Saturday, March 14, 2015

Buffett Partnership Letters: Crane Co.

Crane Co. is the second company I am covering from the Buffett Partnership.  Back in 1962 Crane Co. was 2% of the Partnership portfolio. It held $200k worth of shares.

Crane Co. (NYSE:CR) is still an independent company today with a $3.7B marketcap. Back in 1962 it manufactured mostly pipes and valves and heaters for industry. Crane Co. was like Alco It traded significantly below book. But being a capital intensive company it wasn't a net-net. And it was a netnet. Below is the company balance sheet from the 1963 Moody's Industrial Manual.

1962 Crane Co.
Price $ 40.250
Market Cap $ 51.7 M
P/E TTM 18.2 x
Div yield 5.0 %
P/BV 0.39
ROE2.1 %
LT Debt/Equity0.18
In terms of profits we'd expect Crane to be better than Alco because Crane is still alive today whereas Alco was defunct by the end of the 1960s. The company's results looked a bit odd. The sales were highest in 1956 and then dipped before coming back in 1962. Income was down from a high of $10.9 M in 1958 to $3.2 M by 1962. Still it paid almost all the income out as dividends.

The 1950s and 1960s were a time of rapid expansion for the company. They acquired several companies over that time and the ups and downs may reflect the understandable problems during mergers. What is certain is that Crane was a player in the emerging industries of that time such as space and nuclear. And they have done alright because they are still around today. So maybe Buffett saw something in the growth prospects as well as the margin of safety on the balance sheet.


  1. This comment has been removed by the author.

  2. (Sorry for the deleted comment; I forgot to hit "Notify me" when I posted the below comment last time.)

    Are you sure Crane Co. wasn't a net-net? I see $127 million in current assets - $39 million in current liabilities - ~$24 million in long term debt (bank loans and "Debt of foreign subsids") - $9 million in preferred stock, or a net current asset value of $55 million versus a market cap of $52 million.

    1. aaaah thank you for pointing that out. I mistakenly thought their PP&E was $161M and I called it a capital-intensive company. However, I missed the $96M in depreciation, which makes it NOT a capital intensive company, so in that case you are correct it is a netnet.

  3. First of all where are you finding this info? How much do you have on this? What have you found that he did well on, and didn't?

    I would like to know more about what he was doing in his partnership days. Maybe he was just pretty much following Graham's philosophy and being a little more aggressive with it.

    One thing I noticed is that the investments were carried at cost. Maybe they had appreciated and this deal was better than it first appears.

    Doesn't look like that exciting of a balanc sheet bargain though. 88 m working capital, less 34 million in debt and preferred stock leaving 54 m net current assets for the common. He may have bought it cheaper too. And there may have been other factors he was considering like you said

  4. The stock info is all from a copy of Moody's Industrial Manual that I bought. I have a list of Buffett Partnership holdings from a recent copy of "Of Permanent Value" by Andrew Kilpatrick. If you want shoot me a email and I will send you a copy of the holdings.

    No Crane isn't that exciting. It is still just a 1% position.

  5. can you fwd me a copy of that list? I have an image of that list from another BRK book, but hardly readable for me. thanks.


    1. I think we have the same one, it is hardly readable but I have been able to decypher a lot of it. In any case you can email me at at And I'll send you what I have.