Tips On Investing From Warren Buffet That You Need To Know
Warren Buffet is one of the most successful investors of all time. Great mentors/role models can teach you a lot. One important fact to take away was that Buffet got Duracell for 7x it’s EBITDA (Earnings Before Interest Taxes and Depreciation). He did this while the market was trading at 11.5x EBITDA and while the consumer industry was trading at 9x EBITDA. As Buffet shows EBITDA is a great way to value an investment.
Read about some great tips as to why Buffet purchased Duracell.
Consider for a moment in its ranking of the Best Global Brands in 2014, Interbrand estimated that the brand value of Duracell stood at $4.9 billion, ahead of MasterCard ($4.8 billion) and narrowly trailing both Chevrolet and Ralph Lauren.
Said differently, Buffett paid less for Duracell — the company — than what one company estimated its brand value alone is worth.
Buffet has always said to “buy commodities and sell brands.” Brands are very hard to price but people are willing to pay a lot for a name. Buffet even orchestrated the deal so he won’t be paying any capital gains tax. If you are considering investing in a stock, especially if you are a beginning trader, always looks for a role model.
Learn some more about investing like Buffet and the Duracell purchase here.
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About Shaun Archer Tatum Shaun works in corporate finance in New York City. He has done financial consulting for several start-ups and has worked at several Fortune 500 companies. He has contributed several finance/investing articles on Seeking Alpha which have been published on Yahoo! Finance.