Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev | Next
Author: bearwoods One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 214198  
Subject: Re: OT: Western Union Date: 3/28/2013 8:17 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 3
Rationalwalk...

I agree with your analysis of WU. It might very well make a good fit for Berkshire. (I touch on why I don't think that will happen below.) In the mean time the company continues to do all the right things from a capital management prospective.

Dividends and buybacks. The company bought back $370 million of the $760 million in buybacks the board authorized and announced in October. That buyback was announced through end 2013. So they bought back about 1/2 half of the authorized amount in 1/5 of the allocated time. I would not be surprised if they buy back another $370 million in the 1st quarter and then authorize more. As you noted, they have ample FCF and borrowing capacity to buy back a substantial portion of their stock. In addition if you look back at previous pricing initiatives management has a good track record of fulfilling on the promise of higher revenues and profits a couple of years out.

For Berkshire, I think that the Buffett is more interested in capital intensive businesses now. These can grow and soak up cash so that the future capital allocators job is less important / overwhelming. Imagine if all of Berkshire operating cash flow needed to be reinvested in new business 10 years from now. It would be overwhelming. (A dividend is another way to partially solve this problem.)

Buffett is painting a picture and he wants to leave something that does not need to have increasing larger "scenes" added to it every year.

As an owner I am totally happy with this by the way. The market would not trust a future capital allocator in the same way as Buffett (or would I).

Disclosure I am long WU since the dip in the fall. If Buffett does not buy it someone else might.
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev | Next

Announcements

Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Post of the Day:
Saul's Investing Discussions

Why Did I Buy a Bunch of PFIE Today?
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement