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Shares of several Internet search engine and portal companies rose higher today. Lycos <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LCOS)") else Response.Write("(Nasdaq: LCOS)") end if %> gained $3 5/16 to $53 9/16 after receiving a patent for its "spider" technology for indexing and collecting targeted information from different sites on the Web. Also, Yahoo! <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: YHOO)") else Response.Write("(Nasdaq: YHOO)") end if %> picked up $8 1/2 to $117 7/8 after number-one PC maker Compaq Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPQ)") else Response.Write("(NYSE: CPQ)") end if %> agreed to make the firm's My Yahoo! Web page the default Internet start page for Compaq's new line of Presario Internet PCs. Excite <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XCIT)") else Response.Write("(Nasdaq: XCIT)") end if %> also hitched a ride higher on the developments, rising $3 1/4 to $65. Infoseek <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SEEK)") else Response.Write("(Nasdaq: SEEK)") end if %> gained $4 to $27 1/4.
In other Web news, Internet content provider CNET Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CNWK)") else Response.Write("(Nasdaq: CNWK)") end if %> picked up $12 1/8 to $45 1/8 after General Electric's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GE)") else Response.Write("(NYSE: GE)") end if %> NBC television network agreed to buy a 19% equity stake in CNET's Snap! Internet portal and search service with an option to increase its stake to 60% (or $38 million). CNET and NBC will operate the Snap! unit as a joint venture and might eventually take the unit public. In addition, NBC announced that it will take a 4.99% equity stake in CNET itself, buying 812,800 shares for roughly $26 million. The deal was done with the intention of providing the consumers of a well-known TV brand name with a starting point as they transition from the tube to the Web for more of their information and entertainment needs. "Our goal is to make Snap! the starting point that the nation's TV viewers are most aware of [on the Web]," NBC executive vice president Tom Rogers said. Stay tuned...
Transportation safety and energy absorption products company Simula Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SMU)") else Response.Write("(NYSE: SMU)") end if %> moved up $2 5/8 to $16 7/8 -- back to the level it achieved when it reported first quarter results earlier this year -- after announcing that TRW <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRW)") else Response.Write("(NYSE: TRW)") end if %> Vehicle Safety Systems is going to integrate Simula's inflatable tubular structure (ITS) into its product line for side-impact protection systems. Simula's ITS product is the only one on the market designed specifically to protect the head and neck of vehicle occupants in the event of a side-impact collision, as well as potentially provide for the containment of occupants in rollover and secondary impact collisions. Despite the fact that ITS is not currently Simula's most meaningful unit in terms of revenues, growth in this segment will be key to the company's profitability going forward.
QUICK TAKES: Online company America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> rose $3 7/8 to $88 5/8 after J.P. Morgan started coverage of the company with a "buy" rating and a 12-month price target of $110 per share... Semiconductor maker Texas Instruments <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TXN)") else Response.Write("(NYSE: TXN)") end if %> added another $2 3/8 to $55 7/8 on reports that it is in talks to sell its dynamic random access memory (DRAM) chip business to Micron Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MU)") else Response.Write("(NYSE: MU)") end if %>. Micron gained $1 1/8 to $25 7/8... Specialty semiconductor maker LSI Logic Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LSI)") else Response.Write("(NYSE: LSI)") end if %> advanced $1 1/8 to $25 after announcing an agreement to supply its PC DVD audio and video decoder device to Dell Computer's <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %> Inspiron line of notebook computers... Telecommunications services provider and fiber optic network operator Qwest Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QWST)") else Response.Write("(Nasdaq: QWST)") end if %> moved up $1 3/16 to $33 11/16 after Lehman Brothers started coverage of the firm with a "buy" rating.
