Warren Buffett Is Going to Waste

Warren Buffett is mistakenly called a ‘value investor.’ He isn’t – or at least he hasn’t been since the early 1960s.

To me, a value investor is someone who buys an asset because it is worth less than an easily measurable way of determining value. A basic example is the stock of a company that has $100 million of cash in the bank, no debt, and a $50 million market cap (a situation which happens often during market downturns). Then it is probably a good value. Eventually it will be at least worth its cash levels of $100 million as long as its not losing money.

Another metric that value investors use is the P/E ratio. If a stock is trading at only five times its earnings (e.g. if it earns $10 million and its market capitalization is $50 million) then it is usually a good buy.

There is more to it, but that is value investing at its most basic.

Buffett is more of a demographic investor. His long-term nature means he generally doesn’t do what value guys do: buy when stock that is worth less than its value; sell when it hits its value. He’s got too much money to work with and so takes a much longer term view.

Examples:

Demographic stance: Everyone in the world will eventually drink flavored fizzy drinks
Investment stance: When other investors were down on Coca-Cola (KO), Buffett was a buyer

Demographic stance: Everyone in the world will eventually use a credit card.
Investment stance: Buy American Express (AXP). When Buffett first bought AXP in the early 60s it was when they were in the midst of the famous (at that time) ‘salad oil scandal.’ Investors were fleeing the stock. Buffett stood behind the cashier at his favorite restaurant, saw how many people were using the card, and decided this was a trend that was not going away.

Demographic stance: Everyone in the world will eventually shave with disposable razors (well, at least the men in the world would).
Investment stance: Gillette was having issues and vultures were circling. Buffett came in as a white knight and bought a chunk of preferred stock which he converted to common a few years later and continued to hold through its acquisition by Procter & Gamble.

Demographic stance: China will continue to be a voracious consumer of U.S. commodities.
Investment: Buy the railroad that transports those commodities from the Midwest to the shipping lanes of the West Coast – Burlington Northern (BNI)

So what’s the new demographic stance right now?

The average American creates more solid waste than ever before and that trend will never stop.

Since 1960, the amount of solid waste we create per year has tripled (to 400 million tons)while population has gone up less than 100%. Every year we create more trash than the year before.

Buffett tends to piggyback his bridge partner, a young former software engineer named Bill Gates. Gates invests through his personal investment vehicle (like most other former software engineers), Cascade Investments. Cascade was the largest shareholder of Allied Waste, which has since merged with Republic Service Group (RSG). Gates is now the largest shareholder of RSG. He also owns a stake in Waste Management (WM).

Gates also bought railroads (specifically Canadian National Railroad (CNI) ) long before Buffett. (Buffett has said, ‘I wish I had started buying railroads when Bill first got into them’).

Gates owns 57 million shares of RSG. Now Buffett has raised his stake from 3.6 million shares to 8.3 million shares, according to the most recent filings.

Buffett also added to his position in Iron Mountain (IRM) which, among other services in information management, provides ‘Secure shredding services’ to their clients. Gates also owns shares of Waste Management (WM) through his foundation.

I like to look at not only what Buffett is doing but the funds that tend to follow what Buffett is doing.

It turns out that other hedge funds that typically piggyback Buffett are buying in the waste space. Bridger Management, with $4bb in assets, in addition to owning Berkshire Hathaway and Republic has also been buying positions in Casella Waste (CWST) and Waste Connections (WCN)

The trash sector is perhaps the biggest demographic trend since the Internet bubble and following in the footsteps of the greats like Buffett and Gates (and their followers) is the best way to play the sector.

