http://www.oldschoolvalue.

com
Warren Buffett Stock Portfolio Analysis - 2009 Q2 13-F

Ben
Current DCF Multiples
No. Ticker Company Name Industry Remarks Graham
Price Value Valuation
Formula
American Express Company (American Express) is a global payments and travel company.
The Company�s principal products and services are charge and credit payment card
products, and travel-related services offered to consumers and businesses around the
1 AXP American Express Co world. The Company�s Global Consumer Group offers a range of products and services, (Financials are outside my circle of competence) $34.09
including charge and lending (credit) card products for consumers and small businesses
worldwide; consumer travel services, and stored value products, such as Travelers Cheques
and pre-paid products. The Global Business-to-Business Group provides, among other
products and services, business travel, corporate cards, and other expense management
Bank of America Corporation (Bank of America) is a bank holding company and a financial
holding company. Through its banking subsidiaries and various non-banking subsidiaries
throughout the United States and in selected international markets, it provides a diversified
2 BAC Bank of America Corp range of banking and non-banking financial services and products through three business (Financials are outside my circle of competence) $17.04
segments: Global Consumer and Small Business Banking, Global Corporate and Investment
Banking and Global Wealth and Investment Management. Bank of America operates in 50
states, the District of Columbia and more than 40 foreign countries. Bank of America has
* Gross, operating and net margins steadily increasing
even in recessionary environment
* FCF positive for more than 10 years
* Inventory turnover consistent but margins have
Becton, Dickinson and Company (BD) is a medical technology company engaged in the increased. Leads to higher efficiency and profit.
manufacture and sale of a range of medical supplies, devices, laboratory equipment and * ROA and ROE increasing steadily
diagnostic products used by healthcare institutions, life science researchers, clinical * Reduced debt
3 BDX Becton Dickinson & Co $70.35 $87.00 $110.00 $76.00
laboratories, industry and the general public. The segments in which the Company operates * Has plenty of FCF to pay down debt rather than issue
include BD Medical, BD Diagnostics and BD Biosciences. On May 12, 2008, the Company stock or seek loans
acquired Cytopeia Inc. * CROIC is very steady at 17%. Company makes 17c off
every $1 of cash invested
* FCF/sales = 12%. Converts 12c of every dollar in sales
to FCF.

Burlington Northern Santa Fe Corporation (BNSF) is a holding company. The Company,

* Impressive FCF growth previous 4 years and especially
through its subsidiaries, is engaged primarily in the freight rail transportation business. BNSF
last year
Railway Company (BNSF Railway) is the Company�s principal operating subsidiary. BNSF
* High capex but latest annual result was extraordinary
Railway operates various facilities and equipment to support its transportation system,
* lower sales and margins but improved efficiency in
including its infrastructure and locomotives and freight cars. It also owns or leases other
Burlington Northern returns and turnover
4 BNI equipment to support rail operations, including containers, chassis and vehicles. Support $83.67 $87.00 $145.00 $76.00
Santa Fe Corp * CROIC is on the low side at 3%
facilities for rail operations include yards and terminals throughout its rail network, system
* Top line growth is also above average at 14%
locomotive shops to perform locomotive servicing and maintenance, a centralized network
* Debt to equity ratio is above 200% which isn’t
operations center for train dispatching and network operations monitoring and
uncommon for capex heavy companies
management in Fort Worth, Texas, regional dispatching centers, computers,
telecommunications equipment, signal systems and other support systems.

* Increase in gross margins but decline in operating and

net margin
* Increased cash levels but a huge amount
CarMax, Inc. is a holding company and its operations are conducted through its subsidiaries. * Highest accounts receivables to date. Check whether it
The Company is a retailer of used cars, which retailed 345,465 used vehicles during the fiscal is due to non paying customers or more lenient terms.
year ended February 28, 2009 (fiscal 2009). As of February 28, 2009, it operated 100 used * No intangibles (as it should be with low to no moat
car superstores in 46 metropolitan markets. In addition, it sold 194,081 wholesale vehicles, companies)
5 KMX Carmax Inc during fiscal 2009, through on-site auctions. The Company purchases, reconditions and sells * No long term debt $17.89 NA $11-15 NA
used vehicles. Approximately 85% of the used vehicles it retails are 1 to 6 years old with * Capex a little lower than the upper range
fewer than 60,000 miles. It also offers a selection of used vehicles at each superstore that * Latest year cash from operations included higher
are more than 6 years old or have more than 60,000 miles, if they meet similar quality amount of interest from securities and cash from
standards. reduction inventory
* Inventory turnover at the upper range
* FCF and CROIC close to 0%

