Subprime could create global crisis, economist says?

In Marketwatch.com today tittle : "Subprime could create global crisis, economist says" mentioned that there is 20% chances of another major hedge fund to tumble causing a global finance system freeze up with similar effect to the Asia countries during the 97 Asia financial crisis.
To a value investors, this is what we have been waiting for, a crisis to happen and snap up the undervalued companies.
Due to the biggest fall last week in Wall Street since 2002, there are a lot of companies trading less than what Warren Buffett has purchased. It is party time.

Quote: " When others are greedy, it is time to be worried. When others are worried, it is time to get greedy"

US Bancorp - A Bargain?

Come across this stock 3 months back in Gurufocus when Warren Buffett purchased it @ $31 plus. It has increased to the 33-37 range since then (George Soros purchased at 37).
Now due to the Countrywide Financial Corporation (CFC) effect, it has dropped back down below 30. It's a buy.

A quick look:
Dividend Yield of 5% - versus 2-3% in the industry.
return on asset of 2.09%
return on equity of 23%
equity asset ratio 0f 9% (anything greater than 5% is favourable i.e. lower risk)

US Bancorp has sidestepped credit issues, because its total subprime exposure amounts to 2.8% of its portfolio.

Today's price = $29.99

USG

The average price BERKSHIRE HATHAWAY purchased for the month of August is $41.60 for total of 9,613,812 shares. a 30% gain in less than 6 months. Wow...
The data can be viewed from Reuter, or click this link.

USG

In Millions of USD (except for per share items)	12 months Ending 2005-12-31	12 months Ending 2004-12-31	12 months Ending 2003-12-31	12 months Ending 2002-12-31	12 months Ending 2001-12-31	12 months Ending 2000-12-31
Net Income/Starting Line	-1436	312	122	43	16	-259
Depreciation/Depletion	125	120	112	106	107	96
Amortization	-	-	-	-	-	-
Deferred Taxes	-1261	49	59	67	134	-365
Non-Cash Items	3106	-1	16	96	33	900
Changes in Working Capital	-28	-52	-72	130	-53	-8
Cash from Operating Activities	506	428	237	442	237	364
Capital Expenditures	-198	-138	-111	-100	-109	-380
Free Cash Flow	308	290	126	342	128	-16
% change in FCF	6%	130%	-63%	167%	0%
Average Growth	48%

	Growth	30%	Duration	10
	Constant Growth Phase	5%
	Discount Rate	7%
Year		FCF	PV Factor	Present Value
1	2005	308	1	308.00
2	2006	400	0.931	372.79
3	2007	521	0.867	451.20
4	2008	677	0.807	546.11
5	2009	880	0.751	660.98
6	2010	1,144	0.700	800.01
7	2011	1,487	0.651	968.29
8	2012	1,933	0.606	1,171.96
9	2013	2,512	0.565	1,418.48
10	2014	3,266	0.526	1,716.85
11	2015	4,246	0.489
	Future value at Constant growth	176,374	0.456
	Future Int Value		0.424
	NPV	99,407.81
	Total Common Share	90
	Value per Share	1014.53
	Margin of Safety	30%
	Estimate	1,558.81
	Current price	$57

Analyse MA (Mastercard)

In Millions of USD (except for per share items)	12 months Ending 2005-12	12 months Ending 2004-12	12 months Ending 2003-12	12 months Ending 2002-121	12 months Ending 2001-12	12 months Ending 2000-12
Net Income/Starting Line	266.72	238.06	-385.79	116.43	142.06	118.15
Depreciation/Depletion	46.3	51.28	52.95	42.07	43.02	34.73
Amortization	63.63	72.04	66.6	48.44	26.96	24.67
Deferred Taxes	-54.04	40.84	-240.67	4.43	-2.73	3.28
Non-Cash Items	12.18	11.97	5.75	8.65	14.62	9.05
Changes in Working Capital	-61.95	-70.39	691.6	89.86	-27.43	70.25
Cash from Operating Activities	272.85	343.8	190.44	309.87	196.5	260.12
Capital Expenditures	-82	-78.16	-149.56	-101.36	-107.56	-154.44
Free Cash Flow	190.85	265.64	40.88	208.51	88.94	105.68
%	-28%	550%	-80%	134%	0%
Average Growth	115%

