Camino Christmas (Netflix) was great.

Could Pilot / Flying J buy Applegreen? What are the chances that WEB starts kicking cash down to subs for acquisitions? I mean, who knows their industry best? (Including all private competitors...)

This seems like a good list for BRK to prospect. www.nceo.org/articles/employee-ownership-100 I don't know how friendly any of these companies would be to a buyout, but the hands off / shareholder friendly philosophy of BRK seems like it would fit well with a majority employee owned business. If top management were onboard, they could sell the idea to employees. Have they ever bought similarly owned businesses? --- Waffle House isn't on this list but seems like it would be a strong business. www.eater.com/2017/5/2/15471798/waffle-house-history-menu Too bad we missed What-A-Burger. I almost never see coupons & the restaurants are always busy. Employees seem happy & I've never experienced attitude or bad food. Kind of like the Publix of fast food.

Why not reboot just like he did with the dissolution of the early Buffett partnership? Then we'd see if he really could rip it up with a smaller capital base. www.businessinsider.com/why-warren-buffet-closed-down-his-first-fund-2016-9

I really like the mental model of a good (or at least decent) business that is undergoing market dislocation of some kind as a potential compounder. Less has to go right, and multiple expansion can improve things materially. One that might fit that narrative right now is Ulta Beauty. Growing, strong economics, but concerns about everyone switching to ecommerce and missed earnings have brought the stock down quite a bit. Morningstar has a very good write up on ULTA. ULTA hasn't been this low since June of 2016 Last time I got interested in retail I visited some mall stores & got over it. Ulta only has around 10% of stores in malls.

A little FOMO cash is a good thing in the right hands. We'll see what results from glacial patience.

CVS for a 12%ish gain in a non-taxable account (chalk one up for luck?) Too much political risk (real & of the jawboning type) + a possible write down on the Aetna purchase = this could drop significantly again --- I'm holding cash for something that looks obvious. Thanks for the time spent by fellow members in helping me understand this & other businesses.

Exactly. Then the question becomes: what enables high interest rates. And the answer there is, scarcity of capital. Now, I would argue that human capital is cheap. Financial capital is cheap. Material capital is cheap. So, what will cause a contraction in capital availability? That is the question. Incineration of capital?

Morningstar's new format looked seriously f'ed up at 1st. But after the initial shock of the format change, & after browsing a few Morningstar profiles, it looks like an improvement. There are a lot more fine grained details available now. Elements of the balance sheet, cash flow & income statements can be expanded or shrunk with a click. New pop up info is available on some fields. Very few page refreshes. Still got to get used to the way some of the data is presented and it's probably better suited to large displays. --- edit: Can't select your own comps any more. You get 2 of whatever they throw up.

Shortening of telomeres? According to my Intro to Biology prof.

Does anyone besides me hate the new Morningstar online data format? It looks like a crappy financial finger painting. Add to that the fact that 1 day the "stock favs" screen shows 20ish questionable 5 star results & the next it shows 400ish questionable 5 star results.

Was it AMD? No. I still work at the company (or rather I should say, I now work there again), so I'd rather not say. Ticker does start with an A though. Followed by a D and an I. That team in Texas that was doing this no longer exists though, they didn't survive the 2000 crash. My Dad worked for AMD a long time ago & the office had a disproportionate number of impressive (yet largely unknown) musicians.

Cool stories. Thanks for sharing. I played guitar for a while, but I always was more an appreciator of music than a musician. I think my syneshtesia might make it harder for me to hear/visualize pitch the way others do (it's not so ordered for me, more a jumble of shapes and colors), and that was always a hindrance learning more advanced techniques and figuring things by ear. Oh well ¯\_(ツ)_/¯ Pitches are a bitch.

Guitar flipping makes it sound fun.

Was it AMD?

Here's a great forum with up to date discussions about Yamaha keys & synths. http://www.motifator.com I've been researching a keyboard upgrade for months & have settled on the MOXF8 instead of the newer MODX8. For some reason, Yamaha cut the sequencer out of the MODX & you have to use a DAW for this function. The MOXF still has an internal sequencer so there's no need to have a laptop open during performances. The sequencer allows you to specify voice changes on the keyboard at specific measures / beats. This is a really nice feature to have & you can get it for $1000 +/- new or used. Yamaha beats Roland IMO unless you want that fully weighted spongy key bed feel. Personally, I like the lighter "graded hammer action" of the Yamaha keyboards. The Yamaha key bed is in between a fully weighted & synth action. Anyone on here play? Guitar, bass, keys, other? I'd love to work up a Weird Al styled set list with rejiggered finance related lyrics, for Warren & Charlie. We could spam the crap out of Omaha until they relent & let us play at an AGM!