The Coca-Cola Company is a manufacturer, distributor and marketer of nonalcoholic

beverage concentrates and syrups in the world. Finished beverage products bearing its
* Price and value have been consistent
trademarks are sold in more than 200 countries. The Company markets nonalcoholic
* Numbers throughout the past 10 years are excellent
sparkling brands, which include Diet Coke, Fanta and Sprite. The Company manufactures
6 KO Coca-Cola Co * Previous business spider graph, fair value estimate and $50.63 $38.00 $61.00 Fair
beverage concentrates and syrups, which it sells to bottling and canning operations,
automated KO dcf valuation
fountain wholesalers and some fountain retailers, as well as finished beverages, which it
sells primarily to distributors. The Company owns or licenses approximately 500 brands,
including diet and light beverages, waters, enhanced waters, juices and juice drinks, teas,
coffees, and energy and sports drinks. During 2008, the Company acquired the brands and
Comcast Corporation is a provider of cable services, offering a variety of entertainment,
* FCF and CROIC are close. 10.9% and 9.4% respectively.
information and communications services to residential and commercial customers. As of
This scenario occurs when a company has matured
December 31, 2008, its cable systems served approximately 24.2 million video customers,
without much growth to be expected.
14.9 million high-speed Internet customers and 6.5 million phone customers, and passed
* Excellent margins and very stable returns in both the
over 50.6 million homes in 39 states and the District of Columbia. It operates in two
2001 and 2008 recession
7 CMCSA Comcast Corp segments: Cable and Programming. The Cable segment, which generates approximately $16.85 NA $22.00 $12.48
* Not over leveraged
95% of the Company�s consolidated revenue, manages and operates cable systems in the
* Plenty of FCF to cover debt
United States. The Cable segment also includes the operations of its regional sports
* Big decrease in tangible shareholders equity since 2005
networks. The Programming segment consists of its national programming networks,
* Intangibles more than double in 2007
including E!, Golf Channel, VERSUS, G4 and Style. In June 2009, the Company acquired from
Hearst its 50% interest in New England Cable News (NECN). Comcast owns 100% of NECN.

Comdisco Holding Company, Inc. (Comdisco Holding) was formed for the purpose of selling,
collecting or otherwise reducing to money in an orderly manner the remaining assets of the Using Ben Graham Net Net Spreadsheet, the liquidation
Company and all of its direct and indirect subsidiaries, including Comdisco, Inc. The value looks to be worth $8.38 while the current price is at
Company's business purpose is limited to the orderly sale or run-off of all its remaining $7.50. With most of the assets in cash, this would have
assets. Comdisco Holding Company, Inc., as the successor company to Comdisco, Inc., been a pretty good liquidation play had the spread been
Comdisco Holdings
8 CDCO emerged from bankruptcy effective August 12, 2002. Pursuant to the Company�s first wider. $7.55 NA NA NA
Company Inc
amended joint plan of reorganization, Comdisco, Inc. emerged as a wholly owned subsidiary
of Comdisco Holding. Since emerging from bankruptcy proceedings, the Company has Since the company emerged from bankruptcy in 2002, it
focused on the monetization of its remaining assets. Prior to the bankruptcy, Comdisco, Inc. doesn’t seem like CDCO is in a hurry to sell the remaining
provided technology services worldwide to help its customers maximize technology assets.
functionality, predictability and availability.

ConocoPhillips (ConocoPhillips) is an international, integrated energy company. The

Company�s business is organized into six segments. Exploration and Production (E&P) * First time looking at the financials but now see from
segment explores for, produces and markets crude oil, natural gas and natural gas liquids. the rear view mirror why Buffett announced it was a big
Midstream segment gathers, processes and markets natural gas produced by ConocoPhillips mistake
and others, and fractionates and markets natural gas liquids. Midstream segment consists * COP lost a HUGE amount of money in 2008
of its 50% equity investment in DCP Midstream, LLC. Refining and Marketing (R&M) segment * Increased debt to $27 billion
9 COP ConocoPhillips $45.83 $64.00 NA Fair
purchases, refines, markets and transports crude oil and petroleum products. LUKOIL * Large impairments seem to be showing up each
Investment segment consists of its equity investment in the ordinary shares of OAO LUKOIL. quarter wiping out shareholders equity
Chemicals segment manufactures and markets petrochemicals and plastics and consists of * Good FCF numbers except for 2008. Will normalize for
its 50% equity investment in Chevron Phillips Chemical Company LLC (CPChem). Emerging dcf value below
Businesses segment includes the Company�s investment in new technologies or businesses
outside its scope of operations.

Costco Wholesale Corporation (Costco) operates membership warehouses-based offering

