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Stocks B / Berkshire Hathaway


Subject:  Re: Berkshire buys Heinz Date:  2/14/2013  4:08 PM
Author:  knighttof3 Number:  198601 of 236823

WFC is at 9x earnings. Even KO is much cheaper.

Big consumer staples always enjoy a bigger P/E thanks to the defensive bond-like stream of earnings. You can't compare them to banks like WFC.
KO and HNZ were both at 19-ish P/E before the announcement.
Maybe he overpaid, but I'd like to get 9% on 2/3 of my money and about 2.88% on the other 1/3 which is certain to grow with inflation.
It's also possible that 3G runs HNZ into the ground or that they never recover from the debt burden and the preferred dividend. It's also possible that Buffett has considered these factors.
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