学巴菲特从垃圾处理业中“淘宝”

沃伦•巴菲特(Warren Buffett)被错误地称为“价值投资者”。其实他不是──至少从上世纪60年代初开始就不是了。

在我看来,价值投资者买进资产的原因是资产价值低于其一望便知的价值。一个基本的例子就是,一家公司在银行有一亿美元现金,无负债,而其市值为5,000万美元(通常在市场低迷时会出现这种情况),那么这家公司的股票可能是很好的价值投资对象。只要不出现亏损,最终其价值至少会达到其一亿美元的现金水平。

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价值投资者使用的另一个标准是市盈率。如果一只股票市盈率仅为五倍(比如说其收益为1,000万美元,市值5,000万美元),那它通常也是不错的买进对象。

此外还有更多内容,不过价值投资最基本的就是这些了。

巴菲特更多的是一位运用人口统计学的投资者。他长线投资的特性意味着他通常不会如价值投资者一样行事:在股票被低估的时候买进;当它达到应有的价值时卖出。他手中资金太多,因此着眼也更长远。

以下是一些例子:

从人口统计学角度来看:世界上的每个人最终都会喝调味碳酸饮料。

从投资角度:当其他投资者全都不看好可口可乐公司(Coca-Cola)时,巴菲特却在买进。

统计学角度:全世界所有人最终都会用上信用卡。

投资角度:买进美国运通公司(American Express)的股票。巴菲特在上世纪60年代初首次买进美国运通时,它正处于“色拉油丑闻”之中。投资者们对其股票避之犹恐不及。巴菲特站在他最喜欢的餐馆的收银机后面,看到使用美国运通信用卡的人为数甚众,因而判定使用美国运通卡的风潮肯定不会消退。

统计学角度:世上所有人最终都会使用一次性剃须刀(至少是所有的男性)。

投资:吉列(Gillette)当时正在抵挡投机者的恶意收购。巴菲特以救星姿态出现,买进了一大批优先股,在几年后转换为普通股并继续持有,直至吉列被宝洁(Procter & Gamble)收购。

统计学角度:中国将继续大量消耗美国商品。

投资角度:买进铁路公司Burlington Northern的股票。中国需求的商品通过这家公司从美国中西部运到西海岸的港口装船。

那么,最新的人口统计学说明了什么呢?

美国的固体废物人均产生量比以往任何时候都要多,而且这个趋势还将继续下去。

与1960年相比,美国人在人口增长不到一倍的情况下,年固体废物产生量增长了两倍,达到四亿吨。美国的固体废物产生量逐年增长。

巴菲特可能走他的桥牌牌友、前软件工程师比尔•盖茨(Bill Gates)的老路。和其他从软件工程师转型为商业巨子的人士一样,盖茨也有自己的资金管理公司卡斯凯德投资公司(Cascade Investments),并通过它进行投资。卡斯凯德曾经是垃圾处理企业Allied Waste最大的股东,在Republic Service Group将其收购后,卡斯凯德又成了Republic Service Group最大的股东。此外,盖茨还拥有另一家垃圾处理公司Waste Management的股权。

盖茨还早就抢先于巴菲特吸纳了多家铁路公司的股权,特别是参股了加拿大国家铁路公司(Canadian National Railway)。巴菲特曾经说过,希望自己在盖茨首次买进铁路类股时就开始投资这一领域。

最新的报告显示,盖茨持有Republic Service Group 5,700万股股票,巴菲特的持股量也从360万股上升到了830万股。

巴菲特还增持了数据与文件存储服务提供商Iron Mountain Inc.的股票。这家公司除了提供一般的信息管理服务外,还为客户进行安全的信息粉碎处理服务。盖茨还通过他的基金会持股Waste Management公司。

我感兴趣的不仅仅是巴菲特要怎么做,还想看看惯于跟风巴菲特的基金将有何动作。

结果我发现,通常追随巴菲特的对冲基金正在买进垃圾处理公司的股票。拥有40亿美元资产的投资公司Bridger Management也在买进垃圾处理公司Casella Waste和Waste Connections的股票,此外这家公司还持有伯克希尔哈撒韦(Berkshire Hathaway)和Republic Service Group的股票。

继互联网泡沫之后,垃圾处理行业或许是从人口统计学上看来最有“钱途”的行业了。如果你想在这个领域大展拳脚,那么跟定巴菲特、盖茨或他们的追随者才是上上策。

James Altucher

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