Tag Archive for 'Money'
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Nilus Mattive Discusses Wrigley Buyout in Latest Issue of Money and Markets
Jupiter, Fla. (PRWEB) May 8, 2008
Nilus Mattive discusses the success that Wrigley Jr. Co. has had in the past and how Mars Inc. has recently acquired the company. Mr. Mattive explains three important lessons to learn from the acquisition of Wrigley.
William Wrigley Jr. Co. recently announced that it is being acquired by privately-held Mars Inc. and Warren Buffett’s Berkshire Hathaway will be financing the deal. Since the initial release of that report, Wrigley’s stock is up 33.7%. Wrigley has become the world’s largest gum company with about 40% of the global market. The company’s products are now sold in more than 180 countries. And despite all that expansion, the Wrigley family has remained intimately involved in the company. Bill Wrigley Jr. is the fourth consecutive family member to run the company, first serving as CEO and more recently as executive chairman. In 2007, the company sold about $ 5.4 billion worth of gum and candy. There are three important lessons to learn from the Wrigley acquisition:
1. When it comes to stocks, look for big brand names, solid product lines, and a global reach. Listen to what Buffett said on CNBC’s Squawk Box show shortly after the Wrigley deal was announced. When asked if his investment was a “recession-proof play,” he responded,
“Yeah. Both companies have great brands. When I talk to classes of university students, for a dozen years or more I’ve used Wrigley as an example. I haven’t known about Mars except that they’re a private company. But there is really nothing that can go wrong with something like the Wrigley or the Mars brands. It’s literally true that they have, ah, faced the test of time over decades and decades and people use more and more of their products every day.”
2. Even in a bad credit environment, there are still big deals being done. Profitable businesses selling at attractive prices will always be around. And savvy investors will always be willing and able to buy them.
Another quote from Buffett’s interview on CNBC:
“Well, I think a good time to buy a really great business is when you can do it. Many, many years ago, as I remember, Herman Lay offered the Frito-Lay company to Coca-Cola. And he offered them the company first, as I understand it, and they decided for one reason or another they didn’t want to do it then. And of course Pepsico bought it and it’s the best thing they ever did. So if you get a chance to buy a wonderful business, then my advice is, grab it.”
3. When it comes to investing, patience and conviction are rewarded. Investing is about steady returns over time. Taking a longer-term approach helps protect investors against the market’s bumps, and positions them for big, sudden gains.
“Timeless investment principles will never change, the very same principles espoused by experts like Warren Buffett. Those are the strategies investors should consider using. That’s why I love companies like Wrigley so much. To the untrained eye, they seem boring. But to those in the know, they’re classics that have stood the test of time, and will steadily increase in value over time,” Mattive exclaims.
To read this issue online, please visit:
About NILUS MATTIVE & MONEY AND MARKETS
Nilus Mattive, a financial analyst at Weiss Research, is the editor of Dividend Superstars, a monthly publication and is also the editor of the company’s daily e-letter, Money and Markets. Formerly a senior editor of Standard & Poor’s The Outlook, the oldest continuously published investment newsletter in the country, he has written for a number of investment websites, including BusinessWeek and Individual Investor. Mr. Mattive is the author of The Standard & Poor’s Guide for the New Investor (McGraw-Hill, 2004) and has appeared on the popular investment radio show, Traders Nation, to discuss his views on personal finance.
Mr. Mattive graduated cum laude from the University of Scranton.
Money and Markets (http://www.moneyandmarkets.com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Jennifer Moran at 561-627-3300 or visit http://www.moneyandmarkets.com.
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Mobile Home Park Money Trees
Mobile home park investors across the nation are raking in the dough while countless single family home real estate investors are struggling to turn a monthly profit. Okay, so it’s not exactly like investing on Madison Ave. However, if you have the knowledge you can do just as well as the Donald Trump in real estate. Just ask Jim Clayton of Clayton homes who sold his company and portfolio of mobile home parks to Warren Buffett for a cool .7 Billion dollars!