its members products in a range of merchandise categories. It buys the majority of its * FCF isn’t as high as it used to be
merchandise directly from manufacturers and route it to a cross-docking consolidation * Rock solid margins - proves management is on top of
point (depot) or directly to its warehouses. The Company�s depots receive container-based their game
10 COST Costco Wholesale Corp $57.06 $39.00 $47.00 $37.00
shipments from manufacturers and reallocate these goods for shipment to its individual * Inventory continues to churn at a faster rate
warehouses, generally in less than 24 hours. The Company�s warehouse format averages * Average CROIC but somewhat consistent
approximately 140,000 square feet. Its warehouses operate on a seven-day, 69-hour week.
It carries an average of approximately 4,000 active stockkeeping units (SKUs) per warehouse
in its core warehouse business. Many consumable products are offered for sale in case,
 * Looking back at my previous ETN stock analysis, looks
like my assumptions were over conservative.
Eaton Corporation (Eaton) is a diversified power management company. The Company is * CROIC has been amazing past 10 years. Management is
engaged in the manufacturing of electrical components and systems for power quality, doing a great job of using its cash.
distribution and control; hydraulics components, systems and services for industrial and * Plenty of FCF
mobile equipment; aerospace fuel, hydraulics and pneumatic systems for commercial and * Debt level has been the same past few years
military use, and truck and automotive drivetrain and powertrain systems for performance, * 8c from every dollar of sales converts down to the
fuel economy and safety. In July 2009, the Company announced that Eaton's Automotive bottom line
11 ETN Eaton Corp $56.43 $76.42 $134.53 Fair
and Truck Groups are being consolidated into one operating unit. The combined * Good margins prove the business can make money
organization will be known as the Vehicle Group. On July 31, 2008, the Company acquired PK during a hard recession
Electronics. On July 31, 2008, the Company completed the acquisition of the engine valves * Regression of earnings compared over multiple
business of Kirloskar Oil Engines Limited. On October 2, 2008, the Company acquired Integ timeframes is flat meaning that growth is coming from
Holding Limited. In September 2009, Eaton acquired an additional 50% of the outstanding other than organic business. Shown by the goodwill
shares of Micro Innovation Holding AG. balance which I also discussed in the previous ETN stock
valuation.

* Horrific year in 2008

Gannett Co., Inc. is an international news and information company. In the United States, * Huge impairments of goodwill and PP&E
the Company publishes 85 daily newspapers, including USA TODAY, and nearly 850 non- * Printing equipment would also be of little value if
daily publications. Along with each of its daily newspapers, the Company operates Websites resold
offering news, information and advertising that is customized for the market served and * Totally contrarian investment
12 GCI Gannett Co Inc integrated with its publishing operations. Newspaper publishing operations in the United * Declining sales since 2006 and so has earnings $8.11 $30.47 $33.21 NA
Kingdom, operating as Newsquest, include 17 paid-for daily newspapers, almost 200 non- * Amazing CROIC despite performance. Excellent
daily publications, locally integrated Websites and classified business Websites with national management
reach. The company has three principal business segments: publishing, digital and * Business operations can generate FCF
broadcasting. * Declining capex

General Electric Company (GE) is a diversified technology, media and financial services
* Plenty of cash from all of its operations
company. Its products and services include aircraft engines, power generation, water
* High debt ratio and increasing past 2-3 years
processing, security technology, medical imaging, business and consumer financing, media
* Average CROIC of 3%
content and industrial products. As of December 31, 2008, GE operated in five segments:
13 GE General Electric Co * FCF/Sales is pretty good at 8% $14.87 $15.64 $43.89 $18.75
Energy Infrastructure, Technology Infrastructure, NBC Universal, Capital Finance and
* Stable inventory turnover in line with past 10 years
Consumer & Industrial. In January 2009, the Company acquired Interbanca S.p.A., an Italian
* Maybe a good company but not great
corporate bank. In April 2008, Oil & Gas completed the acquisition of the Hydril Pressure
Controls business from Tenaris. In September 2008, the Company announced the sale of its
Japanese consumer finance business to Shinsei Bank. During the year ended December 31,
GlaxoSmithKline plc (GSK) is a global healthcare group, which is engaged in the creation and
discovery, development, manufacture and marketing of pharmaceutical products, including * Lots of FCF but slow growth
vaccines, over-the-counter (OTC) medicines and health-related consumer products. GSK�s * Excellent CROIC above 30%. Able to make returns of
principal pharmaceutical products include medicines in the therapeutic areas, such as over 30% from their use of cash.
respiratory, central nervous system, anti-virals, anti-bacterials, metabolic, vaccines, * Pharma companies also are able to drop the sales
Glaxosmithklineadr cardiovascular and urogenital, oncology and emesis. It has operations in some 114 countries figures directly to the FCF line
14 GSK $39.22 $43.79 NA $32.00
ADR rep 2 ord shs and products sold in over 150 countries. The Company operates in two segments: * High margins and returns as expected from drug
Pharmaceuticals (prescription pharmaceuticals and vaccines) and Consumer Healthcare. On companies
October 14, 2008, it acquired the Egyptian mature products business of Bristol Myers * Big drop is tangible shareholders equity due to
Squibb Company (BMS). In July 2009, BMS' branded generics business, which comprises a goodwill fr0m acquisition activity
portfolio of 13 branded pharmaceuticals was acquired by the Company. In July 2009, GSK
acquired Stiefel Laboratories, Inc.

