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.
| 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 |
| ROE | 2.1 % |
| LT Debt/Equity | 0.18 |
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.
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ReplyDelete(Sorry for the deleted comment; I forgot to hit "Notify me" when I posted the below comment last time.)
ReplyDeleteAre 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.
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.
DeleteFirst 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?
ReplyDeleteI 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
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.
ReplyDeleteNo Crane isn't that exciting. It is still just a 1% position.
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.
ReplyDelete
DeleteI 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 gmail.com. And I'll send you what I have.