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Stocks B / Berkshire Hathaway

URL:  https://boards.fool.com/if-you-look-through-the-investor-presentations-34053847.aspx

Subject:  Re: Maystery purchase Date:  11/5/2018  8:17 AM
Author:  mungofitch Number:  239452 of 243205

If you look through the investor presentations you can see steady improvement over the last few years.

I certainly agree that there has been improvement.
If it continues, then yes, they may become a company worth investing in.
But improvement in a business's fundamental economics is not something that extrapolates well.
Maybe Mr Buffett and Mr Munger are in a position to forecast the last half of the needed turnaround, but I am not.
I wouldn't look at a bank that isn't already demonstrably capable averaging double digit ROE through the business cycle.
Think of all the years that people have been waiting for the imminent improvement at Deutsche.


Not to nitpick but there were some truly non recurring items in Q4 2017 like the 2.9bn loss from the Tax Act.
True.
But that doesn't actually change things much. $2.9bn is a lot, but not in comparison to net income to shareholders of $22bn.
Taking out that hit, four quarter ROA and ROE based on comprehensive income rise to 0.81% and 7.05%.
Not yet up to the bottom end of acceptable, in my books.
So, the improvement has to last.

Here's what a nicer bank ROE history looks like : )
static.seekingalpha.com/uploads/2017/6/11/47781612-149721453...
That's SVNLY, trading near five year lows.

Jim
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