Why are mobile home parks the “red-headed stepchildren” of the commercial real estate investment world? Perhaps one of the reasons why most investors ignore this lucrative asset class, other than for obvious eye sore reasons and the negative connotation associated with mobile home parks (we like to call it the Jerry Springer effect), is because they believe it requires too much up front cash and a personal income statement well above their means. This might be true if you were trying to finance your property through a large bank, however many mobile home parks are purchased with much less than 20% down and with little financial reserves in the bank. In fact, many of these mobile home parks are purchased with seller financing.
Small to medium sized parks are typically owned by “mom and pop owners” that have been running or overseeing the managers of their respective parks for a long time. Many of these owners have mobile home parks that have a large vacancy due to the glut of repossessed mobile homes caused by the mobile home industry overheating in the late 1990′s. It is difficult for these owners to refinance or sell the mobile home parks conventionally due to the significant vacancies in their park.
Furthermore, some of these same owners prefer doing business the old fashioned way (without bankers / real estate brokers). In other words, a large percentage of mobile home park owners would rather take some initial financial consideration, make a nice profit each month off the interest on their note and not worry about the day-to-day issues of running the park. Additionally, many do not want to deal with a large tax problem if they sell the park outright. Sure they could 1031 exchange it into something bigger; but then they would be in the same situation all-over again.
Investing in mobile home parks is an absolutely beautiful thing! Not only is it a long term land play, but you have NUMEROUS ways to make money through multiple “profit centers” in a park. Single family homes and apartments are a “one trick pony” with only one source of revenue… the rent payment. It is much easier to achieve your financial goals with mobile home parks due to the following reasons:
1. The parks are usually in a less than favorable part of town. Therefore the land is cheap and you will be spreading that cost over numerous mobile homes.
2. Provided you purchased the right mobile home park, there will be vacancies for you to bring in extra mobile homes. (Yes, that’s right….you want at least 20% of the park vacant so that you have a huge upside!) You’re healthy, sharp and full of energy so you’ll improve the quality of the park, raise rents and maximize your rent roll. By the way, this will immediately increase the value of your mobile home park through the cap rate valuation.
30 Space Park, 0 a month Rent Roll (50% Vacant) = ,000 yearly rent
,000 – 15,000 (33% of rent goes towards Operating Expenses) = ,000
,000 (N.O.I.) / 9.0 % (cap rate) = 3,333 (Your Purchase Price)
30 Space Park, 100% Occupancy, 0 a month rent roll = 5,200 yearly rent
5,200 – ,560 (30% park operating expenses) = ,640
,640 (N.O.I.) / 9.0% (cap rate) = 6,000 (at 100% occupancy)
Over 0,000 profit!
3. If the cash flow of a park is low, you can add additional revenue by putting in a coin operated laundry mats, vending machines, lawn service, day care service, self storage, etc.
4. You can purchase mobile homes at a 40%-50% discount and resell them on terms (either with a lease option or note). Home ownership is the American dream so when you advertise “Own your own home, 00 down, low monthly payments – Bad credit OK, call Boca Vista Mobile Home Park” your phone will ring off the hook, trust me. From there you take their down payment and have them sign your lease option paperwork that details the term of their loan with you. So why sell them one of your mobile homes….isn’t that an asset to the park you ask? Yes, but:
A. You now collect the lot rent. Pure profit with no additional expense.
B. Now you have someone in your park that has pride of ownership and will most likely take better care of the mobile home than a renter.
C. No costly maintenance. The buyer is responsible for all maintenance.
D. You can purchase the mobile home at wholesale cost and sell to your customer for retail. In many cases, you can double your money on each home. In addition, you charge an interest rate of 10-15%.
E. Some of your buyers will not finish out the loan term and will give you back the home in good condition. At that point, the property is 100% yours again, you’ve pocketed the 00 option payment and you start the process all over.
