stlplaceLast Updated on May 1, 2008 by stlplace
A bit long. It was a talk Buffett gave to MBA students at the Business school at University of Florida, in 1998 (10 years ago). But I promise it’s both fun and educational 🙂
Chinese translation (中文)
English (PDF) (24 pages).
Google Video (88 minutes) original link here.
He talked about “chewing gum business” in the talk (address to question: What makes a company something that you like).
Last Updated on April 30, 2008 by stlplace
Buffett is in the news again yesterday. This time he is playing sidekick (financing) to help Mars to buy Wrigley (NYSE:WWY), the chewing gum company. One interesting Buffett comment I heard from CNBC is “I have doing taste testing of the Wrightly gum for 70 years”.
Fun aside, Buffett and value investing have also been very popular in China in recent years, thanks to the boom/bust of Chinese stock market. There are tons of books on Buffett and his investing strategy, either translated from English, or written by someone who really does not know value investing. I saw a guy (who admires Buffett and claims to be value investor) talked about how great PetroChina is, and encourage small investors to buy at CCTV-2. Now we all know how PetroChina (NYSE:PTR) A share (601857) did.
But I found this one (written by Jingzhou Lawyer, 锦州律师) to be different. I found he has a very good understanding of value investing, much better than many pros in China. So let me quote some:
任何人价值投资的理念是一个三合一的系统。缺少了任何一项都不是真正的价值投资。 价值投资就是：选择强势公司的股，以便宜的价格买入，不轻易交易。
Last Updated on April 27, 2008 by stlplace
The future of food
I watched the movie (documentary) The Future of Food in the weekend, via the NetFlix “instance play” feature. This 2004 documentary is about the genetic engineered seeds, and its effect on farmers and our daily food. I remember a few years ago there was a lot talk about genetic modified food, and its resistence in Europe. The critism seems subsided recently due to the global food shortage. Agriculture chemical companies such as Monsanto (NYSE: MON), which is the top GM (genetic modified) seed maker in the world (also main subject in the film), are red hot on the Wall Street these days. The interesting thing for me, is how GM seed is changing the global agriculture industry, including many small family farms in developing countries, and at the same time, affecting our food safety and sustainability of farming.
Here is a 9 minutes introduction of the film on YouTube.
Last Updated on April 24, 2008 by stlplace
It’s the NBA playoffs season again, and I watched the two games between Phoenix Sun and San Antonio Spur lately. As you may know, I am a big fan of Phoenix Sun/Nash. But they disappointed me again this year: they lost 2 games in a row. The main reason is that Phoenix is pretty much a one-dimensional team: a fast tempo, “Nash passing, Stoudemire dunk” team. After the Spurs sealed the ball from Nash to Stoudemire, Suns lost its touch. I did not see meaningful contributions from other key players (Diaw, Barbosa, Bell), and Shaq is just a bit too old. So what’s my point? In the NBA, the team with the best balance of offense and defense wins (if we exclude referee, luck factor). A team can not win the championship simply by one strategy, one super star,…they need the supporting cast, the defense as well as offense.
Back to the investing. Yesterday we saw a huge disppointment from Starbucks (Nasdaq:SBUX) earning report. It says “it experienced the worst consumer enviroment”.
(picture souce: will work for food)
Last Updated on April 23, 2008 by stlplace
In last two days China Mobile (NYSE:CHL) and Syngenta (NYSE:SYT) released its Q1 results (Bloomberg: CHL result, SYT result). Both are doing very well lately. Today CHL got an upgrade from Zacks. But let’s not got too excited on the stocks, as a general rule. Also keep in mind sometimes we could use the analyst upgrade or downgrade as an opposite indicator (market sentiment).
Remember a company’s fundamental does not change before and after an analyst wrote a report.
