Annual Report 200 9: Fill & Download for Free

On the evening of March 28, 2008, Warren Buffett sat behind his desk at the Omaha office of Berkshire Hathaway. He waited patiently for a desperate call from Richard “Dick” Fuld, the CEO of Lehman Brothers.Lehman Brothers was near collapse. Caught in the throes of the Great Recession, the investment bank’s disastrous bets on the housing market had in fact been a key accelerant in the crisis. The American and world economy teetered on the edge of a depression, thanks to a house of cards built on an unsustainable housing bubble.Dick Fuld needed as much as five billion dollars for Lehman to survive, and he needed it fast. The U.S. government worked frantically behind the scenes to stave off an economic disaster, with Treasury officials calling the investment bank’s leadership on a daily basis.At the recommendation of Treasury Secretary Hank Paulson, Fuld called Buffett to make his sales pitch.[1]Photo: Warren Buffett. Paul Morigi, Getty Images. Warren Buffett says he bid about $5 billion for Tech Data, calling it 'our kind of business' | Markets InsiderWhen Buffett’s assistant announced that she had Fuld on the line, Buffett “set down his Diet Cherry Coke and reached for the receiver.”[2]“Warren, it’s Dick. How are you? I’ve got Erin Callan, my CFO, on with me.”“Hi there,” Buffett greeted him in his dependably affable manner.“As I think you know, we’re looking to raise some money. Our stock’s been killed. It’s a huge opportunity. The market doesn’t understand our story,” Fuld said.[3]After the Lehman CEO detailed his plan to raise three to five billion dollars, Buffett considered the terms.Buffett indicated he might be interested in investing in preferred shares with a dividend of 9 percent, and warrants to buy shares of Lehman at $40. Lehman’s stock had closed at $37.87 that Friday.It was an aggressive offer by the Oracle of Omaha. A 9 percent dividend was a very expensive proposition - if Buffett made a $4 billion investment, for example, he’d be due $360 million a year in interest - but that was the cost of “renting” Buffett’s name. Still, Buffett said, he needed to do some due dilligence before committing to even those terms.“Let me run some numbers and I’ll get back to you,” he told Fuld before hanging up.[4]When I first read this story, I predicted the next steps: Buffett would call in his team and give them their marching orders. Lehman’s books would be scrutinized for several days, lawyers would be consulted, and all manner of arcane financial sleuthing would be employed. Billions of dollars do not easily trade hands; due dilligence meant as thorough an investigation as possible.But the army of accountants did not immediately materialize in Buffett’s office. What he did next was something far simpler.He reached for Lehman’s 10-K, its annual report, and began to read.The annual report is a relatively simple document. In the legally required publication, a corporation must report on its overall financial health and operations for the past year.Lehman Brothers was no different.[5] The report was hundreds of pages, but, armed with a new Diet Cherry Coke, Buffett dove into it. Despite the implications for the world economy, the investor employed the same techniques he had used previously with hundreds of other companies.Whenever he had a concern about a particular figure or issue, he noted the page numbers on the front of the report. Less than an hour into his reading, the cover of the report was filled with dozens of scribbled page citations. Here was an obvious red flag.[6]Lehman's questionable decisions piled up on each page.Buffet would not violate his simple rule. He could not invest in a company “in which he had so many questions, even if there were purported answers.”[7]Lehman Brothers would receive no lifeline. In an interview with The Wall Street Journal, he recounted his concerns.Lehman was looking for money at that time and they approached Berkshire. I came down to the office at night and made these little notes on here of things that were red flags and you'll see a number of pages here [points to notes on the front page of the 10-K report he is holding].You had to get to page 150 or 200, but there was clearly a lot of trouble there. By the time I got through 'em, we decided that we were not in a position to lend to Lehman.[8]Within six months, the 150-year-old investment bank filed for bankruptcy. Lehman Brothers was one of the early dominos to fall in the 2008 financial crisis.Though Buffett did not save Lehman, he did invest heavily in Goldman Sachs and General Electric. His rescue poured more than $15 billion into the faltering companies, injecting life-saving funds at the height of the crisis in September and October 2008.[9]Buffett’s reading habits are well known. He spends about 80% of his day reading and sifting through dense financial material.The CEO of Berkshire Hathaway, when asked once about the key to success, pointed to a stack of books and said, “Read 500 pages like this every day. That’s how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it.”“I read and think. So I do more reading and thinking, and make less impulse decisions than most people in business.”[10]This prodigious reading is one salient reason why the legendary money manager needed no team of high-powered accountants in 2008 to tell him the obvious truth.Though it pained him greatly at the time, he knew it after only a couple of hours of reading the annual report. Lehman Brothers, a venerable investment bank with a storied history, was indeed a lousy investment.Footnotes[1] Warren Buffett and Lehman 'Never Got Close' to Deal - Examiner's Report[2] Too Big to Fail[3] Too Big to Fail[4] Too Big to Fail[5] https://www.sec.gov/Archives/edgar/data/806085/000110465908005476/a08-3530_110k.htm[6] Too Big to Fail[7] Too Big to Fail[8] 10 Years On: 9 Bizarre Facts You Forgot About Lehman Brothers' Bankruptcy[9] Warren Buffett Recounts His Role During 2008 Financial Crisis[10] Warren Buffett’s reading routine could make you smarter, science suggests

