Tuesday, November 28, 2006


In the article written almost an year ago, we compared Nasdaq and Nyse. Let us revisit the comparison and contrast the two indices. Let us compare the two exchanges using the same metrics as before.

Both NDAQ and NYX have been volatile through out the year.

  • Creating a global network of stock exchanges - Advantage NYX. This position reversed from the last time as the NDAQ acquisition of London Stock Exchange didnt go through. However, NDAQ is making an aggressive bid for LSE and may yet succeed in owning the exchange. Current advanage - NYX
  • Trend - NYX got its pop after a while. NDAQ while down, will get back if it buys LSE. Current Advantage - NYX
  • Revenues - Although NYX and NDAQ have about the same revenue, NYX sells for a higher price. The reason for the premium is that NYX is executing better at the moment. Advantage - NYX
  • Stock dilution/debt - Both the exchanges will take on more debt or sell equities to expand. Neutral
  • Listing companies. NDAQ fees are lower but NYX still has the prestige. Advantage - NDAQ
  • Management - John Thain has done a great job for NYX. The Rich Grasso excess is a long memory at the moment. Advantage - NYX.
  • Cost cutting upside. NYX executed on its cost cutting upside. Neutral
  • Technology - Neutral
  • Valuation - NDAQ is cheaper although one might argue that it is because of the lower perceived potential for NDAQ. Advantage - NDAQ.

Sunday, November 26, 2006

Chico's FAS (CHS) Analysis

We have looked at CHS before. CHS is a specialty clothes retailer - specializing in womens clothes.

Chico’s FAS, Inc. operates as a retailer of private label, casual-to-dressy clothing, intimates, complementary accessories, and other nonclothing gift items. The company offers its products under the Chico’s, White HouseBlack Market (WHBM), Soma by Chico’s, and Fitigues brand names. The Chico’s brand includes clothing focused on women who are 35 years old and over.

At that time - we found a risk for P/E contraction.

From a strict earnings point of view, the earnings per share are expected to increase by 25% year over year. However, the P/E of the stock is close to 40 - so there is definitely some mismatch here. For the first thirty nine weeks of 2005, the earnings grew by ~38% compared to 2004 and sales by 31%. The share dilution increased by 1.1% year over year. The analysts are expecting 1.34 per share in 2007 where as the expected earnings this year is 1.07 a share. The growth rate is 25% for the next year. Although the stock risk dilution is minimal, there is the risk of P/E contraction which in turn poses a risk to the stock price.

Since then, the stock has had a P/E contraction. A word from Ben Graham from intelligent investor may be mentioned in this context.

"The philosophy of investment in growth stocks parallels in part and in part contravenes the margin of safety principle. The growth-stock buyer relies on an expected earning power that is greater than the average shown in the past. Thus he may be said to substitute these expected earnings for the past record in calculating his margin of safety. In investment theory there is no reason why carefully estimated future earnings should be a less reliable guide than the bare record of the past; in fact, security analysis is coming more and more to prefer a competently executed evaluation of the future. Thus the growth-stock approach may supply as dependable a margin of safety as is found in the ordinary investment - provided the calculation of the future in conservatively made, and provided it shows a satisfactory margin in relation to the price paid"

The company is managed well - with ROE of 28.8% and ROA of 22.91%. The EPS has increased an average of 25% in the past five years. However, it is likely that the EPS growth will be far lower in the next five or ten years. Consequently the P/E has compressed to a more reasonable 20 from a more lofty 40.

The cash flow from operations have increased year over year for the past several years. However, the free cash flow has declined this year because of the increasing capital expenditure. The analysts estimate for growth next year is about 17% compared to this year but the median estimate of the stock price is around $25. If the earnings grow by the estimated amount and the stock price stays put, it should present a good buying opportunity with a good margin of safety.

Jos A Bank Clothiers Inc (JOSB) Analysis

We have looked at JOSB a couple of times in this blog. The last time we looked at it, it still was priced for its growth and not for value. Let us look at JOSB at the moment to see if it is a value play now.

First an introduction to JOSB and its businesses. Jos. A. Bank Clothiers, Inc. engages in the design, retailing, and marketing of men’s tailored and casual clothing and accessories. Its product line includes tuxedos, suits, shirts, vests, ties, sport coats, pants, sportswear, overcoats, sweaters, belts and braces, socks and underwear, branded shoes, and other items. The company sells its products through retail stores, catalog, and the Internet, as well as through franchisees.