As you can see, mobile home parks are an amazing real estate investment. Where else can you find an income property with so many profit centers (with the exception of self storage). Mobile home parks are huge cash cows and ultimately will become a land play. Take advantage of the untapped opportunity that exists today in the mobile home park industry before it is discovered by the masses!
Corey Donaldson is co-founder of www.MobileHomeUniversity.com. www.MobileHomeUniversity.com is the leading online website for mobile home and mobile home park investor education, providing hard-hitting advice and information to investors about the mobile home industry. Mobile Home University presents a full range of teleseminars, bootcamps, and live events, including Mobile Home Millions (http://mobilehomeuniversity.com/mobilehomemillions/), now in its sixth year. Visitors to MobileHomeUniversity.com may access free articles, an active forum, and a topical and timely blog, as well as opt-in to a free investor’s ezine.
Article from articlesbase.com
Why Warren Buffett can’t make money any more
Diary of a private investor: It might be hard to believe, but sometimes not being mega-rich offers you more opportunities.
Read more on AFP Telegraph Finance News via Yahoo! UK & Ireland Finance
Why Warren Buffett can’t make money any more
Sometimes not being mega-rich offers more opportunities.
Read more on Daily Telegraph
My name is Anthony Green and what I am about to share with you is a real life story.
It’s about a very small team of 6 people (including me) who make an average of 3,846.17 each and every week… by trading on the stock market
And just to save you the math, that adds up to a little over ,000,000 a year. Or just under ,000 a day. In other words, it’s a truckload of money — no matter how you look at it!
But much MORE important..
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In fact, if you just follow my technique, then I guarantee you will be able to turn…
00 into Million in roughly 5 years. Or 00 into .7 Million in just 1.9 years.
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Turn 00 into .7 Million. Guaranteed or get a refund. A trading method that will change your life. Teaches you right from opening an account to become a pro trader. Easy to follow guide.
My name is Anthony Green and I am a Day Trader. I along with my small team make an average of 3,846.17 each and every week by trading on the stock market
Article from articlesbase.com
When I first started raising money from private investors for my real estate investments, I thought pretty much like everyone else did. Private Money ‘Lenders.’ My pitch to prospective investors was in essence: “will you loan me money secured by real estate?
You’re probably familiar with this pitch. Maybe you’ve used it. Perhaps you’ve had success, perhaps not (at least yet). One day I was reading a biography on Warren Buffett, billionaire investor and Chairman of Berkshire Hathaway. Buffett has generated returns in excess of 10% higher than the market for the past 45 years. When Buffett took control of Berkshire Hathaway in 1965, the share price was . Today the share price is 2,000.
Needless to say, I have always thought following and trying to copy Buffett as much as possible – to the greatest extent I could – would be helpful in making more money. Well, one day I was reading a bio on Buffett and I was really enlightened upon reading something not widely talked about, with regard to how Buffett got started in his investing business. You see, Buffett started his investing career by forming partnerships. He brought other people’s money into the partnership, invested it and then he got to keep a part of the profits made. Starting out with 0,000 in partnership funding, he soon had people all over his home town (Omaha) wanting to ‘get in’ with him. After a few years, he had plenty of capital and was on his way. Those first few investors were a catalyst for long term wealth.
The most interesting thing, though, was how Buffett structured his partnerships. Everybody that came in as a partner owned a proportional interest in the partnership. Buffett earned a piece of the profits the money generated (by his management). What Buffett did NOT do, was borrow money. He had equity investors.
A thought hit me when I read this: “I should do the same thing.” Instead of borrowing money, secured by mortgages and jumping through hoops each time a deal closed (buy side and sell side), I would raise an amount and each investor would own a proportionate interest in the company, and I would keep part of the profits generated.
This was really rocket fuel at the time. My business started growing much faster after I started raising equity capital versus only private money loans. Another big side benefit of this revolution in my business was that I was able to bring in more private money, because my offering had an appeal to higher net worth investors that could write bigger checks. These investors were less concerned about security and collateral and more concerned about returns and tax consequences of investment. Off and running I was. It doesn’t take much to give your business a boost and you never know where the next “lightening” moment is going to strike you.
