A Warren Buffett Quote About Cash Flows

Every year in the Berkshire Hathaway Inc.(NYSE: BRK $213,725.00) annual reports, chairman Warren Buffett shares his investment philosophy and strategies.

I recently went through each annual report since 2000 and did a search for the phrase "cash flow".
Each report averages about 20 pages and after searching 15 reports the phrase "cash flow" only was found once. (in 2000)

6/1/2000

Warren Buffett, Chairman of Berkshire Hathaway: click to  <2000 Annual Report:

"Common yardsticks such as dividend yield, the ratio of price to earnings or to book value, and even growth rates have nothing to do with valuation except to the extent they provide clues to the amount and timing of cash flows into and from the business. Indeed, growth can destroy value if it requires cash inputs in the early years of a project or enterprise that exceed the discounted value of the cash that those assets will generate in later years.
Market commentators and investment managers who glibly refer to growth and value styles as contrasting approaches to investment are displaying their ignorance, not their sophistication. Growth is simply a component--usually a plus, sometimes a minus-- in the value equation."

Berkshire Hathaway Shares Make New High $201,204

Five Largest Public Companies by Market Capitalization

• Apple Inc (NASDAQ: AAPL $97.50)         $583 billion market capitalization
• Exxon Mobil (NYSE: XOM $99.09)           $422 billion market capitalization
• Google Inc (NASDAQ: GOOG $574.65)    $388 billion market capitalization
• Microsoft (NASDAQ: MSFT $44.27)         $364 billion market capitalization
• Berkshire Hathaway (NYSE: BRK.A )      $324 billion market capitalization

Equities Research Upgrade Cooper Tire Acquired

This morning the 100 year old company Cooper Tire & Rubber Company (NYSE: CTB) announced it will be acquired at $35.00 a share.

Stockdiagnostics upgraded CTB @ $13.18 (dividend adjusted) on February 14,2007 after the company reported 4th quarter financials for the period ending December 31,2006. Since the upgrade 6 years ago shares have appreciated 157% vs 11% for the Standard & Poors 500 index.

Equities Research  upgraded CTB @ $19.05 (dividend adjusted) on August 14,2007 after the company reported 2nd quarter financials for the period ending June 30,2007. Since the upgrade 6 years ago shares have appreciated 78% vs 14% for the Standard & Poors 500 index.

click to Equities Research Upgrade and Stockdiagnostics Chart


IN APRIL 2013 
H.J.Heinz Company (NYSE:HNZ) announced the approval of its acquisition by Berkshire Hathaway (NYSE: BRK) at an all time (28 year) high @ $72.50. Stockdiagnostics upgraded HNZ @$34.24 (dividend adjusted) on August 25,2009 after the company reported 1st quarter financials for the period ending July 31,2009. Since the upgrade shares have gained 112% in 44 months. (22% annualized total return)
<click to HNZ Stockdiagnostics OPS chart
<click to HNZ GFNN news story


Click to 55 Stockdiagnostics Upgrades Acquired in 2012

Click to learn more about Upgrades and Downgrades

Order the June 2013 Equities Research Newsletter here

**Warren Buffett, Chairman of Berkshire Hathaway:2000 Annual Report:

"Common yardsticks such as dividend yield, the ratio of price to earnings or to book value, and even growth rates have nothing to do with valuation except to the extent they provide clues to the amount and timing of cash flows into and from the business. Indeed, growth can destroy value if it requires cash inputs in the early years of a project or enterprise that exceed the discounted value of the cash that those assets will generate in later years.
Market commentators and investment managers who glibly refer to growth and value styles as contrasting approaches to investment are displaying their ignorance, not their sophistication. Growth is simply a component--usually a plus, sometimes a minus-- in the value equation."

Equities Research Maintains SELL RATING on CMG & UA

My work (Equities Research, Tommy Renna) is mentioned near the two minute mark of this CNBC TV clip.
CMG
After being bullish on Chipotle Mexican Grill (NYSE: CMG) for nearly 6 years and watching the stock soar from $50 to $440, on the morning of April 20,2012 I became bearish. Since my Sell rating ($430.78) that morning shares have declined $47 or -11% vs. the S&P500 index which has decline 1.62% over the same 11 week period.
click to view my sell call mention on CNBC TV 4/20/2012  (approx. 2 minutes into clip)

UA
I issued a Sell rating on Under Armour (NYSE: UA) four weeks ago when shares hit a new all time high @ $105. Since the call, shares of UA have declined $13 or -12.55% vs the S&P500 index which is up 2.19% over the same period.

Earnings Season kicks off this week and I will be busy examining 10Qs & 10Ks looking for companies with weakening fundamentals trading at premiums that I will recommend as short picks.
Companies growing fundamentals that are trading at discounts in the market place will be included in by long picks.

All my research is 100% objective, give it a try and subscribe today.
A newsletter subscription is well worth the time and energy that I will save you from doing the work.

*Remember, I am only looking for value stocks that are growing on the long side and overbought stocks trading at premiums with weakening fundamentals on the sell side.

**Warren Buffett, Chairman of Berkshire Hathaway: 2000 Annual Report:

"Common yardsticks such as dividend yield, the ratio of price to earnings or to book value, and even growth rates have nothing to do with valuation except to the extent they provide clues to the amount and timing of cash flows into and from the business. Indeed, growth can destroy value if it requires cash inputs in the early years of a project or enterprise that exceed the discounted value of the cash that those assets will generate in later years.
Market commentators and investment managers who glibly refer to growth and value styles as contrasting approaches to investment are displaying their ignorance, not their sophistication. Growth is simply a component--usually a plus, sometimes a minus-- in the value equation."