JOSB has been a fast growing company and was priced as a growth company. However, the earnings growth has declined even though the sales growth has remained impressive. Let us look at the most recent quarter to see how things came out.

The second quarter of 06 looked good, as reported in the 10-Q,

For the second quarter of the Company’s fiscal 2006, the Company’s net income was $7.0 million compared with net income of $5.3 million for the second quarter of the Company’s fiscal 2005. The Company earned $0.38 per diluted share in the second quarter of fiscal 2006 compared with $0.30 per diluted share in the second quarter of fiscal 2005. As such, diluted earnings per share increased 27% as compared with the prior year period. The results of the second quarter of fiscal 2006 were primarily driven by:
20.8% increase in net sales with increases in both the Stores and Direct Marketing (catalog and Internet) segments;
30 basis point increase in gross profit margins;
40 basis point decrease in operating expenses as a percentage of net sales;
The opening of 58 new stores since the end of the second quarter of fiscal 2005.
Management believes that the chain can grow to approximately 500 stores. As of July 29, 2006, the Company had 340 stores opened. The Company plans to open approximately 50 stores in fiscal 2006 as part of its plan to grow the chain to the 500 store level, including 16 stores opened in the first half of fiscal 2006. The store growth is part of a strategic plan the Company initiated in the year ended February 3, 2001 (“fiscal 2000”). In the past six years, the Company has continued to increase its number of stores as infrastructure and performance has improved. As such, there were 10 new stores opened in fiscal 2000 (including two factory stores), 21 new stores opened in the year ended February 2, 2002, 25 new stores opened in the year ended February 1, 2003, 50 new stores opened in the year ended January 31, 2004, 60 new stores opened in fiscal 2004 and 56 new stores opened in fiscal 2005.

Despite the good results of the second quarter, year over year, the growth in EPS was only 4.5%. Let us look at the cash flow and other ratios to see how the company is doing. The free cash flow available to shareholders has declined this year compared to the previous years . This is primarily because of the increased capital expenditure incurred by the company. The increase in the number of outstanding shares also hasnt helped the EPS figure. The company's trailing P/E is attractive at ~15 but this isnt the lowest for the company. If the economy continues to cool off, there could be further compression in the P/E ratio for the company. This happened in the early 2000s. If this scenario repeats, it should present a more attractive buying opportunity.

Saturday, November 25, 2006

SIAL ( Sigma Aldrich ) Analysis

SIAL is a company that develops, manufactures and distributes the broadest range of high quality biochemicals and organic chemicals available in the world. These chemical products and kits are used in scientific and genomic research, biotechnology, pharmaceutical development, the diagnosis of disease and as key components in pharmaceutical and other high technology manufacturing. The Company operates in 35 countries, offers over 100,000 chemical and 30,000 equipment products and sells these products into over 150 countries.

The interesting thing about SIAL is that no single product generates more than 3% of its sales. The majority of the companies orders ( around 70% ) are for labs around the world and are $400 or lower. The company derives about 60%+ sales outside the United States.

SIAL's business is viable and has growth potential. The recent decline in the US dollar should help the company improve its bottom line. In the next segment, we will look at the SIAL financials.

First, we will look at the return on equity and return on asset numbers for SIAL. The ten year averages for both the numbers are 20.88 and 14.5% respectively. Both these numbers are impressive and point to very strong fundamentals and operations at the company.

The revenue growth at the company has averaged about 5.35% for the past ten years but the EPS has grown at a faster pace of 10% per year. The key ingredient causing the increase in EPS is the decrease in outstanding shares. The outstanding shares the company has declined from 99 million to 67 million in the past ten years. In the ten year period, the cash flow from operations has almost doubled and free cash flow has increased by about 3.5 times. The dividends per share have increased by about 11.7%/year for the past five years.

SIAL is a good stock with steady ( ~10-11% earnings growth/year ) and is not cheap. The stock is currently selling for about 10% discount to its fair value. This stock is a strong buy when its price drops becuase of the market fluctuations or variations.

Thursday, November 23, 2006

Indian Equities

We came across a presentation on the Indian equities and the tax laws in India. This presentation makes a bull case for Indian equities in the next five years because of the following reasons.