Information technology education firm Computer Learning Centers <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CLCX)") else Response.Write("(Nasdaq: CLCX)") end if %> added another $11/16 to $23 3/8 after reaching a settlement yesterday with the Illinois Attorney General regarding alleged misrepresentations by CLC at one of its campuses in the state... Utility software developer Symantec Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SYMC)") else Response.Write("(Nasdaq: SYMC)") end if %> was lifted $2 1/16 to $24 3/4 after saying it will repurchase up to 5% of its outstanding shares, or about 2.8 million shares, by the end of the year... Computer products maker Apple Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AAPL)") else Response.Write("(Nasdaq: AAPL)") end if %> gained $1 to $28 1/4 after Standard & Poor's revised its outlook for the company to "positive" from "negative," citing "improved profitability and financial flexibility"... Electronic and online transaction processing services firm CheckFree Holdings Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CKFR)") else Response.Write("(Nasdaq: CKFR)") end if %> rose $1 7/16 to $25 1/16 after long-distance carrier AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> agreed to use CheckFree's billing services to allow AT&T residential customers to see and pay their phone bills through the websites of major online banks or at AT&T's own site.
American depositary shares of Dr. Solomon's Group PLC <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SOLLY)") else Response.Write("(Nasdaq: SOLLY)") end if %> rose $3 3/8 to $35 1/2 after the maker of anti-virus software products agreed to merge with rival Network Associates <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NETA)") else Response.Write("(Nasdaq: NETA)") end if %> in a stock swap valued at about $640 million. Network Associates tacked on $1 7/8 to $43 7/8... Supply chain management software firm Logility <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LGTY)") else Response.Write("(Nasdaq: LGTY)") end if %> climbed $1 9/16 to $11 5/16 after reporting fiscal Q4 EPS of $0.07, beating the Street's mean estimate by $0.04... Data networking company Ascend Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ASND)") else Response.Write("(Nasdaq: ASND)") end if %> was lifted $2 to $49 after being chosen to replace Digital Equipment Corp. on the Standard & Poor's 500 Index. Digital is merging with number-one PC maker Compaq Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CPQ)") else Response.Write("(Nasdaq: CPQ)") end if %>.
Electronic audio and anti-noise systems designer Andrea Electronics Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: AND)") else Response.Write("(AMEX: AND)") end if %> tacked on $2 5/16 to $16 7/16 after the Patent and Trademark Office granted the firm a "notice of allowance of patent claims" regarding its active noise reduction technologies... Organ transplant pharmaceutical developer Sangstat Medical Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SANG)") else Response.Write("(Nasdaq: SANG)") end if %> gained $2 13/16 to $28 1/4 after naming Jean-Jacques Bienaime president and COO. Salomon Smith Barney started coverage of the company with a "buy" rating and set a 12-month price target of $60 per share... Saville Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SAVLY)") else Response.Write("(Nasdaq: SAVLY)") end if %> gained $3 1/2 to $41 5/8 after BancAmerica Robertson Stephens raised the telecommunications billing software company's fiscal 1998 earnings estimate to $0.99 per share from $0.93 per share. The fiscal 1999 estimate was increased to $1.41 per share from $1.35 per share.
Athletic shoe retailer Just For Feet <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FEET)") else Response.Write("(Nasdaq: FEET)") end if %> raced ahead $1 1/2 to $25 1/2 after agreeing to buy privately held rival Sneaker Stadium Inc. yesterday for an undisclosed sum and $43 million in assumed debt. Merrill Lynch raised its near-term rating on the company to "buy" from "accumulate"... Internet software tools developer Macromedia Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MACR)") else Response.Write("(Nasdaq: MACR)") end if %> advanced $1 to $17 1/8 after agreeing to license its Flash computer animation software to Netscape Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NSCP)") else Response.Write("(Nasdaq: NSCP)") end if %> for use in its updated Navigator Internet browser software. Netscape climbed $1 3/8 to $24 3/16.
TV and video security communications equipment maker Odetics Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ODETA)") else Response.Write("(Nasdaq: ODETA)") end if %> rose $2 3/4 to $16 3/4 after a U.S. District Court judge handed down an injunction against Storage Technology Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: STK)") else Response.Write("(NYSE: STK)") end if %>, enjoining the maker of information storage devices from selling certain automated tape library systems until a final hearing on a patent infringement case between the two firms is held on July 1... Disk drive maker Seagate Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SEG)") else Response.Write("(NYSE: SEG)") end if %> tacked on $1 3/8 to $23 after Salomon Smith Barney raised its rating on the company to "buy" from "neutral," with a 12-month price target of $30 per share.