China Mobile’s strength or new growth mainly comes from the rural areas, and data/internet plan in urban areas. While I apploud its management’s forward looking strategy, I am not sure how long this momentum can sustain. Note CHL trades at a much higher price compared to other mobile operators, and it is the No. 1 carrier in the world according to market cap. Here is another interesting Chinese article about China Mobile (from Caijing).
Last Updated on May 1, 2008 by stlplace
(Update Apr 24) The trading tax bullet worked, at least for a day. The Shanghai composite index went up 305 points, or 9.29%. Similar performance from Shenzhen. All but two stocks in the two markets went up, many went up 10% (the limit). See the below picture for more details.
(The thumbnail above is clickable, for faster download, click here for a full size picture)
(Original) The Chinese goverment (regulatories) has listened, and now they are pulling the trigger. Here are the two new policies:
On April 20 Sunday evening, they unveil the new lockup share transaction rules. Basically they are saying any large block of shares (larger than 1% of overall shares) has to go through a special trading platform, to avoid the large supply of unlocked shares. Reasonable move. But I heard people already abused the system. Guess what? They sell 0.99% instead of 1% (Chinese news from Sina). This is one thing I don’t like some of my countrymen: they cut corners and bend the rules. One reason Chinese have not made good quality cars like the Japanese do?
Last Updated on April 23, 2008 by stlplace
Today is Earth day, we are seeing all kinds of “Green talk” from CNBC to Fox News, from Google to WSJ, from Democrats to Republicans. I think this is all good but this environment thing should be done in our everyday lives, not some sort of campaign or movement: when the passion run out or when the gas back to $2, we back to our old habbits 🙂
Similar logic can be applied to the recent Chinese boycott movement against French brands, after the recent Olympics torch incident in Paris. I noticed the Chinese goverment and news media already toned down harsh words. They are now asking Chinese people show patrotism in the daily work and lives, which is exactly my point.
Boycott does not work
Here are the reasons:
1) Lose moral high ground: in this case the role of the big French supermarket chain in current pro-free Tibetan movement is not definite, we could hit the wrong guy. Even if if somebody hit us, do we have to hit back everytime? I think it depends on the situtation.
Last Updated on May 1, 2008 by stlplace
Currency effects
While we are heading to $4 gas (partly thanks the weak dollar), not all are victims of this trend. Think Google or IBM. Google (GOOG) and IBM reported blow out earning, while cell phone maker Nokia (NOK) reported so-so earning (or outlook) last week. One key difference is the reported currency, Google and IBM reported results in USD, while NOK reported in Euro. We all know Dollar lost a lot ground to Euro in past year, since GOOG and IBM did a lot business in Europe (and internationally), their earning and earning growth is exaggerated by the depreciation of dollar. Nokia is hit by the opposite force. A more important question to ask is: can the dollar continue to slide vs. other currencies? Personally I would not bet on GOOG or IBM if their growth is mostly from the currency effect…
ICBC, Goldman Sachs, China Invest Co. and Blackstone
Last Updated on April 18, 2008 by stlplace
Shanghai composite index closed new 52 week low today, at 3094.67 (down 12% compared to a year ago).
(full size pic here, powered by Google Finance)
But I don’t think too much of it, other than the valuation of China A share market is more attractive now. The composite index itself is screwed up because PetroChina A share (601857) has more than 20% of weight, much bigger than its floating shares weight. In case you did not pay attention to PetroChina (NYSE:PTR, 0857.HK), 601857 was CNY 43.96 on Nov. 06, 2007, and closed CNY 16.02 as of today Apr. 18, 2008. That’s a whopping 63.56% drop!
My simply valuation tool for A shares
A more reliable indicator for A share valuation, a tool I found useful, is this AH spread sheet. As one can see from this spead sheet, some Chinese banks’ A share (include ICBC, 601398) is very attractive now. That is, assume the H share is fairly priced. One caveat of this approach, is we can only use it for companies have both A and H shares. But again, I don’t see many gems in the A share only companies in China 🙂
China index fund/ETF (FXI, PGJ, CAF)
