Quote:
Originally Posted by Phanuthier
It seems for Buffet, he perfers management to use extra cash to buy back shares if its not being reinvested, the reason being that if the company is chartering outside of its usual business (i.e. if coca-cola were to buy a film industry) that its not under its expertise. Overhead (SG&A) would be higher I would assume, and the company would run less efficiently. (Am I right there? Just trying to interpret diff opinions) It seems like acquisitions seem to be good only if its in the same industry to keep the same management expertise (assuming you are investing in a company with good management, i.e. not Ford, GM, AIG, et al).
BTW ... markets have went really bearish to really bullish the past few hours. Down 3% to up 3% lol.
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Yes I agree, it can't be random in what you buy. For example it might make sense to buy a cash strapped company in your industry that had a good product/service/technology but had very slow sales or a debt, then you would control the assests when times got better, but you bought it at a fraction of its potential value.
So should Toyota buy GM as an example Only if they think that in the future the products/technology will be good enough to make a large return in the long haul. Guess you have to look at the potential baggage of said company as well. Don't want that to drag you down to your own death.