Discount department store Stein Mart <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SMRT)") else Response.Write("(Nasdaq: SMRT)") end if %> plummeted $3 3/16 to $11 13/16 after warning that its second quarter earnings will be below analysts' estimates of $0.26 per share and will be more in line with the $0.20 the company reported in Q2 1997. The company said that while same-store sales are "modestly positive" and new store sales are "on track," performance is not as strong as anticipated. Stein Mart seems to be going against the tide in the retail sector -- many retailers have been reporting increases in same-store sales. Several analysts cut their ratings on the company after the warning. J.C. Bradford lowered its rating to "buy" from "strong buy," Morgan Keegan downgraded it to "market perform" from "outperform," and Robinson-Humphrey cut its short-term rating to "market perform" from "buy."
Medical diagnostic products developer Chromatics Color Sciences International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CCSI)") else Response.Write("(Nasdaq: CCSI)") end if %> was pummeled for $2 5/16 to $6 1/2 after notorious institutional short-seller Asensio & Co. initiated coverage of the company with a "strong sell" and "short sell" recommendation. Asensio charges that CCSI made false claims about its medical instrument Colormate III when it said that the market for the product will be between $330 million and $510 million. In fact, according to Asensio, the Colormate III is not a unique product and the market for it is estimated to be less than $2.5 million. Asensio's recent targets have included Vivus <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VVUS)") else Response.Write("(Nasdaq: VVUS)") end if %>, BioTime <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BTIM)") else Response.Write("(Nasdaq: BTIM)") end if %>, Crystallex International <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: KRY)") else Response.Write("(AMEX: KRY)") end if %>, and Coinmach Laundry <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WDRY)") else Response.Write("(Nasdaq: WDRY)") end if %>. In regard to CCSI, Asensio states that despite getting FDA approval almost a year ago, the company has yet to sell a single Colormate III unit and that the company's "excessive" stock price is due to management's "misrepresentations" about the Colormate III's sales potential. In a statement yesterday, CCSI said it continues to be engaged in "late stage negotiations" with potential manufacturing and distribution partners.
QUICK CUTS: Wells Fargo <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WFC)") else Response.Write("(NYSE: WFC)") end if %> dropped $12 3/4 to $353 and Norwest Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NOB)") else Response.Write("(NYSE: NOB)") end if %> was cut for a $7/8 loss to $35 15/16 as the market priced in uncertainty over the two banks' ability to execute their post-merger strategic plan following yesterday's merger announcement... Nabisco Holdings <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NA)") else Response.Write("(NYSE: NA)") end if %>, maker of Ritz crackers and Oreo cookies, crumbled another $1 1/8 to $38 3/4 after yesterday announcing a restructuring plan that will result in a $406 million ($1.01 per share) Q2 charge and an additional $118 million in charges over the next 12 months... Zip and Jaz drive maker Iomega <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IOM)") else Response.Write("(NYSE: IOM)") end if %> fell $1/2 to $6 1/2 after announcing Compaq Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPQ)") else Response.Write("(NYSE: CPQ)") end if %> will include the Zip drive as a standard feature in the majority of its new Compaq Presario PCs. The deal was undercut by another deal between Compaq and Iomega rival SyQuest Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SYQT)") else Response.Write("(Nasdaq: SYQT)") end if %>, under which SyQuest will provide drives for Compaq's "configure to order" program.