The Home Depot, Inc.is a home improvement retailer. The Home Depot stores sell an
* Struggled with the housing bust
assortment of building materials, home improvement and lawn and garden products, and
* Low growth
provide a number of services. The Home Depot stores average approximately 105,000
* Slowed down opening new stores dramatically if you
square feet of enclosed space, with approximately 24,000 additional square feet of outside
look at capex further
15 HD Home Depot Inc garden area. During the fiscal year ended February 1, 2009 (fiscal 2008), the Company had $27.38 $27.23 $26.39 $25.00
* Plenty of FCF
2,233 The Home Depot stores located throughout the United States, including the
* Average CROIC, FCF/Sales, Revenue growth, earning
Commonwealth of Puerto Rico and the territories of the United States Virgin Islands and
growth
Guam, Canada, China and Mexico. On January 26, 2009, the Company announced the closing
of its EXPO, THD Design Center and Yardbirds stores.

Ingersoll-Rand plc, formerly Ingersoll-Rand Company Limited, along with its subsidiaries, is a
* Big increase in goodwill in 2008
diversified, global company that provides products, services and solutions to enhance the
* FCF positive yet erratic at times. Median of 11% FCF
quality of air in homes and buildings, transport and protect food and perishables, secure
growth
homes and commercial properties, and enhance industrial productivity. The Company has
* Excellent CROIC. Buffett sure does a good job of
four segments: Air Conditioning Systems and Services, Climate Control Technologies,
16 IR Ingersoll-Rand plc picking effective management at the helm $31.78 $20.00 $51.30 Fair
Industrial Technologies and Security Technologies. The Company generates revenue
* Consistency in ROA and ROE when looking at multiple
primarily through the design, manufacture, sale and service of a diverse portfolio of
timeframes
industrial and commercial products that include brand names, such as Club Car, Hussmann,
* Revenue growth on the low side
Ingersoll-Rand, Schlage, Thermo King and Trane. On June 5, 2008, the Company completed
the acquisition of Trane Inc.

Iron Mountain Incorporated (IMI) provides information protection and storage services.
These services can be divided into three service categories: records management services, * Lost more FCF than it made throughout the past 10
data protection and recovery services, and information destruction services. The Company years
offers both physical services and technology solutions in each of these categories. Media * None or very low FCF growth, CROIC, returns
17 IRM Iron Mountain Inc $28.10 NA $20.79 $13.40
formats can be divided into physical and electronic records. Physical records include paper * Steady increase in sales but can’t convert it to FCF
documents, as well as all other non-electronic media such as microfilm and microfiche, * Doesn’t look like a Buffett pick at all
master audio and videotapes, film, X-rays and blueprints. Electronic records include email
and various forms of magnetic media such as computer tapes and hard drives and optical
disks. IMI&derives
Johnson Johnsonmost of its revenues
is engaged from theand
in the research storage of paper documents
development, manufactureand storage-
and sale of a
range of products in the healthcare field. Johnson & Johnson has more than 250 operating
companies. The Company operates in three segments. The Consumer segment includes a
range of products used in the baby care, skin care, oral care, wound care and women�s Good to excellent everything as I mentioned in the JNJ
18 JNJ Johnson & Johnson $60.92 $70.27 $109.84 Fair
healthcare fields, as well as nutritional and over-the-counter pharmaceutical products. The analysis.
Pharmaceutical segment includes products in the therapeutic areas, such as anti-infective,
antipsychotic, cardiovascular, contraceptive, dermatology, gastrointestinal, hematology,
immunology, neurology, oncology, pain management, urology and virology. The Medical
Devices and Diagnostics segment includes a range of products distributed to wholesalers,
Kraft Foods Inc. (Kraft) is engaged in manufacturing and marketing packaged food products,
including snacks, beverages, cheese, convenient meals and various packaged grocery * Margins decreasing for more than 7 years straight
products. During the year ended December 31, 2008, the Company have operations in more * Inventory turnover has been improving
than 70 countries and sell the products in approximately 150 countries. The Company * No FCF growth
19 KFT Kraft Foods Inc manages and operates, through two commercial units: Kraft North America and Kraft * Makes 22c of every $1 invested (CROIC=22%) $26.85 NA $19.96 $24.00
International. Kraft North America operates in the United States and Canada. On August 4, * Growth is minimal
2008, the Company completed the spin-off of its post cereals business. The brands of the * Increasing debt
Company span five consumer sectors: snacks, beverages, cheese, grocery and convenient
meals.