I heard a long time ago that “luck is when preparation meets opportunity.” With real estate, the opportunity is there right now, so get prepared and then prepare to get lucky.
Adam Davis is a real estate investor, author, speaker and founder of Ultimate Private Money. He teaches real estate investors how to raise capital from private investors. Adam has completed hundreds of real estate deals- from single family house flips, lease options to apartment buildings, land contracts and hard money loans – all with none of his own money. All told, he has raised millions of dollars from private individuals to finance real estate deals. For a FREE audio program on how to get private money go to: http://www.UltimatePrivateMoney.com.
Article from articlesbase.com
In 1999, Warren Buffett was interviewed by Fortune magazine and discussed his thoughts on the stock market and how it might do over the next 17 years. It was, to put it mildly, a dour assessment. His views were triggered by surveys showing an unusually high level of expectations and confidence among both new and experienced investors. As we look to the future, it’s a good time to review Buffett’s thoughts from the second half of 1999. Based on his historical analysis of the U.S. stock market, Buffett concluded that stocks could return 4% per year on average including dividends (+2%) and adjusted for inflation (-2%) from November of 1999 to November of 2016. This compares to around an 8% real return earned from 1926 to today. Buffett said that if he were to be wrong, he’d guess the actual results might be lower than 4%. Here is how he arrived at his forecast.
First, the crowd psychology was all wrong. In July 1999, UBS Securities found by surveying experienced clients that they expected a 12.9% return over the next five years and less experienced clients expected 22%. Buffett described this as “rearview mirror” investing. The prior five years had provided very high returns (abnormally high) and investors were extrapolating those results forward.
Second, Buffett acknowledged that the prevailing interest rates on relatively low risk investments like treasury bonds and notes have a great deal to do with pricing the future profits of common stocks. If the interest rates are high on low risk investments, investors feel there is no need to take risk. However, when the prevailing interest rates decline, payment of future profits are worth more to investors. Between 1964 and 1981 the Gross Domestic Product (GDP) of the U.S. grew 370%, but investors preferred inflation protection and earning interest as rates went higher and higher.
Third, corporate profitability as a percentage of Gross Domestic Product (GDP) is an important variable. When profitability rises over long stretches of time, stocks can get more popular and when profitability falls, stocks can lose popularity. Profits as a percentage of GDP bottomed at 3.5% in 1982 and rose dramatically over the next 17 years during a period of great stock popularity.
Today the U.S. stock market is sitting about 5-10% below where it was when the original interview was printed in November of 1999. The first question for us is, “how will we do going forward if his 17-year prediction comes true”? The second question is, “have those three important variables changed since then to affect his prediction?”
The good news isn’t that we saved a bunch of money on our car insurance, but that Buffett’s 1999 prediction was for the S&P 500 Index to hit 2900 by November of 2016. From where we are today, around 1300 on the S&P 500 Index, it would be a gain of 115% in the remaining 8-plus years or somewhere close to 9% per year appreciation. This could exceed the historical 8% norm.
The variables that he felt could change the outcome of his prediction also paint a positive picture. The crowd psychology of the stock market is about as favorable as it can get because the expectations of investors are as low as at other major market bottoms. First, looking backwards in the rearview mirror for four, five and eight years makes an investor wonder if there is any money to be made owning quality U.S. companies. Second, individual investors have panicked out of the market for the last 60 to 90 days and the American Association of Individual Investors weekly poll recently showed their members are the most negative they’ve been in 20 years (the direct opposite of 8 years ago). Third, a major investment firm survey showed that the big money institutional investors are as negative as they have been anytime in the last 7 years (including right after the 9/11 attacks). Fourth, among the historically smart money crowd, the market-making specialists on the New York Stock Exchange (NYSE) are selling short the least amount of stock as a percentage of overall short sales in 40 years, officers and directors of publicly-traded companies are buying at record levels and wealthy billionaires like Buffett, Wilbur Ross, Warburg Pincus and Sandy Weill are buying bargains like mad men.
