Comments on: Buffett. Coca-Cola. 1988. Now I Get It. http://www.fwallstreet.com/article/24-buffett-coca-cola-1988-now-i-get-it/ Value Investing Blog Mon, 16 May 2011 10:55:06 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: alope068 http://www.fwallstreet.com/article/24-buffett-coca-cola-1988-now-i-get-it/#comment-3612 alope068 Fri, 25 Feb 2011 04:22:46 +0000 http://www.fwallstreet.com/article/24-buffett-coca-cola-1988-now-i-get-it#comment-3612 I meant in Capitalized INCOME TAXES PAYABLE, PRINCIPALLY DEFERRED. I meant in Capitalized INCOME TAXES PAYABLE, PRINCIPALLY DEFERRED.

]]> By: alope068 http://www.fwallstreet.com/article/24-buffett-coca-cola-1988-now-i-get-it/#comment-3611 alope068 Fri, 25 Feb 2011 04:21:20 +0000 http://www.fwallstreet.com/article/24-buffett-coca-cola-1988-now-i-get-it#comment-3611 I read your explanations of how to calculate intrinsic value and I came across Wesco Financial whose CEO is Charlie Munger. In Warren Buffet's annual letters he has an explanation of how he and Charlie come to a close valuation of BRK.A through intrinsic value, but in Wesco's annual letters Charlie Munger uses a different approach to find the intrinsic value of Wesco by adding stockholders equity + the present value per share of an government interest-free loan which happens to be in the balance sheet to UNREALIZED APPRECIATION OF INVESTMENTS, NET OF TAXES. He adds Stock. Eq. + this loan discounted to today = intrinsic value of Wesco Financial. any inputs? best regards Alex Lopez I read your explanations of how to calculate intrinsic value and I came across Wesco Financial whose CEO is Charlie Munger. In Warren Buffet’s annual letters he has an explanation of how he and Charlie come to a close valuation of BRK.A through intrinsic value, but in Wesco’s annual letters Charlie Munger uses a different approach to find the intrinsic value of Wesco by adding stockholders equity + the present value per share of an government interest-free loan which happens to be in the balance sheet to UNREALIZED APPRECIATION OF INVESTMENTS, NET OF TAXES.

He adds Stock. Eq. + this loan discounted to today = intrinsic value of Wesco Financial.

any inputs?

best regards
Alex Lopez

]]> By: vinvestor2010 http://www.fwallstreet.com/article/24-buffett-coca-cola-1988-now-i-get-it/#comment-3269 vinvestor2010 Wed, 28 Apr 2010 21:04:46 +0000 http://www.fwallstreet.com/article/24-buffett-coca-cola-1988-now-i-get-it#comment-3269 Hi just went through the excel the formula for CROIC takes Free Cash Flow and Invested Cash Flow of the same year , ideally if you take the free cash flow of period t1 would you not take the invested capital of time period t0 as the base(i.e. the previous period)?? Buffett himself says something in his letters about beginning equity capital Sorry my comments are a little late as I can see about 2yrs off,but your site is a class act so it keeps popping up high on Google Hi

just went through the excel

the formula for CROIC takes Free Cash Flow and Invested Cash Flow of the same year , ideally if you take the free cash flow of period t1 would you not take the invested capital of time period t0 as the base(i.e. the previous period)??

Buffett himself says something in his letters about beginning equity capital

Sorry my comments are a little late as I can see about 2yrs off,but your site is a class act so it keeps popping up high on Google

]]> By: Reba Wesson http://www.fwallstreet.com/article/24-buffett-coca-cola-1988-now-i-get-it/#comment-1292 Reba Wesson Fri, 25 Jan 2008 14:47:55 +0000 http://www.fwallstreet.com/article/24-buffett-coca-cola-1988-now-i-get-it#comment-1292 My mother just passed away, I found where she purchased$1,100.00 @100 shares of coca cola stock from Sterne,Agee&Leach. Inc. 10/17/88. What I would like to know what happened? The receipt says For the seven days ended 10/21/88. The annulizes yield of daily dividends declared averaged 7.48 percent. The average portfolio maturity was 33 days. Daily dividends will flutuate with interest rates. This was in my fathers name William Howard Jones Trade dat 10/21/88 to 10/28.88 Did he lose money just in a few days. At the bottom it says cash equivalent fund balances 206.61., but then it says total value of securities $812.50. I didn't know my parents tried the stock market. Please explain to me what happened. Thanks will appreciate any answer I cAN get. I have original check and papers. My mother just passed away, I found where she purchased$1,100.00 @100 shares of coca cola stock from Sterne,Agee&Leach. Inc. 10/17/88. What I would like to know what happened? The receipt says For the seven days ended 10/21/88. The annulizes yield of daily dividends declared averaged 7.48 percent. The average portfolio maturity was 33 days. Daily dividends will flutuate with interest rates. This was in my fathers name William Howard Jones Trade dat 10/21/88 to 10/28.88 Did he lose money just in a few days. At the bottom it says cash equivalent fund balances 206.61., but then it says total value of securities $812.50. I didn’t know my parents tried the stock market. Please explain to me what happened. Thanks will appreciate any answer I cAN get. I have original check and papers.