* Better growth opportunity that Home Depot

* Good FCF growth but CROIC is very low at 2%. Better
Lowe�s Companies, Inc. is a home improvement retailer. As of January 30, 2009, the than nothing but not effective with utilizing capital.
Company operated 1,638 stores across 50 states and 11 stores in Canada. Its 1,649 stores * Good revenue and earnings growth
represent approximately 187 million square feet of retail selling space. The Company serves * Gross margins increasing to date
homeowners, renters and commercial business customers. Homeowners and renters * Debt down to average levels
primarily consist of do-it-yourself (DIY) customers and do-it-for-me (DIFM) customers who * Tangible book value increasing
20 LOW Lowe's Companies Inc $21.72 $18.91 $52.66 $22.00
utilize the Company�s installed sales programs, as well as others buying for personal and * ROE and ROA declining past 2 years
family use. Commercial business customers include those who work in the construction, * Sales flat since 2007
repair/remodel, commercial and residential property management, and business * The macro idea that people will continue to repair and
maintenance professions. The Company offers a line of products and services for home improve houses still doesn’t work well in a recession.
decorating, maintenance, repair, remodeling and property maintenance. * If I had to choose LOW or HD, I would go for LOW. Or
be like Buffett and get both.
 M&T Bank Corporation (M&T) is a bank holding company. As of December 31, 2008, the
Company had two wholly owned bank subsidiaries: M&T Bank and M&T Bank, National
Association (M&T Bank, N.A.). The Banks offer a range of commercial banking, trust and
21 MTB M&T Bank Corp investment services to its customers. M&T Bank operates branch offices in New York, (Financials are outside my circle of competence) $59.00
Maryland, Pennsylvania, Delaware, New Jersey, Virginia, West Virginia and the District of
Columbia. M&T operates in six segments: Business Banking, Commercial Banking,
Commercial Real Estate, Discretionary Portfolio, Residential Mortgage Banking and Retail
Moody�s Corporation (Moody�s) is a provider of credit ratings and related research, data
and analytical tools, quantitative credit risk measures, risk scoring software, and credit
portfolio management solutions and securities pricing software and valuation models. The
22 MCO Moody's Corp Company operates in two segments: Moody�s Investors Service (MIS) and Moody�s (Financials are outside my circle of competence) $24.55
Analytics (MA). The MIS segment publishes credit ratings on a range of debt obligations and
the entities that issue such obligations in markets worldwide, including various corporate
and governmental obligations, structured finance securities and commercial paper

NRG Energy, Inc. (NRG) is a wholesale power generation company. NRG is engaged in the * Had a big year in 2008
ownership, development, construction and operation of power generation facilities, the * Big margins increase in 2008 and since 2005
transacting in and trading of fuel and transportation services, and the trading of energy, * Increase in short term and long term debt
capacity and related products in the United States and select international markets. As of * Company is able to make money but its returns are ont
December 31, 2008, NRG had a total portfolio of 189 active operating generation units at 48 he low side.
power generation plants, with an aggregate generation capacity of approximately 24,005 * Mean ROA and CROIC of 2.7% and 5% respectively.
23 NRG NRG Energy Inc $26.70 $37.11 $34.00 $58.00
megawatt, and approximately 550 megawatt under construction, which includes partners� Lower than competition
interests of 275 megawatt. In addition, NRG has ownership interests in two wind farms * FCF isn’t consistent.
representing an aggregate generation capacity of 270 megawatt, which includes partner * Huge increase in capex in 2008
interests of 75 megawatt. On April 28, 2008, NRG completed the sale of its 100% interest in * Large amount of taxes deferred.
Tosli Acquisition B.V. In May 2009, Reliant Energy, Inc. completed the sale of its Texas retail * Still converts 12% of sales into FCF
business to NRG.

* Needs to improve efficiency. 40+% margins but

negative net income or low single digits at best isn’t good
Nalco Holding Company (Nalco) is the provider of integrated water treatment applications
* Decrease in intangibles suggests bad acquisitions and
to prevent corrosion, contamination and the buildup of harmful deposits. The Company has
mistakes by management
a sales and service team of 7,000 technically trained professionals serving more than 70,000
* Long term debt is steady
customers in a range of end markets, including aerospace, chemical, pharmaceutical,
24 NLC Nalco Holding Co * Been buying back stock $17.83 NA NA $22.00
petroleum, steel, power, food and beverage, medium and light manufacturing, marine and
* FCF isn’t reliable. Lots of cash come from “other”
pulp and papermaking industries as well as institutions such as hospitals, universities and
income
hotels. Nalco operates in three business segments: industrial and institutional services,
* Low returns, cash and earnings growth
energy services and paper services.
* Doesn’t look like something Buffett would buy

NIKE, Inc. (NIKE) is engaged in the design, development and worldwide marketing of
footwear, apparel, equipment, and accessory products. NIKE sells athletic footwear and
* Great company, leader, innovator, huge moat
athletic apparel. It sells its products to retail accounts, through NIKE-owned retail, including
* Drop in margins in 2008 but increased inventory
stores and Internet sales, and through a mix of independent distributors and licensees, in
turnover
over 170 countries around the world. Running, training, basketball, soccer, sport-inspired
* Low debt with plenty of cash
25 NKE NIKE Inc casual shoes, and Kid�s shoes are its footwear categories. It also markets shoes designed $55.35 $65.00 $77.00 $56.00
* Can pay off debt with FCF easily
for aquatic activities, baseball, cheerleading, football, golf, lacrosse, outdoor activities,
* Don’t have to go in detail with numbers. They are just
skateboarding, tennis, volleyball, walking, wrestling, and other athletic and recreational
too good.
uses. It sells a line of performance equipment under the NIKE brand name, including bags,
socks, sport balls, eyewear, timepieces, electronic devices, bats, gloves, protective
equipment, golf clubs, and other equipment designed for sports activities.

