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The fundamentals of this transaction will be outside the scope of understanding of the HN crowd.
by geraldchan 14y ago
The fundamentals of this transaction will be outside the scope of understanding of the HN crowd.
- ww520 14y agoWhat are the fundamentals of this transaction?
- jcampbell1 14y agoHeinz is a 100 year brand and generates about $1.3B a year in after tax cash.
- Retric 14y ago1.3 / 23 is less than 6 percent ROI, and buffet thinks this is a good investment. Granted, they may think the business can be streamlined, but I still think this says a lot about the capital glut that's driving down returns. Ps: Most of this deal is financed with debt, so there buying 6% ROI with debt.
- r4vik 14y agoas long as the debt costs them less than 6% then free money
- 3am 14y agoBerkshire Hathaway's biggest problem is finding productive investments on the scale of the cash they generate. There insurance float provides them with what is essentially interest free loans if they estimates losses well.
- mseebach 14y agoas long as (profit - cost of debt)/(invested capital) > (ROI on best alternative investment) then free money. Low risk, low volatility 6% ROI isn't a bad investment at all, but I think smart money is on Buffett having an idea or two for increasing that number.
- filvdg 14y agoUnderstanding value investing might be nice if you want to attract VC interest in your start up , taken that most start ups are bought by other companies and don't go IPO (if they don't fail)it might be interesting to understand the fundamentals ... this one if brand identity for sure
- Mvandenbergh 14y agoValue investing and venture capital are about as different as investment strategies could be. Value investors don't usually companies that don't pay regular dividend streams, most tech companies (let alone start-ups) never pay revenue.
- Keyframe 14y agoWhy the blanket statement?
- coob 14y agoI think that's a little unfair. BH is buying Heinz for the same reason it buys as much Coca-Cola as possible.