April 21st article: Buffett buying up stock in Budweiser

[HenryTo]

Not sure if the Warren Buffett fans remember this:

http://moneycentral.msn.com/content/invest/extra/P115822.asp

The price of BUD jumped from 44.60 to 47.50 on the day of the announcement. BUD closed at 40.57 last Friday. If I remember correctly, BUD is also a pick by Motley Fool's Inside Value Newsletter. Has anyone looked into potentially investing in this stock? Bill?

Best,

Henry

[nodoodahs]

IMO -

Micro drinkers wouldn't touch Bud, Mic, Busch, King Cobra, or Natural Light (all BUD brands) with a bottle-opener, so why bother aiming them at micro drinkers or bother caring what micro drinkers appreciate in those brands? They'd be better off trying to appeal to you and your crowd in the packaging of their alternative products - or in buying something you guys already enjoy, like a local microbrewery.

BUD has two micros in NW US, Redhook and Widmer. They have two in TX under the Ziegen name. They also have Bacardi and Tequiza "malt beverages" and an energy drink that I've never heard of. It would make more sense for these to have packaging that appeals to micro-brew drinkers, then it would for the Budweiser to have it.

They own their own packaging, so they probably made that switch for other reasons then just appeal (i.e. $$).

Re: global brand, download their 2004 annual report, on page 15-18 they detail operations in China. On pages 18-19 they detail UK, Canada, Ireland, Argentina, and Mexico operations. Page 28 shows that most of their growth is international. Hence I think they're not likely to care much about the micros in the U.S., more interested in holding the bars and bar-b-q crowd in the U.S. while building brand in foreign countries (not necessarily with names we would recognize in the states).

Also, the picture on page 20 of their annual report reminds me that, in a survival situation, you can actually start a fire with a can of beer (or soda) and a chocolate bar.
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I haven’t seen a beatin’ like that since somebody stuck a banana in my pants and turned a monkey loose.

[fh1951]

Did anyone else notice the bottles in the latest Budweiser ads? They don't have a label - it's printed right on the bottle. This is their answer to the micros - and it connotes mass production. Don't think they get it.

[nodoodahs]

Micros' increasing popularity, and the increasing popularity of non-beer malt beverages, could be behind the low revenue growth of BUD. However, they are in those segments. Here is a list of the beer-related products they sell. http://www.anheuser-busch.com/overview/abi.html

The crowd that any one of us sees in action is but a niche of the overall market - we are insulated by class, geography, education, field of endeavor, etc. Your crowd may be "into" microbrews ... mine may not ... and we each see only a very very small segment of the market ...
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I haven’t seen a beatin’ like that since somebody stuck a banana in my pants and turned a monkey loose.

[fh1951]

Who drinks Budweiser? Microbrews are what people I know are drinking nowadays. Taste in beer seems more subject to national taste preferences than sugar water - is Budweiser really a global franchise?

[nodoodahs]

BUD's got a lot to like as a company, some things to dislike, but I don't think it's a value, even today after it's fallen so far.

High and consistent profit margins, excellent ROE, ROA, earnings quality. Good dividend payout. High free cash flow. They've been buying back shares, reducing the number of shares outstanding. They've got the qualities that Buffet likes, a business that's easy to understand, a good moat around the business, no product memory (i.e. it's easy to buy a second and third unit after buying the first, similar to Coke or to (is it?) See's Candies, two other businesses Warren likes), etc.

What I didn't like about BUD were declining sales, large cap size (kind of goes with the sales), valuation on book, sales, and earnings, and debt metrics going the wrong way.

Buffet's in a ... different position then he used to be. He can't invest in smaller companies any more, unless the whole thing is for sale with management intact. He has always paid a lot of attention to buying businesses and not stocks, but since he has such large amounts of cash to deploy, he has to shift his focus from valuation to other metrics, metrics that allow him to invest. He's said as much himself in some annual reports and other comments, including one where he stated that if he were managing "only" a few million dollars, he would beat the index by 50% or more in today's market. Unfortunately what he invests in today is not what he would invest in as a manager with less capital to deploy, or what he would have invested in during his prime. Not that he has less acumen than he used to ... he is in a different position ... and has to sacrifice the value metrics in order to deploy capital.
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I haven’t seen a beatin’ like that since somebody stuck a banana in my pants and turned a monkey loose.

[Goodfella]

I have been short BUD for a while now.

I remember when Buffet bought the stock. It scared me a little bit but i hung in there. Now Barrons have tipped.

Not the first stock they have tipped i have been short on. Expect i will lose some money on monday.


BUD has large debt, its mature and is past its best days. The chart looks terrible. I have been right so far. we shall see. I might lock in some profits.