February 14, 2013 Comments

In today’s news, Warren Buffett’s Berkshire Hathaway is partnering with another outfit to buy Heinz. This is not a huge surprise considering it fits much of the profile Buffett likes. It’s sells branded consumable products that are not likely to change much in the next two decades or longer. It’s simple, stable and predictable. It has a very long history. Buffett likes his history. It was a family company though I am not sure there is any family involvement left. I have no idea about the valuation. I do know that the fact that he is paying some 20% more than the market place is no indication that he is paying too much. He has always held that he can calculate the value of a company like this better than the market can.

I usually don’t have any short term predictions about share prices. But I did mention in my January 20 note below that I expected Berkshire to hit a record price this quarter. It’s just about there. It’s up 4.2% since then. Not huge put the thing is the upside seemed predictable and there did not seem to be a lot of downside risk over a reasonable holding period. I own Berkshire but I should have bought more. I was cheaping out hoping it might fall a bit.

 

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