I understand, and totally agree, with that rationale. However, with BNI there is somethings I’m willing do to as a small time investor even if I dont understand the valuation. I’m willing to just copycat Buffet’s move if I can get in at or below BRK’s recent acquisition prices. Why? Because BRK bought SO MUCH of BNI. I mean, Buffet really loaded up on this one, now owning @ least 15% of the outstanding shares! It looked like whenever the stock got around 80 BNI or below BRK was loading up. From a Buffet-watcher position it looked like 80 was a magical number for BNI. Something in Buffet’s valuation criteria made that price range a go for another BRK purchase.

Or course, if one were to copycat Buffet’s latest moves because the market has corrected the stock for the short-term, and some can be bought at the levels berkshire paid, there is still the issue of when to sell. A copycat investor wont know when buffet sells until after it is announced. However, with BNI, the most glaring thing is how much he bought. Personally if I can get in around 80 or below I buy some. I hope the copycatting pays off. For sure, I dont worry about BNI being speculative on my part. I sleep easy knowing that BRKA bought 15% (or more) of the outstanding shares at this price level.

In the end, BNI is too difficult for me. Still, if you have a good grasp on its future, it may be extremely attractive.

BNI’s shareprice has been moving over the past few years as revunues have been rising. This means past preformance is not the basis of valuation, but a change in the business economics of this high capex low return business has been telegraphed.

WEB has stated that the economics which makes him baulk at high capex low return industries like railroads or utilties for the past 50 years have now changed. Perhaps his enthusiasm now stems from his macro calls on the economy which have certainly been playing out. He states that we have been through at least 3 bubbles or periods of overvaluation – in the late 90s, then in real estate, currently there is a bubble in most commodities especially metals.

You should look forward on a businesses economic characteristics and where they are now placed 5 years or so ahead as well as backwards in your analysis of companies.

Many companies hold depreciated real estate on the books from utilities like Southern to Plum Creek, but that doesn’t translate into a return – their is oversupply – the bubble is now deflating, I hold TRJ – that is prime RE well under market value, that has been going nowhere for plenty of years!

i wonder when you’ll publish a book of your own on investing

i would like to be the first one to have it

cheers

Thanks!