Interest rates on Treasury Notes and Bonds are well lower than they were in November of 1999 (2-year notes around 1.8% versus 5% and 10-year bonds at 3.6% versus 6% in 1999). This indicates to Buffett that the future profits of the companies should be valued more highly because of a less competitive risk-less rate and a lower discount rate for computing present value.
The profitability scorecard shows a mixed picture. Companies have been much more profitable since 1999 than Buffett expected, but those profits are high in relation to GDP, which argues that profits growth will be harder to come by in the future. However, in 1999 Buffett pointed out that there was much more economic growth between 1964 and 1981 (370%) with lousy stock market results. We assume at this point that the cyclical industries (Oil, Basic Materials and Heavy Industrial) which are enjoying record profit margins will see profits and margins recede through this business cycle. Simultaneously, the financial service companies are reporting the fallout from the “sub-prime debacle” and the combination of the two sector profit margin declines (cyclical and financial) could quickly drive the ratio of profits to GDP back to a comfortable zone. As we have seen in the market-place, “what the Lord giveth, the Lord taketh away.”
Let me tie it all together. Warren Buffett correctly predicted a difficult 17-year stretch in the stock market back in November of 1999. Based on his prediction and the variables which he felt would most affect it, we feel the next 8.5 years could be an excellent period for the kind of large capitalization recession-resistant stocks we like to own; even if his dour prediction comes true. Buffett followed his teacher, Ben Graham, who taught him the concept of “margin of safety” and we believe our participation going forward has one. We look anxiously and positively to the remainder of 2008 expecting our scenario could play out in the marketplace.
Smead Capital Management, Inc.(“SCM”) is an SEC registered investment adviser with its principal place of business in the State of Washington. SCM and its representatives are in compliance with the current registration and notice filing requirements imposed upon registered investment advisers by those states in which SCM maintains clients. SCM may only transact business in those states in which it is notice filed or qualifies for an exemption or exclusion from notice filing requirements.
This newsletter contains general information that is not suitable for everyone. Any information contained in this newsletter represents SCM’s opinions, and should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results. There is no guarantee that the views and opinions expressed in this newsletter will come to pass. Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. SCM cannot assess, verify or guarantee the suitability of any particular investment to any particular situation and the reader of this newsletter bears complete responsibility for its own investment research and should seek the advice of a qualified investment professional that provides individualized advice prior to making any investment decisions. All opinions expressed and information and data provided therein are subject to change without notice. SCM, its officers, directors, employees and/or affiliates, may have positions in, and may, from time-to-time make purchases or sales of the securities discussed or mentioned in the Publications.
For additional information about SCM, including fees and services, send for our disclosure statement as set forth on Form ADV from SCM using the contact information herein. Please read the disclosure statement carefully before you invest or send money.
William Smead is the founder of Smead Capital Management, where he oversees all activities of the firm. As Chief Investment Officer he is responsible for all investment and portfolio decisions as well as reviewing the implementation of those decisions. Prior to starting SCM he was Portfolio Manager of the Smead Investment Group of Wachovia Securities. He has over twenty seven years of experience in the investment industry.
Article from articlesbase.com
Zuckerberg, Icahn to give away bulk of their money
Facebook founder Mark Zuckerberg and 16 other wealthy U.S. individuals and families agreed to give most of their fortunes to charity, joining a pledge started by billionaires Warren Buffett and Bill Gates. Investor Carl…
Read more on San Francisco Chronicle
More U.S. billionaires pledge to give away wealth
Another 17 U.S. billionaires, including Facebook co-founders Mark Zuckerberg and Dustin Moskovitz, have pledged to give away at least half their fortunes in a philanthropic campaign led by Warren Buffett and Bill Gates.
Read more on Reuters via Yahoo! News