Sunday, April 24, 2005

Budweiser, Monopoly and Ben Graham -- and NY Property Prices...

It was with unusual pleasure that we noted Berkshire’s purchase of BUD this week. What a complementary consumption alternative to Coke, all while increasing shareholder value. And BUD sports 50% of the beer market (talk about scale…) and quite carbonated recent ROE numbers. Munger talks about the benefits of scale here, but more in a subscription only OID article which is the best summary of strategic advantage I have ever read, here (subscription only). In the headlines you’ll note Monopoly is now available with Berkshire Hathaway properties – my British friends would describe this as OTT (over the top). If you really are keen, look here for the bobble heads. Finally, last headline -- is Cousin Jimmy a reverse indicator on NY property? I recently heard of a 750sqf 1 bedroom in Nolita for $1.3m, almost $2k/sqf. Reminds me of my days in HK, where soon after I left the average property price was down more than 50% (I’ve seen reports of 65%, and this I note, is average!!!). I believe the average price of luxury prices in HK (on the Peak) was (HK11,000) psf, or USD$1400 (adjust this for relative GDP and the HK heights are just over USD2k psf). Gives me pause… Especially since Nolita is far from the height of luxury. It’s nice, but it ain’t Central Park South. Anyone see the news on the China Peg? No surprise here, but if it goes through, it may encourage obstructionist tariff seekers – never a good thing.


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