  • The Indian economy is growing at a fast pace and it is unlikely to slow down in the next several years
  • Indian tax laws favor the investor - there are no taxes on long term capital gains or dividends. Short term capital gains are taxed at 10%
  • Indian population is not exposed to equities - this should correct itself in the next several years
  • The fundamentals of top two hundred Indian companies is getting better. The ROE of the companies is at 22% and ROA is at 15%.
  • The slide deck also talks about the likely scenario for Indian stocks to be in the 19,000 - 23,000 range by 2010. This comes to a growth in the range of 9 % per year for the next four years.

As we have done in our previous articles, we will focus on the investment vehicles available to US residents to invest in India.

The Indian stock market - BSE Sensex has gained 45.5% thus far this year and the index is seemingly moving upwards. This comes on the heals of a 42% gain in equities in 2005. The returns are quite extra ordinary and one can be certain that this kind of returns can't be maintained to perpetuity. The returns have to go down sooner or later - the longer this lasts, the more severe will be the correction.

Let us look at the different instruments one can use to invest in India and see which ones are attractive at the moment.

EEM is the iShares emerging market fund and has returned about 17.39% YTD. If one bought the ETF at the low 80's in the second quarter, the ETF has returned more than 30%. EEM has an expense ratio of 0.77%. EEM had 5.8% exposure to India at the end of October.

VWO is the Vanguard emerging market fund and has returned about 15.88% YTD. This correlates highly with EEM but has a lower expense ratio of 0.3%. VWO has a 7.07% exposure to India.

IIF is Morgan Stanley India Investment Fund, Inc. is a non-diversified, closed-end management investment company. The Fund's investment objective is long-term capital appreciations, which it seeks to achieve by investing primarily in equity securities of Indian issuers. The Fund will invest at least 65% of its total assets in equity securities of Indian issuers; which for this purpose means common and preferred stock bonds, notes and debentures convertible into common or preferred stock, stock purchase warrants and rights, equity interests in trusts and partnerships and American , Global and other types of Depositary Receipts. The Fund may invest up to 25% of its total assets in unlisted equity securities of Indian issuers.Currently IIF sells for about 2.48% premium to the net asset value. The management fees for this stock is 1.27%. The total return of IIF is 42% compared to the BSE Sensex Index return of 45%. Interestingly enough, the fund is trading at a slight premium of ~1% to its NAV.

IFN India Fund is a closed-end management investment company. The fund seeks long-term capital appreciation through primarily investing in the equity securities of Indian companies. The fund will invest at least 80% of its total assets in the equity securities of Indian Companies. The management fees for this stock is 1.47%. The fund has returned 25% compared to the BSE Sensex index of 45%. To top it off, the fund is selling at 10% premium to its NAV.

MINDX Mathews India Fund is a relative new comer to the block. The fund carries an expense ratio of 2.75% has returned 25% YTD. This compares to the BSE Sensex index gain of 45%.

ETGIX It has an initiation fee of 5.75% for small sums of money that declines to zero if the capital is greater than a million dollars. This is not targeted for individual investors but is targeted more towards institutional investors that want an exposure to India. The fund also has an expense ratio of 2.75% on top of the initiation fee. This fund has returned 33% YTD.

EEB ( Claymore/BNY BRIC ETF ) - This is a new ETF targeting only the BRIC countries - Brazil, Russia, India and China. The fund doesnt have the assets divided equally with all the four countries but it only specializes in these four emerging markets. The fund carries an expense ratio of 0.65% and returned 8.7% since inception.Although both India and China look expensive at the moment compared to other markets, the growth in these markets make it look as though there is still upside for companies in these countries.

To summarize, EEM/VWO provide partial exposure to India with lower expense ratios. Among the pure plays, IIF is the best by far followed by MINDX. EEB is a newcomer and not enough information is available regarding per country investment break down.

Coca Cola (KO) and Google (GOOG)

In this blog, we have been somewhat bearish on Google from the very beginning. The seasonal trends are putting a tail wind into the internet stocks from Google to Amazon.com. One might argue that we are in a bull market now and every stock has gone up. While this is true, let us compare two companies, KO and GOOG and see where they stand from the balance sheet perspective.

Almost all the readers here should be familiar with Coke and Google. Coke is an old world company that has been around for more than hundred years. It has with stood competition and idiotic management over the course of its existence. Google on the other hand is an internet darling and has been growing revenues and earnings at an exponential rate. Google is a young company with smart founders with a new business model.

