Why SWM is worth more than $1.50 per share, page-296

Or to put it in other terms at 22.5 cents you are buying SWM at a stupendous 44.4% yield based on low cycle earnings (155m NPAT) . Reminds me of when Warren Buffett said he felt like he was going crazy- he was pitching Kansas City Life Insurance to the local Kansas City Life Agent whilst it traded at approx 3x earnings or a 35% yield. The agent just looked at Buffett as if he was speaking another language.

“I read from page to page. I didn’t read brokers’ reports or anything. I just looked at raw data. And I would get all excited about these things. I’d find Kansas City Life at three times earnings, Western Insurance Securities at one times earnings. I never had enough money and I didn’t like to borrow money. So I sold something too soon to buy something else.” said Buffett

For those that know the story Kansas City Life was one of Buffetts greatest early investments.

Opportunities to buy shares at these types of stupendous yields are few and far between and as Buffett established in his early years they make for truly spectacular investment returns over time.