Subject: Re: Why STZ - low ROE
A pure example of the converse, a high ROE without strong RIIC opportunity, is Buffett’s purchase of Seas Chocolate. It produced huge cash flows but it couldn’t be reinvested back at the same high rate of ROE. Their expansion attempts were geographically sensitive. Nevertheless such a business can be marvelous investment, even without the high RIIC opportunity, if the cash flow can be taken out and reallocated to another business at a higher return than the business producing those earnings can achieve incrementally. That is also exactly what Buffett did of course.

This is an excellent observation @Manlobbi! See's in the hands of Buffett & Berkshire is worth a lot more than it is as a standalone company because Buffett could take all the cash See's produced & reinvest it elsewhere inside Berkshire. The same thing goes for a more recent acquisition of Berkshire, Allegheny. It is also worth more as a part of Berkshire than as an independent company for a similar reason.