Coca Cola is fully valued at the moment when compared to the long bond. Google on the other hand fully valued against its future (2007/2008) earnings. In this segment we will look at some financial ratios to see which offers enduring competitive advantage and a long term buy opportunity. In the short term, Google definitely has more upside as momentum investors jump in to make a quick buck.

First comparison of earning yield. Based on the long bond ratios, Coke is fairly valued at today's market. Google has to earn ~$23 to be on par with Coke regarding price compared to the long bond. Google is not expected to earn $23/share till about 2009-2010.

Coke is a slowly growing company. In the last ten years, its EPS has increased from 1.40/share to 2.24/share. The EPS has grown at 4.8%/year in that period. The total outstanding shares have decreased somewhat. The dividends have increased by 55% in the past five years and the company roughly gives out about 50% of its earnings in dividends. The operating cash flow in Coke has increased from 3.43 billion to about 5.77 billion in the ten year period - a 5.3% increase per year. The free cash flow has increased at the rate of about 6.3% per year in the same period. The return on equity and return on assets have been in the double digits in that time.

Google is a fast growing company. The EPS for Google went from 41 cents a share in 2003 and is on track to hit almost $10 a share this year. The revenue growth rate in the past two years has been 100% and 70% respectively. The growth is slowing to about 40% range next year and will probably go to the 30% range in the year after. Googles cash flow has increased from 218 million in 2003 to 1.5 billion in 2006. The cash flow in 2006 is less than that of 2005 because of larger capital expenditures. Googles return on equity is less than that of Coke in the last two years whereas the return on assets is higher by a couple of points.

The return on equity is an important metric. If we look back at the 1977 Berkshire Hathaway annual letters, Warren Buffett has this to say about earning per share and managerial performance. "Except for special cases, we believe a more appropriate measure of managerial economic performance to be return on equity capital. In 1977 our operating earnings on beginning equity capital amounted to 19%, slightly better than last year and above both our own long-term average and that of American industry in aggregate. But, while our operating earning per share were up 37% from the year before, our beginning capital was up 24%, making the gain in earnings per share considerably less impressive than it might appear at first glance" He goes on to discuss why return on equity is an important metric in the subsequent annual letters.

To sumarize the above points, KO has a free cash flow of 4.5 billion where as Google has a free cash flow of 1.5 billion. Coke's return on equity is higher than that of Google whereas Google has a slightly higher return on assets compared to Coke. Coke's return on equity is better than that of Google by about 10 percentage points. However, Cokes market cap is 110 billion compared to Google's market cap of 155 billion.

We will finish off this article by looking at the various valuation ratios of the two companies. The trailing PE for Google is 74, price to book is 11.6, price to sales is 19 and price to cashflow is 52. The forward PE for Google is 50.

Coke on the other hand has a P/E of 21, price to book of 6, price to sales 5, price to cash flow ratio of 29.5. The forward PE for Coke is 18.6.

Based on these factors, each investor can make a decision for themselves which business is superior and which business is cheaper at the moment.

Sunday, November 19, 2006

DR Horton Inc Analysis

D.R. Horton, Inc. is the largest homebuilding company in the United States, based on our domestic homes closed during the twelve months ended September 30, 2005. DR Horton constructs and sells high quality single-family homes through its operating divisions in 25 states and 74 metropolitan markets of the United States, primarily under the name of D.R. Horton, America’s Builder. D.R. Horton, Inc. is a Fortune 500 company, and its common stock is included in the S&P 500 Index and listed on the New York Stock Exchange under the ticker symbol “DHI.”

The home builders have taken a beating in the second half of this year and are trading for low P/E ratios. The main reason for the low price is the decline in the U.S housing market. One interesting phenomenon is that the recent bad news on housing starts didnt depress the home builders and the wall board manufacturers. We will look into the home builders - especially DHI to see if they have hit a bottom and if the stock is a buy at the current prices.

DHI primarily has two businesses. The first one is the one that specializes in building single family homes. The second part of the business specializes in doing mortgages and financial services. The home building business accounts for 98% of the revenue whereas the financial services account for 2% of DHI's revenue. The majority of DHI's revenue comes from the six states of California, Arizona, Colarado, Texas, Florida and Nevada. One should also note that the housing bubble has been the strongest in California, Florida and Nevada.

The housing market is the strongest in spring and summer months - consequently, the sales and revenues from homes is also the strongest in those months.