]]> By: Edward http://www.fwallstreet.com/article/24-buffett-coca-cola-1988-now-i-get-it/#comment-1032 Edward Thu, 06 Dec 2007 07:20:33 +0000 http://www.fwallstreet.com/article/24-buffett-coca-cola-1988-now-i-get-it#comment-1032 Sorry, just found blog #17, which answers all my questions about KO. http://www.fwallstreet.com/blog/17.htm Sorry, just found blog #17, which answers all my questions about KO.

http://www.fwallstreet.com/blog/17.htm

]]> By: Night http://www.fwallstreet.com/article/24-buffett-coca-cola-1988-now-i-get-it/#comment-1031 Night Thu, 06 Dec 2007 07:03:27 +0000 http://www.fwallstreet.com/article/24-buffett-coca-cola-1988-now-i-get-it#comment-1031 I took Joe's JNJ spreadsheet and used it for a couple of different companies; I am not an excel pro at all but I think I have figured out why it gave you a crazy value (as I have gotten a crazy value as well). Where it has the "Total" value, or one of those cells right under it, it takes the companies projected value and divides it by some number that was similar to 2890000000 (2.89Bil), which is about the number of shares JNJ has out(2.86bil). So just correct that to the number of shares KO has out, and I think you get the correct number for KO. KO has 2310000000(2.31Bil) shares out.. hmm I don't think that correction is going to account for such a huge difference. Though, maybe they are over-priced on the market right now; they're trading at a P/E of 27 which is pretty high. I don't have the spreadsheets infront of me, as I am reformatting my computer and the information is on backup media at the moment.. Someone help please! :) I took Joe’s JNJ spreadsheet and used it for a couple of different companies; I am not an excel pro at all but I think I have figured out why it gave you a crazy value (as I have gotten a crazy value as well).

Where it has the “Total” value, or one of those cells right under it, it takes the companies projected value and divides it by some number that was similar to 2890000000 (2.89Bil), which is about the number of shares JNJ has out(2.86bil). So just correct that to the number of shares KO has out, and I think you get the correct number for KO.

KO has 2310000000(2.31Bil) shares out.. hmm I don’t think that correction is going to account for such a huge difference. Though, maybe they are over-priced on the market right now; they’re trading at a P/E of 27 which is pretty high.

I don’t have the spreadsheets infront of me, as I am reformatting my computer and the information is on backup media at the moment..

Someone help please! :)

]]> By: Edward http://www.fwallstreet.com/article/24-buffett-coca-cola-1988-now-i-get-it/#comment-1029 Edward Thu, 06 Dec 2007 06:05:47 +0000 http://www.fwallstreet.com/article/24-buffett-coca-cola-1988-now-i-get-it#comment-1029 I plugged in the numbers for KO into your spreadsheet and it says the stock is worth $30.84 per share without the discount. It's trading at $64 per share, more than twice the value. Makes me think something is wrong with the numbers. Has anyone else done the JNJ analysis on KO ? I plugged in the numbers for KO into your spreadsheet and it says the stock is worth $30.84 per share without the discount. It’s trading at $64 per share, more than twice the value.

Makes me think something is wrong with the numbers. Has anyone else done the JNJ analysis on KO ?

]]> By: Buddy Caviness http://www.fwallstreet.com/article/24-buffett-coca-cola-1988-now-i-get-it/#comment-848 Buddy Caviness Fri, 23 Nov 2007 14:23:33 +0000 http://www.fwallstreet.com/article/24-buffett-coca-cola-1988-now-i-get-it#comment-848 Dear Sir, How do you find out if you own stock in a company ? Coke for instance ! Dear Sir, How do you find out if you own stock in a company ? Coke for instance !

]]> By: Tien http://www.fwallstreet.com/article/24-buffett-coca-cola-1988-now-i-get-it/#comment-158 Tien Thu, 16 Aug 2007 21:36:02 +0000 http://www.fwallstreet.com/article/24-buffett-coca-cola-1988-now-i-get-it#comment-158 hi joe ah..i see, now i understand how you calculate that figure, thanks once again yes, i'm following (and learning) through articles here and hopefully i can come out with an idea about how to value companies by my own one day hi joe

ah..i see, now i understand how you calculate that figure, thanks once again

yes, i’m following (and learning) through articles here and hopefully i can come out with an idea about how to value companies by my own one day

]]> By: Joe Ponzio http://www.fwallstreet.com/article/24-buffett-coca-cola-1988-now-i-get-it/#comment-154 Joe Ponzio Thu, 16 Aug 2007 03:17:07 +0000 http://www.fwallstreet.com/article/24-buffett-coca-cola-1988-now-i-get-it#comment-154 Hi Tien, You took the average of the 7 years, but that doesn't necessarily give you a good picture of how your company will perform through good and bad cycles. I prefer to use various timeframes throughout the ten years to compare how the business can sustain or grow in its various natural cycles. Download the spreadsheet on the <a href="http://www.fwallstreet.com/blog/4.htm" title="Johnson & Johnson">Johnson & Johnson</a> valuation to get a better idea of how I use various timeframes. To answer your other question about POSCO, I know nothing about the steel industry so any analysis would likely end with me saying, "I don't know." There is (I believe) enough information on F Wall Street for you to figure out how to do it on your own if you want to. Hope that helps. Hi Tien,

You took the average of the 7 years, but that doesn’t necessarily give you a good picture of how your company will perform through good and bad cycles. I prefer to use various timeframes throughout the ten years to compare how the business can sustain or grow in its various natural cycles.

Download the spreadsheet on the Johnson & Johnson valuation to get a better idea of how I use various timeframes.

To answer your other question about POSCO, I know nothing about the steel industry so any analysis would likely end with me saying, “I don’t know.” There is (I believe) enough information on F Wall Street for you to figure out how to do it on your own if you want to.

Hope that helps.

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