Joshua Kennon is a Managing Director of
Kennon-Green & Co., a private asset management firm specializing in global value investing for affluent and high net worth individuals, families, and institutions. Nothing in this article or on this site, which is Mr. Kennon's personal blog, is intended to be, nor should it be construed as, investment advice, a recommendation, or an offer to buy or sell a security or securities. Investing can result in losses, sometimes significant losses. Prior to taking any action involving your finances or portfolio, you should consult with your own qualified professional advisor(s), such as an investment advisor, tax specialist, and/or attorney, who can help you consider your unique needs, circumstances, risk tolerance, and other relevant factors.
I am reading the Wells Fargo & Company annual report again for the fourth time this year, as well as conference call transcripts, analysts reports, and a host of other documentation. I’ve been looking at making some additional purchases of Wells Fargo & Company for the long-term holdings through some of my personal retirement trusts and plans, including the only one I discuss on the site, the KRIP portfolio, because I’m convinced the “new” bank, which includes the acquisition of Wachovia during the Great Recession and financial meltdown that doubled the size of the “old” bank, is significantly undervalued.
I’ve told you in the past that Berkshire Hathaway appears to be trading at the lowest valuation in nearly a decade. Recently, Morningstar revised its intrinsic value estimate for the Berkshire Hathaway Class B shares, stating they believe the stock has an intrinsic value of $89 per share (equal to $133,500 per Class A share since it takes 1,500 Class B shares to equal a single Class A share). I find this interesting for several reasons. First, Morningstar’s intrinsic value calculations are often reasonable, in my opinion. On more than one occasion, we’ve been within a single percentage point after I had valued a firm and then cross checked third-party estimates as part of the process to see if there were major disagreements. But in this case, I just think they’re wrong.
Most people don’t know the exact Cinnabon cinnamon roll recipe but for a decade, both Aaron and my mom have been intermittently attempting to crack the code, making various tweaks to their pastry-baking-marathons. They’ve been close but never hit upon a recipe that was indistinguishable, in our opinion, from the Cinnabon franchise version.
An English professor walked up to the chalkboard and carefully wrote out the following sentence, informing the students it was their responsibility to punctuate it correctly. “A woman without her man is nothing” All of the males in the class wrote: “A woman, without her man, is nothing” All of the females in the…
Aaron and I were sitting in a sandwich shop trying to flavors in the new Coca-Cola Freestyle machine, when I began to wonder what it would take to build a $250,000 stake in a company like Coke by the time a person reached 35 years old. It was a fun academic thought experiment.
Before you invest a single penny of your money into a potential stock, bond, project, or other asset, there are two questions you should ask yourself. These two questions could have saved a lot of investors from asset bubbles and bankruptcy court. #1 – Does the Investment Offer an Adequate Rate of Return All Things…
I’ve made no secret of the fact I’ve been a net purchaser of Berkshire Hathaway shares for the past year. The valuation seemed (and still seems) absurdly low relative to intrinsic value. Apparently, the Berkshire Hathaway Board of Directors and management agrees.1 The company is now looking at itself as the best use of the firm’s cash.
I spent years working out my thoughts on a wide range of topics only to discover that John Stuart Mill had come to many of the same conclusions long before I was even born. I wish I had found his writings as a teenager.
Today’s mail bag question deals with the ethics of the mental model called assortative mating. This refers to the phenomenon whereby individuals choose to engage in relationships with others who are like themselves (positive assortative mating) or dissimilar (negative assortative mating). There are strong economic arguments that the perceived rise in income inequality is due to assortative…
There is a quick test that can help you determine if you rely on intuition or reflective reasoning (intellect) when making decision. Answer the following question as quickly as possible: “A bat and a ball cost $1.10 in total. The bat costs $1 more than the ball. How much does the ball cost?” Do you…