Let us move forward to the latest quarterly report. The cash and cash equivalents have declined from 1.1 billion to about 100 million. The inventory of finished homes and land under development has increased sharply from the year ago period. Although the company says it is monitoring the housing industry carefully, the increased inventory in a down market is definitely going to erode the profit margins.

The analysts are expecting the EPS to improve in 2008 for DHI while expecting steep slow down in the March quarter and fiscal year 2007.

The book value of the stock is in the finished houses and the land it has under its name. Since the company uses debt to finance its operations, the decline in housing prices or new homes will erode the book value. So a book value of $21/share is not what is made out to be.

Looking at DHI's balance sheet, cash from operations and free cash flow have both been negative for the past ten years except 2003. Cash from financing has been positive primarily because of the issuance of a lot of debt. The company does sport good return on equity and return on asset numbers. Since the company doesnt have a positive free cash flow and has a heavy growth in inventory, it may be prudent to stay away from the stock till early next year. It may also be prudent to stay away till the time the inventory/accounts receivable situation improves on the balance sheet compared to the existing housing market conditions.

Saturday, November 11, 2006

UPS Analysis

In the previous article we looked at Fedex Corporation, a company that has specialized in overnight delivery. We have two other companies in the same business - UPS and DHL. UPS is a public company that has specialized in delivering large and small packages around the world. DHL is a privately held company that specializes in international delivery of couriers.

The package delivery and handling business is interesting for several reasons. The growing trend of globalization and commerce needs more shipping and delivery across the world. Another factor aiding this industry in the growing wealth around the world. A third factor in favor of this business is the increasing demographic trends and e-commerce in the US needing the services of these companies.

Currently this sector is looking a bit attractive. The attractiveness is primarily because of the expected economic downturn and people expecting slow down in growth in this segment. The recent price increases by UPS and Fedex show that the companies have pricing power and the market is fairly robust. In the rest of the article, we will analyze UPS and consider its pros/cons.

UPS's competitive strength is the built up infrastructure in North America and Europe. UPS is currently building up its network in China as well. A con of UPS is that the labor force is unionized and the record of companies with unions is dismal.

Now that we are convinced that UPS has potential as a business, let us look into the financials. We will also look into the TA ( technical analysis ) to verify the trend for UPS.

Since we dont have the trends for the full ten years ( a preferred period ), we will only look at the trends for the last six years for which public data is available. UPS stock price hasnt increased significantly since its IPO but we have seen compression of its P/E ratio. The revenues have increased at the rate of 8.7% per year for the past six years. The EPS has grown at the rate of 29% in the same period though the 1999 numbers were comparitively a bit lower. The number of shares has remained steady - so the buy backs have stemmed further dilution in shares. The free cash flow has seen steady and impressive growth in this period.

The return on equity has averaged about 20% in the last five years for UPS. Approximately 40% of the income is paid out in dividends. If the current ROE holds, the EPS should be about $8 in about ten years. This would result in a divident yield of 3.25 dollars/share up from the current value of $1.55/share. If the P/E of 20 holds, the stock should be worth about $160 in that time frame. In that time, $15 would have been paid out in dividends. This would make the total return about $175 dollars at a cumulative rate of about 9%. If the stock goes further, it is a good time to accumulate UPS.

GEHL Analysis

Gehl recently came under the radar because of the considerable amount of insider trading in its stock. Let us take a look at its stock to see if it is a buy at the current prices. First, overview of its business from its website.

Gehl has been producing agriculture implements for nearly 150 years. Today, it is the leading non-tractor manufacturer of agricultural equipment in North America, offering a broad line of implements for the farm equipment industry.
In 1986, Gehl aggressively moved into the light construction equipment market as it established a separate construction sales division. Gehl serves small contractors, sub-contractors and owner-operators with dirt, lifting and paving equipment.
While Gehl has has a presence in international markets for over 50 years, in 1991 it focused its efforts through one group; Gehl International. Gehl International was formed to tap growing worldwide opportunities.

Some of the other big competitors in this field are CAT and AG. It is safe to say that GEHL operates in a niche environment.

Let us dive into the balance sheets to understand GEHL better.

GEHL operates in a capital intensive and cyclical business. In the second half of 2005, GEHL did a secondary public offering of its stock where it raised approximately $46 million to pay out its debt. GEHL operates in two segments - construction and agricultaral equipment category respectively. The construction segment accounts for 71% of the companies business and agricultural segment accounts for the remaining 29% of its business. The construction equipment segment is more profitable accounting for 84% of the profits whereas the agricultural division accounts for the remaining 16% of the profits.