Norfolk Southern Corporation (Norfolk Southern) controls a freight railroad, Norfolk * Looks to be a better company than BNI
Southern Railway Company. Norfolk Southern Railway Company is primarily engaged in the * Good top line growth
rail transportation of raw materials, intermediate products and finished goods primarily in * Decrease in gross profit but managed to increase net
the southeast, east and Midwest and, via interchange with rail carriers, to and from the rest margins
26 NSC Norfolk Southern Corp of the United States. Norfolk Southern also transports overseas freight through several * Lots of FCF and excellent FCF growth $48.39 $61.00 $120.00 $54.00
Atlantic and Gulf Coast ports. The Company provides logistics services and offers an * Low end for CROIC at 4%
intermodal network in the eastern half of the United States. Norfolk Southern and CSX * Debt can be handled with FCF rather than taking on
Corporation (CSX) jointly own Conrail Inc. (Conrail), whose primary subsidiary is additional debt
Consolidated Rail Corporation (CRC).

The Procter & Gamble Company (P&G) is focused on providing branded consumer packaged
goods. The Company�s products are sold in over 180 countries worldwide primarily through
mass merchandisers, grocery stores, membership club stores, drug stores and in high- * Wrote about PG briefly in the Best Stocks to retire list
frequency stores, the neighborhood stores, which serve consumers in developing markets. * FCF growth above 18%
As of June 30, 2009, the Company was organized into three Global Business Units: Beauty; * CROIC at 60%! Mindblowing.
Health and Well-Being, and Household Care. The Company had six business segments under * Only negative is big drops in tangible shareholders
27 PG Procter & Gamble Co $53.76 $76.00 $97.00 $67.00
United States Generally Accepted Accounting Principles (GAAP): Beauty; Grooming; Health equity
Care; Snacks and Pet Care; Fabric Care and Home Care, and Baby Care and Family Care. In * Stable margins. Net margins even increased in 2008
August 2009, AnimalScan, LLC announced that it has acquired Iams Pet Imaging, LLC from * Good stable dividend
The Procter & Gamble Company and ProScan Imaging. In November 2008, the Company
completed the divestiture of its Coffee business through the merger of its Folgers coffee
subsidiary into The J.M. Smucker Company.

Sanofi-Aventis is a pharmaceutical group engaged in the research, development,

manufacture and marketing of healthcare products. The Company's business includes two
main activities: pharmaceuticals and human vaccines through sanofi pasteur. In its
# Stats look good but some metrics are quite erratic
pharmaceutical activity, Sanofi-Aventis specializes in six therapeutic areas: thrombosis,
# FCF growth is up and down
cardiovascular, metabolic disorders, oncology, central nervous system (CNS) and internal
Sanofi Aventis ADR # Top line isn’t so consistent
medicine. The Company offers vaccines in five areas: pediatric combination vaccines,
28 SNY Each Representing One # FCF and earnings growth is relatively low $34.58 $47.00 $18.00 $36.00
influenza vaccines, adult and adolescent booster vaccines, meningitis vaccines, and travel
Half Of One Ord Shs # Has outstanding returns and converts it to plenty of FCF
and endemic vaccines. On September 1, 2008, Sanofi-Aventis acquired the Australian
# Debt is not an issue
company, Symbion CP Holdings Pty Ltd (Symbion Consumer). On September 25, 2008, it
acquired Acambis plc. In January 2009, the Company sold its French plant of Colomiers to
French pharmaceutical company Unither. In April 2009, the Company acquired Mexican
generic company, Laboratorios Kendrick.

SunTrust Banks, Inc. is a diversified financial services holding company whose businesses
provide a range of financial services to consumer and corporate clients. The Company
operates in four business segments: retail and commercial, wholesale banking, mortgage,
29 STI SunTrust Banks Inc and wealth and investment management. On May 1, 2008, the Company completed the (Financials are outside my circle of competence) $21.13
acquisition of GB&T Bancshares, Inc. (GB&T). On May 30, 2008, the Company sold its
interests in First Mercantile Trust Company (First Mercantile), a retirement plan services
subsidiary. On September 2, 2008, the Company sold its fuel card business, TransPlatinum
Torchmark Corporation (Torchmark) is an insurance holding company. Torchmark through
its subsidiaries provides a variety of life and health insurance products and annuities to a
broad base of customers. Torchmark is the holding company for a group of insurance
30 TMK Torchmark Corp companies, which market primarily individual life and supplemental health insurance, and to (Financials are outside my circle of competence) $42.33
a limited extent annuities, to middle income households throughout the United States. Its
primary subsidiaries are American Income Life Insurance Company (American Income),
Liberty National Life Insurance Company (Liberty), Globe Life And Accident Insurance
 U.S. Bancorp operates as a financial holding company and a bank holding company. U.S.
Bancorp provides a range of financial services, including lending and depository services,
cash management, foreign exchange, and trust and investment management services. It
31 USB US Bancorp (Del) also engages in credit card services, merchant and Automated Teller Machine (ATM) (Financials are outside my circle of competence) $21.75
processing, mortgage banking, insurance, brokerage and leasing. U.S. Bancorp�s banking
subsidiaries are engaged in the general banking business, principally in domestic markets.
The subsidiaries provide a range of products and services to individuals, businesses,