Growth at 115% would be almost unattainable. Assume 20% growth

	Average Growth	20%	Duration	10
	Constant Growth Phase	5%
	Discount Rate	7%
Year		Free Cash Flow	PV Factor	Present Value
1	2005	190.85	1	190.85
2	2006	229.02	0.931	213.23
3	2007	274.82	0.867	238.22
4	2008	329.79	0.807	266.15
5	2009	395.75	0.751	297.36
6	2010	474.90	0.700	332.22
7	2011	569.88	0.651	371.17
8	2012	683.85	0.606	414.69
9	2013	820.62	0.565	463.31
10	2014	984.74	0.526	517.63
11	2015	1181.69	0.489
	Future value at Constant growth	49085.70	0.456
	Future Int Value		0.424
	NPV	28588.82
	Total Common Share	100.00
	Value per Share	285.89
	Margin of Safety	30%
	Estimate	200.12
	Current price	$57

However its other financial data is not so promising:

Profitability
Profit Margin (ttm):	-1.36%
Operating Margin (ttm):	16.78%

Management Effectiveness
Return on Assets (ttm):	7.88%
Return on Equity (ttm):	-2.45%

i.e . return to investor is negative... hmmmm..

Analysing Johnson & Johnson

	Growth	14%	Duration	10
	Constant Growth Phase	0%
	Discount Rate	9%
Year		Free Cash Flow	PV Factor	Present Value
1	2005	9,245	1	9,245.00
2	2006	10,536	0.917	9,666.15
3	2007	12,008	0.842	10,106.48
4	2008	13,684	0.772	10,566.88
5	2009	15,595	0.708	11,048.24
6	2010	17,773	0.650	11,551.54
7	2011	20,256	0.596	12,077.76
8	2012	23,084	0.547	12,627.96
9	2013	26,308	0.502	13,203.21
10	2014	29,982	0.460	13,804.68
11	2015	34,169	0.422
	Future value at Constant growth	379,660	0.388
	Future Int Value		0.356
	NPV	274,899.43
	Total Common Share	2,904.32
	Value per Share	94.65
	Margin of Safety	30%
	Estimate	66.26
	Current price	$66

Where to Start?

Where and how shall I start my journey for investment? I have been asking this question long ago. Now finally I am going to write it . I am going to investigate stocks from his recent purchase. This information may be gathered from gurufocus.com.

Ticker	Company	Date*	buy/sell	Impact to Portfoliodown	Price Range	(Average)*	Current Price	Change from Average	Comment	Current Shares	Value	%
USG	USG Corp.	30/09/2006	Add	0.97%	$45.01 - $51.61	$48.20	$51.45	7%	Add 156.94%	16,700,992	$804,987,814.40	25%
LOW	Lowe's Companies Inc.	30/09/2006	Add	0.36%	$26.71 - $29.47	$28.20	$30.10	7%	Add 797.44%	7,000,000	$197,400,000.00	6%
NKE	Nike Inc.	30/09/2006	Add	0.27%	$76.22 - $88.3	$80.30	$96.87	21%	Add 61.64%	4,000,000	$321,200,000.00	10%
IRM	Iron Mountain Inc.	30/09/2006	Add	0.09%	$34.41 - $43.63	$39.20	$43.12	10%	Add 20.04%	6,031,900	$236,450,480.00	7%
JNJ	Johnson & Johnson	30/06/2006	add		$57.14 - $61.32	$59.10	$66.20	12%		24,588,800	$1,453,198,080.00	45%
IRM	Iron Mountain Inc.	30/06/2006	Add	0.13%	$35.82 - $40.2	$37.90	$43.12	14%	Add 44.25%	5,024,700	$190,436,130.00	6%

From the above, I sum up all total market value (product average price and number of shares purchased) and determine the percentage. So 45% of his recent purchased was Johnson & Johnson. Tomorrow I will try to get its financial data from the web and analyse its value. Most of the method will be based on this book :

The Warren Buffett Way, Second Edition