Thanks for the A2APlease note: My definition of multibagger is more than 10x.That's tough to answer but since others are giving names I'll try to answer it in a different way.All the multibagger stocks have many common factors, namely:1. They have a small market cap (less than ₹1000cr, smaller the better).2. The stock is illiquid. They are not tracked by brokerage houses and there is no/negligible institutional investor present.3. They have a first generation management. (Like Sunil Mittal of Bharti, Dhirubhai Ambani of Reliance, Poddar of Mayur Uniquoter, etc.)4. Zero debt or Debt to equity ratio of less than 0.5.5. High ROE (return on equity) and High ROCE (return on capital employed)6. Low P/E ratio. (It's not a norm but chances are high since P/E re-rating exponentiates your return. There are many high PE stocks which go further up but that judgement will come from experience and knowledge. It can't be taught.)7. Ethical and Efficient Management - The single most important factor to watch out for while hunting for a multibagger. Since, it's an intangible factor and can't be found by equations or an excel sheet. It can only be evaluated by reading annual reports, articles on the management, researching about their past, their views on the business, and if you need a shortcut then look out for the business' ROE. If it's high, then most of the time the management will be efficient.8. Scalable Business Model - One of the quoran gave example of Lupin, how it went up from 1 to 2000. It went up because the business was scalable. The Pharma industry is huge. It can accommodate 10 more Lupins.9. Sector Leader - There are high chances of sector leader in a scalable sector to become a multibagger.10. Future Growth Potential - In 1995, Hero Honda had a market cap of 200 crores. They sold one bike for ₹20,000. By conservative estimate, even if we assume that 10 million people will buy a bike, the whole 2 wheeler market was pegged at ₹20,000 crores (10m x 20,000). So, the sector leader was quoting at ₹200 crores and the whole sector was ₹20,000 crores. That itself gave Hero Honda 100x potential. Whoever spotted that potential, is happily retired.In conclusion, I'll say instead of giving you a fish, my point is to teach you how to catch a fish.Cheers and happy investing.

All the multibagger stocks have many common factors, namely:1. They have a small market cap (less than ₹1000cr, smaller the better).2. The stock is illiquid. They are not tracked by brokerage houses and there is no/negligible institutional investor present.3. They have a first generation management. (Like Sunil Mittal of Bharti, Dhirubhai Ambani of Reliance, Poddar of Mayur Uniquoter, etc.)4. Zero debt or Debt to equity ratio of less than 0.5.5. High ROE (return on equity) and High ROCE (return on capital employed)6. Low P/E ratio. (It's not a norm but chances are high since P/E re-rating exponentiates your return. There are many high PE stocks which go further up but that judgement will come from experience and knowledge. It can't be taught.)7. Ethical and Efficient Management - The single most important factor to watch out for while hunting for a multibagger. Since, it's an intangible factor and can't be found by equations or an excel sheet. It can only be evaluated by reading annual reports, articles on the management, researching about their past, their views on the business, and if you need a shortcut then look out for the business' ROE. If it's high, then most of the time the management will be efficient.8. Scalable Business Model - Rakesh Jhunjhunwala gave example of Lupin, how it went up from 1 to 2000. It went up because the business was scalable. The Pharma industry is huge. It can accommodate 10 more Lupins.9. Sector Leader - There are high chances of sector leader in a scalable sector to become a multibagger.10. Future Growth Potential - In 1995, Hero Honda had a market cap of 200 crores. They sold one bike for ₹20,000. By conservative estimate, even if we assume that 10 million people will buy a bike, the whole 2 wheeler market was pegged at ₹20,000 crores (10m x 20,000). So, the sector leader was quoting at ₹200 crores and the whole sector was ₹20,000 crores. That itself gave Hero Honda 100x potential. Whoever spotted that potential, is happily retired.In conclusion, I'll say instead of giving you a fish, my point is to teach you how to catch a fish.Happy investingYS✌️