* Rose with the housing market. Dropped with the

housing market.
USG Corporation (USG), through its subsidiaries, is a manufacturer and distributor of
* The capex numbers show in hindsight how USG had
building materials, producing a range of products for use in new residential, new
high capex at the peak of the housing bubble.
nonresidential, and repair and remodel construction, as well as products used in certain
* Been losing a lot of cold hard cash in the process - FCF
industrial processes. The Company is organized into three reportable segments: North
* Tiny gross profits from good revenue
American Gypsum, Building Products Distribution and Worldwide Ceilings, the net sales of
* Turnover back down to 10.9 compared to 12.2 from
32 USG USG Corp which accounted for approximately 46%, 38% and 16%, respectively, of its consolidated net $14.70 NA NA NA
the previous year
sales during the year ended December 31, 2008. North American Gypsum manufactures and
* Even if I ignore 2008 numbers and imagine looking at
markets gypsum and related products in the United States, Canada and Mexico. Building
the company in 2006 or 2007, numbers still aren't great.
Products Distribution consists of L&W Supply, a specialty building products distribution
business in the United States. USG�s Worldwide Ceilings segment manufactures and
No reliable data or numbers to calculate intrinsic value.
markets interior systems products worldwide.
Only thing I can say with certainty is that the tangible book
value is at $14.14.

* Good tangible book value growth. Shows that growth

is organic.
Union Pacific Corporation (UPC) is engaged in the transportation business. The Company�s
* Top line growth is impressive. Median of 33% in the
operating company, Union Pacific Railroad Company (UPRR), links 23 states in the western
past 5 years.
two-thirds of the United States. Union Pacific Railroad Company�s business mix includes
* CROIC is just below 2%. Only makes 2c off every $1 of
agricultural products, automotive, chemicals, energy, industrial products and intermodal.
cash invested.
UPRR has approximately 32,012 route miles, linking Pacific Coast and Gulf Coast ports with
* FCF growth isn't much to consider unless you compare
33 UNP Union Pacific Corp the Midwest and eastern United States gateways and providing several corridors to Mexican $62.25 $54.81 $95.40 Fair
it to capex.
gateways. The freight traffic consists of bulk, manifest and premium business. Bulk traffic
* Seems like earnings and FCF is realized 3 years after
consists of coal, grain, rock, or soda ash in unit trains. Manifest traffic is individual carload or
the capex outlay.
less than train-load business, including commodities, such as lumber, steel, paper and food.
* Consistent reduction in debt.
The transportation of finished vehicles and intermodal containers is part of the premium
* Rising margins since 2004 to highest levels.
business.
* NSC still looks to be the better company.

* Huge moat.
United Parcel Service, Inc. (UPS) is a package delivery company. The Company delivers * Stock price affected by high oil price.
packages each business day for 1.8 million shipping customers to 6.1 million consignees in * Reducing capex past 2 years. How will it affect future
over 200 countries and territories. During the year ended December 31, 2008, UPS delivered results?
an average of 15.5 million pieces per day worldwide, or a total of 3.92 billion packages. Its * Past 5 years hasn't been great for UPS. Went no
primary business is the time-definite delivery of packages and documents worldwide. UPS where.
United Parcel Service
34 UPS operates in three segments: U.S. Domestic Package operations, International Package * Good stable CROIC at 11% $55.43 $52.72 $85.00 $35-40
Inc
operations, and Supply Chain & Freight operations. U.S. Domestic Package operations * Earnings YOY isn't good. Shows a decline.
include the time-definite delivery of letters, documents, and packages throughout the * Margins are good but there are huge overhead costs as
United States. International Package operations include delivery to more than 200 countries expected. 75+% gross margin but only 6-9% net margin.
and territories worldwide. Supply Chain & Freight includes its forwarding and logistics * Big rise in debt
operations, UPS Freight, and other related business units. * Still better than FDX

UnitedHealth Group Incorporated (UnitedHealthcare) is a diversified health and well-being

company. The Company operates in four segments: Health Care Services, OptumHealth, * Healthcare is a great industry for cash flows.
Ingenix and Prescription Solutions. The Health Care Services segment consists of * Highly profitable business but has a lot of economic
UnitedHealthcare, Ovations and AmeriChoice businesses. OptumHealth serves factors involved
approximately 60 million individuals with its diversified offering of health, financial and * Universal healthcare is just uncertainty which provides
ancillary benefit services and products that assist consumers in navigating the healthcare a better deal for investors
35 UNH UnitedHealth Group Inc $28.40 $61.00 $64.00 $40.00
system and accessing services. Ingenix offers database and data management services, * Outstanding FCF, CROIC and profitability return
software products, publications, consulting and actuarial services and business process numbers
outsourcing services. Prescription Solutions offers a suite of integrated pharmacy benefit * Huge drop in tangible shareholders equity
management services to approximately 10 million people, through approximately 60,000 * Try looking at the smaller healthcare companies.
retail network pharmacies and two mail service facilities as of December 31, 2008. On May
30, 2008, it acquired Unison Health Plans.

