Professor Glen Arnold

I couldn’t resist buying shares in Northamber (LSE:NAR) at 50.4p.  Its market capitalisation is 0.504p x 27.5m shares = £13.9m, but its cash holdings will be over £16m once it receives the money from selling its warehouse (announced in July). It has no debt.  The only liability is £7.4m of payables which is more than […]

In this, the last newsletter on Wells Fargo (I’m impatient to write about a UK company I’ve just invested into this week), I’ll outline the key qualitative factors needed for a successful bank. This is followed by a quick summary of what has happened to Wells Fargo and Berkshire Hathaway’s investment in it over the […]

The secret to running a successful commercial bank is to lend at a good margin above the cost of obtaining those funds from depositors etc., while holding down operating costs and lowering losses inflicted by borrower default. It helps if there is plenty of non-interest income as well such as fees from investment management.  If […]

Warren Buffett was optimistic about Wells Fargo’s prospects in 1989/90.  He was so optimistic that he spent $289m of Berkshire Hathaway’s money buying almost 10% of Wells Fargo’s shares.  But we have to ask: Was Warren correct to be greedy when others were fearful? There are two parts to answering this question. First, did the facts […]

Warren Buffett started building his holding in Wells Fargo in 1989 but it wasn’t until October 1990 the stake grew so large that he announced Berkshire Hathaway held 5m shares, almost 10% of its common stock, making it the largest shareholder. So, what was it that made Buffett go against the crowd and spend $289m on […]

The numbers in millions I used in yesterday’s newsletter are pretty well the real numbers, but you need to convert the millions to billions for Wells Fargo in 1990. It had lent out $49bn and owed depositors and others $46.5bn.  Common stockholders’ equity was about $2.5bn. It had 455 branches, 19,500 staff and had made around […]

In between completing the proof reading of the latest edition of The Financial Times Guide to Investing (in all good book shops in January!) I’ve been contemplating Warren Buffett’s rationale for investing in Wells Fargo. Looking at Buffett’s investments can teach us a lot about the thinking process we value investors should go through to arrive at […]

Connect Group (LSE:CNCT) has not had an attractive-looking balance sheet for many years. It had/has very high levels of intangible assets, especially goodwill, due to paying excessive prices for acquisitions. Even after including those doubtful “assets” in its balance sheet it could barely report a positive net current asset value.  On top of that, it […]

In 2014 the big idea at Connect Group (LDSE:CNCT) was to diversify into parcel delivery and at the same time gain synergy with the early morning News Distribution business by buying Tuffnells for £139m. Here are the performance numbers for Tuffnells under Connect’s ownership – not pretty reading for shareholders who forked out £139m. Now the […]

Connect Group (LSE:CNCT) has a business which produces profits and lots of cash flow year after year called Smiths News.  SN is a duopolist alongside Menzies delivering newspapers and magazines to shops.  They tend to stick to their own territories in allocating their vans – it is pointless having two rivals sets of vans passing […]