Spent time over the weekend reading Westpac's annual report and analysing their balance sheet once again. Their financial position is rock solid and it is more solid this time than it was during the GFC. Westpac meets Buffett's back of the envelope investment criteria. Compared buying Westpac in my investment model to Buffett buying Coca Cola in 1988, Freddie Mac in 1992, Gannett Corporation in 1994, McDonald's in 1996.
Westpac - steady earnings over the past 10 years and predictability of future earnings, great initial rate of return at entry price, strong EPS and steady return on capital, projected rate of return on investment is >11% p.a (not including capital growth), it like buying equity but in reality you are buying a bond with an expanding coupon rate. You can borrow at 3% and dividend yield is 11.5% and interest is fully deductible against dividend income.
Bought some more WBC shares today just under $20 and waiting patiently to buy some more tomorrow, next week, next month, next year as the case maybe. Happy to stay invested in Westpac for all it takes.
Never cut a tree during winter. Wait and be patient. This storm will pass and spring will come. The trees that are slow to grow bear the best fruit.
WBC Price at posting:
$19.52 Sentiment: Buy Disclosure: Held
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