WABCO Holdings Inc. is a provider of electric and electromechanical products for

commercial truck, trailer, bus and passenger car manufacturers. The Company
manufactures and sells control systems, including advanced braking, stability, suspension,
transmission control, and air compressing and processing systems. The Company operated Too short inconsistent history to provide reliable
36 WBC WABCO Holdings Inc $19.23 NA NA NA
as the vehicle controls systems business division within American Standard Companies Inc. comments
On July 31, 2007, the Company was spun off from American Standard Companies Inc.
Subsequent to its spin off American Standard Companies Inc. changed its name to Trane
Inc. (Trane). On June 5, 2008, Trane was acquired in a merger with Ingersoll-Rand Company
Limited. On June 3, 2009, the Company increased its equity investment in its joint venture, * FCF doubled compared to past year. Highest its ever
been.
Wal-Mart Stores, Inc. (Walmart) serves customers and club members more than 200 million * No change in margins. WMT doesn't need to lower
times per week at more than 8,000 retail units under 53 different banners in 15 countries. margins.
37 WMT Wal-Mart Stores Inc The Company operates in three business segments: Walmart U.S. and Sam�s Club in the * Highest inventory turnover rate ever in 10 years at 8.9 $51.11 $57.00 $70.00 $60.00
United States, and Walmart International in 14 countries and Puerto Rico. In January 2009, (although COST has better turnover)
the Company acquired 57% of D&S S.A. * Tangible book value consistently up.
* Good top line and bottom line growth.
* Rock solid.

The Washington Post Company is a diversified education and media company. The * Media has been one of the worst industries in the past
Company�s Kaplan, Inc. (Kaplan) subsidiary provides a variety of educational services, both year. Especially with everyone believing that newspapers
domestically and outside the United States. The Company�s media operations consist of thewill become extinct.
ownership and operation of cable television systems, newspaper publishing (principally The * Fiscal 2008 saw a big decline in everything. Sales,
Washington Post), television broadcasting (through the ownership and operation of six profit, cash, book value, ROE, ROA
television broadcast stations) and magazine publishing (principally Newsweek). The * Management still used its cash effectively with a CROIC
38 WPO Washington Post Co $435.45 $293-$358 $240-$492 NA
Company�s operations in geographic areas outside the United States consist primarily of of 12.2%
Kaplan�s foreign operations and the publication of the international editions of Newsweek. * FCF positive with stable capex.
During the year ended December 31, 2008, these operations accounted for approximately * Capital expenditures have been steady for 4-5 years
13% of the Company�s consolidated revenues, and the identifiable assets attributable to now.
foreign operations represented approximately 13% of the Company�s consolidated assets, * Tells me that most of the current $280mil in capex is
during 2008. due to maintenance rather than growth.

Wells Fargo & Company (Wells Fargo) is a financial holding company and a bank holding
company. The Company is a diversified financial services company providing retail,
commercial and corporate banking services through banking stores located in 39 states and
39 WFC Wells Fargo & Co the District of Columbia. It provides other financial services through subsidiaries engaged in (Financials are outside my circle of competence) $27.68
various businesses, principally wholesale banking, mortgage banking, consumer finance,
equipment leasing, agricultural finance, commercial finance, securities brokerage and
investment banking, insurance agency and brokerage services, computer and data
WellPoint, Inc. (WellPoint) is a health benefits company serving 35 million medical
members, as of December 31, 2008. The Company is an independent licensee of the Blue
Cross and Blue Shield Association (BCBSA), an association of independent health benefit * Again, Buffett likes to buy in pairs.
plans. It serves its members as the Blue Cross licensee for California and as the Blue Cross * Much like UNH. Great cash flow, great numbers.
40 WLP WellPoint Inc $52.84 $52.84 $86.91 $64-70
and Blue Shield (BCBS), licensee for Colorado, Connecticut, Georgia, Indiana, Kentucky, * By the numbers, I prefer UNH.
Maine, Missouri (excluding 30 counties in the Kansas City area), Nevada, New Hampshire, * Dependent on macro factors.
New York, Ohio, Virginia, and Wisconsin. In a majority of these service areas, it does
business as Anthem Blue Cross, Anthem Blue Cross Blue Shield or Empire Blue Cross Blue
Shield. The
Wesco Company
Financial also serves
Corporation its members
is engaged throughout
in three the country through
principal businesses, as UniCare. WellPoint
its direct or
indirect wholly owned subsidiaries: the insurance business, through Wesco-Financial
Insurance Company (Wes-FIC) and engages in the property and casualty insurance business,
41 WSC Wesco Financial Corp and The Kansas Bankers Surety Company (KBS) purchased by Wes-FIC in 1996 and provides (Financials are outside my circle of competence) $302.00
specialized insurance coverages for banks; the furniture rental business, through CORT
Business Services Corporation (CORT), which traces its presence to the combination of five
regional furniture rental companies in 1972 and was purchased by Wesco in 2000, and the