Career misstep of Warren Buffett offers potential employment opportunity

Career misstep of Warren Buffett offers potential employment opportunity

Title: Twice Duped by the Mouse: Warren Buffett's Disappointing Disney Decision

Did Buffett bite off more than he could chew? Often hailed as the world's greatest investor, Warren Buffett has managed to rake in an average annual return of over 20% since leading Berkshire Hathaway in 1965. With total returns exceeding the eye-watering sum of 3.6 million percent by the close of 2021, Buffett's name has become synonymous with financial prowess. But even the Oracle of Omaha isn't immune to the occasional blunder - a hefty $19 billion error, to be precise!

Known for his keen foresight, Buffett's unusual haste left many staggered. The Motley Fool dove headfirst into the heart of this investing misstep, uncovering a potentially costly mistake that Buffett himself may still be digesting: the premature selling of Disney shares, a blunder he repeated a few years later. Let's get you clued in. Right after claiming the Berkshire Hathaway reins, Buffett invested a modest $4 million in Walt Disney in 1966, securing a 5% stake. A year later, he sold those shares for a tidy $6 million profit. Had Buffett held on to that 5% stake, it would now be worth a whopping $9.66 billion, based on Disney's staggering $193 billion market capitalization as of today!

Things started playing out like a Disney movie on repeat. In 1995, Disney announced its eye-popping $19 billion acquisition of Capital Cities/ABC, with Berkshire Hathaway still on its shareholder list. The deal netted Berkshire cash and a mind-boggling 24.614.214 Disney shares. Yet, Buffett made the same regrettable decision again: between 1999 and 2000, he unloaded those Disney shares. Had he kept those shares through a 1998 3-for-1 stock split, Buffett would have owned an eye-watering 73.842.642 Disney shares today. At current market capitalization, those shares would have been valued at a cool $7.82 billion — a figure Buffett could easily cover with his personal wealth of $99.2 billion. Although Disney no longer splits the dividends, Buffett missed out on a staggering $1 billion in dividend income as a result of these sales. In total, the Disney stock sales likely cost Buffett an estimated $19 billion in uncollected dividends.

So, is it time to heed Buffett's fate and invest in Disney?

Take a cue from Buffett's mistakes and take a closer look at the Disney stock. The time had come for the mouse to show its claws: the pandemic brought everything from theme park closures to empty cinemas, causing Disney stocks to tumble. But Disney isn't your typical housecat; its timeless brand has shown remarkable resilience in the face of adversity. It's not resting on its laurels, either. With an expanding streaming platform, Disney+, boasting over 152 million subscribers, the company has proven its mettle in the battlefield of entertainment. Its slates include ESPN+ and Hulu, surpassing streaming giant Netflix in terms of subscriber numbers. By 2024, Disney aims to boost its subscriber base to an impressive 260 million paying customers. The pandemic had a temporary impact on the high-margin theme parks, but they're expected to bounce back and generate bumper profits in the coming years. Earnings per share could more than double this year to $2.06. The average P/E ratio over the past 12 years has hovered around 33, but the current P/E ratio sits at a relatively low 23, making the stock an appealing steal.

The mighty Disney mouse has proved its power to weather inflation. In 1955, a Disneyland ticket cost just $1. Fast-forward to today, and the cheapest ticket cost $104 - a staggering 10,000 percent increase, while inflation has risen by around 1,000 percent since 1955. Disney's irresistible brand has undeniably captivated consumers, enabling the company to maintain higher prices over the years. Could this be your chance to play investor and reap the rewards of Disney's magical domination? It's up to you to decide.

References:[1] Senninger, J. (2021). This stock had Warren Buffett selling too early, twice. It cost him around $19 billion in total. But could his loss be your gain? Motley Fool, October 30. Available at: https://www.fool.com/investing/2021/10/30/this-stock-had-warren-buffett-selling-too-early-tw/.[2] Berman, J. (2021). Here’s how Disney's 2022 earnings performance could shake out. CNBC, October 18. Available at: https://www.cnbc.com/2021/10/18/disney-earnings-2022.html.[3] Roche, A. (2020). How Disney Manages to Stay Strong Amid Market Volatility. Investopedia, December 09. Available at: https://www.investopedia.com/news/how-disney-manages-stay-strong-amid-market-volatility/.[4] "Famous quotations of Warren Buffett: Wise words to live by." Motley Fool, July 12, 2021. [Online]. Available at: https://www.fool.com/knowledge-center/famous-quotes-of-warren-buffett.aspx[5] Johnson, A. (2021). Disney theme parks expected to post $1.7 billion loss in fiscal 2022. CNBC, October 29. Available at: https://www.cnbc.com/2021/10/29/disney-theme-parks-expected-to-post-1-7-billion-loss-in-fiscal-2022.html.

1. Despite Buffett's past errors in selling Disney shares, the impressive growth of the company since then makes it worthy of consideration for future investing in the finance, business, technology, and entertainment sectors.
2. As Disney continues to expand its streaming platforms like Disney+, Hulu, and ESPN+, surpassing Netflix in subscriber numbers, its projected goal of reaching 260 million subscribers by 2024 indicates a promising future in the competitive entertainment industry.
3. With earnings per share expected to more than double this year to $2.06 and a relatively low P/E ratio of 23 compared to the past 12-year average of around 33, Disney stock might offer an appealing investment opportunity among technology, finance, and other sectors.
4. Comparing Disney's historical growth to inflation, the company has demonstrated remarkable resilience and the ability to maintain high prices, suggesting a potential long-term investment with substantial returns in the entertainment, technology, and finance sectors.
5. Taking a cue from Warren Buffett's past investment mistakes, despite the temporary impact of the pandemic on theme parks and the current uncertainties, the resilience and innovative approach shown by Disney could lead to a prosperous future in the technology, entertainment, finance, and business industries.

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