Dear Diary,
Mr. Buffett's secret weapon in a bear market is "arbitrage." The specific kind is known as a "cash on sale or liquidation" or "workout." I've been watching the Anheuser Busch (BUD) deal for $70 a share in cash, due to be done 12-31-08, along with the AHG deal for $21 a share, due to be done 09-30-08. I'll be reading through "The New Buffettology" to get specifics on how to handle the deal. This is my first arbitrage, only because I've not found a singe company in a year with an expanding Net Profit Margin with my "Holy Grail" criterion.
Tempur-Pedic (TPX) appears to carry over 8 times its Net Profit in Long term Debt, but it is trading at just over 2 times its Working Capital of $2.97 per share. If it drops more, I'll take a nibble at it, I think, as the Long term Debt Ratio issue should resolve itself when the recession ends and earnings pick up.
Gene
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2005, In Front of IRS Building, Washington, D.C.
Diary of a Business Investor
Gene Chapman
2005, In Front of IRS Building, Washington, D.C.
About Me
- Gene Chapman, Author
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