The business is very capital intensive. In 2005, the company spent 7.5 billion in capital expenditures and had about 4.9 billion in amortization. What this figure shows is that the industry is very capital intensive and continuous capital expenditure is needed to keep the competitive position. The huge capital expenditure undermines the free cash flow generation. Even much larger competitors such as Caterpillar see huge swings in their free cash flow from year after year because of these trends.

Despite the stock dilution, the book value in the company increased in 2005 by almost 25%. This seems to be a one time event as this year the growth in book value has been more normal this year and the best case estimate would probably be around 10% gain.

Let us look at some of the ratios in the balance sheet over longer periods of time. Morningstar provides some very useful data and we can analyze the data provided by Morningstar. Ten year analysis of the earning per share shows that GEHL grew at a 8% pace compared to much more impressive 10.6% rate for caterpillar. Caterpillar also provides a dividend to put the full return at around 13%. Clearly, caterpillar is a better business to own than GEHL.

The next thing to look at is the current discount/premium compared to its peers to see if GEHL is a buy. The key factor in favor of GEHL is its price/book ratio. Caterpillar has a P/B of 4 where as GEHL has a better ratio of 1.48. Caterpillar however has a better earning yield compared to GEHL. GEHL has negative free cash flow where as Caterpillar is cash flow positive.

The short term technical analysis shows that the 100 day moving average is below the 200 day moving average - meaning the downtrend in the stock is not over. The insider buying is a clear indication that the stock is undervalued as there has been more insider buying than selling of late. As noted, the company is profitable and is probably worth about $36 a share. The estimates for next year's earnings are good but there are a lot of wild cards about next year - especially the way the economy is going to go. If those earnings estimates are met, it would provide the stock with an impetus to move higher.

Friday, November 03, 2006

Berkshire Hathaway (BRK.A/BRK.B) Q3 Report

In this segment, we will look at Berkshire Hathaway quarterly earnings and see the various segments to see how the different businesses are doing.

First, BRK did extremely well this quarter. The book value increased by 5% from the second quarter. The increase in book value was partially helped by the increase in the equity portfolio.

Let us first analyze the different segments by revenue. The insurance premiums increased by 10% year over year for the third quarter. The primary reason for the big surge in insurance income was the reduced adjustment for insurance losses and loss adjustment accounts compared to the same quarter last year.

The increase in revenues year over year (Q3 of 05 vs Q3 of 06 ) in the various segments is as follows:

Geico - 9.35%
GenRe - -0.05%
Berkshire ReInsurance - 31%
Berkshire Primary Group - 8%
Investment Income - 22%
Total Insurance Group - increased by 11.69%.

The apparel group revenues increased by 44.7%.
The building products group increased by 4.9%
Finance products increased by 6.4%
Flight Services increased by 31%
McLane company increased by 4.4%
Retail increased by 10.4%
Shaw Industries was constant
Utilities increased by 2.85 billion this year compared to the prior year.
Other businesses increased by 87%. This includes the Iscar acquisition.

The revenues in operating businesses increased by 26% year over year.

The one segment that performed a bit below last years level is investment/derivative gains. This caused the EPS to come in below 2K level for this quarter.

The net differential in income from the insurance businesses was 3.427 billion. The income from operating businesses sky rocketed by 52% year over year to 1771 million dollars from 1032 million dollars. The new acquisitions definitely contributed to this phenomenal rise. Almost all the analysts have overlooked this part.

The cash flows from operating activities increased by 39% year over year. Cash and equivalents were at 39 billion dollars. About 7 billion out of this amount is spoken for in the equitas deal in the form of additional reserves to be kept aside. Subtracting the ten billion needed for catastrophic events, there is 22 billion available for general investments.

The quarter was very strong. The net earning came in at 4301 million before income taxes. Both the revenues and net earnings from insurance and other operating businesses have beaten the whisper numbers. The earnings per share beat the wallstreet consensus estimates by a wide margin.

The intrinsic value of BRKA is some where in the 125-131K range from a very conservative view point. If the shares dont go up further this year, investors can expect 10%+ growth in stock price in 2007 and 2008. BRKA is still a cheap stock and a bargain compared to the more popular dot.com stocks of the type of Google, Apple variety.