Some oil-related companies dropped again on worries that additional production cuts will not be enough to stem the worldwide oversupply. Exxon <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: XON)") else Response.Write("(NYSE: XON)") end if %> lost $1 1/4 to $69 15/16; Schlumberger <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SLB)") else Response.Write("(NYSE: SLB)") end if %> fell $2 1/16 to $74 13/16; Cooper Cameron <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RON)") else Response.Write("(NYSE: RON)") end if %> shed $1 1/4 to $55 1/2; Smith International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SII)") else Response.Write("(NYSE: SII)") end if %> skidded $1 3/4 to $43 1/2; R&B Falcon <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FLC)") else Response.Write("(NYSE: FLC)") end if %> finished down $1 1/4 to $23 3/4; and Camco International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CAM)") else Response.Write("(NYSE: CAM)") end if %> slumped $3 to $62 3/4... Washington Post Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WPO)") else Response.Write("(NYSE: WPO)") end if %> slipped $2 3/4 to $557 1/2 after Salomon Smith Barney cut its rating on the newspaper and broadcasting company to "outperform" from "buy" citing that the stock has jumped 34% since the brokerage issued the "buy" rating. Salomon predicts the shares will reach $620 in 12 to 18 months.
Financial services company Washington Mutual <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WAMU)") else Response.Write("(Nasdaq: WAMU)") end if %> sank $1 7/16 to $44 11/16 after CEO William Longbrake said analysts' estimates for the company's 1998 earnings should be lowered from $3.08 a share, according to Reuters. He said the company has encouraged analysts to be "somewhat more conservative" in their outlook for the rest of the year... Fully furnished temporary housing provider BridgeStreet Accommodations <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BEDS)") else Response.Write("(Nasdaq: BEDS)") end if %> was trounced for $4 to $5 1/4 after warning that its Q2 EPS won't meet analysts' expectations of $0.14. The company anticipates Q2 EPS of around $0.06 and blamed the shortfall on underperforming markets and overcapacity of available apartments... Non-contact manufacturing sensors and systems maker CyberOptics Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CYBE)") else Response.Write("(Nasdaq: CYBE)") end if %> tumbled $2 5/8 to $13 3/8 after announcing that it expects to report Q2 EPS around $0.20, short of analysts' mean estimate of $0.30.
Third party billing clearinghouse Billing Concepts <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BILL)") else Response.Write("(Nasdaq: BILL)") end if %> plunged $2 15/16 to $15 1/16 after warning that lower-than-expected revenues and earnings from its Local Exchange Carrier billing business likely will mean it will report Q3 EPS between $0.19 and $0.20. Analysts had expected EPS of $0.23... Critical and cardiac care devices maker Arrow International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ARRO)") else Response.Write("(Nasdaq: ARRO)") end if %> was shot down $4 3/4 to $30 5/16 after announcing it expects to report Q3 EPS in the range of $0.42 to $0.44, short of the $0.47 mean estimate of the analysts surveyed by First Call... BMC Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BMC)") else Response.Write("(NYSE: BMC)") end if %>, which makes aperture masks for color picture tubes used in TVs and PC monitors, tanked $3 to $9 15/16 after announcing it expects Q2 EPS of $0.08 to $0.13, substantially below analysts' expectations of $0.26, due to soft market conditions confronting its mask operations division.
Casualwear designer Tommy Hilfiger <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TOM)") else Response.Write("(NYSE: TOM)") end if %> was cut $3 5/8 to $60 5/16 after saying that its order backlog at the end of fiscal Q4 was up a less-than-anticipated 7% (however, Pepe Jeans was excluded from the reported number)... Hotel owner and operator Servico Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SER)") else Response.Write("(NYSE: SER)") end if %> was down $1 1/4 to $15 3/4 after selling $175 million in convertible preferred stock in a private placement... Communications servers maker Computone Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CMPT)") else Response.Write("(Nasdaq: CMPT)") end if %> lost $5/16 to $6 7/8 after announcing it will merge with LADIA LLC to form LADIA Communications Technologies Inc. Computone will issue up to 8.5 million shares to LADIA members and debtholders... Veba AG <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VEB)") else Response.Write("(NYSE: VEB)") end if %> American depositary receipts dipped $1 1/2 to $69 3/4 after Germany's largest phone company, Deutsche Telekom AG <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DT)") else Response.Write("(NYSE: DT)") end if %>, said it wants to more than double what it charges competitors such as Veba to use its phone connections.
FOOL
ON THE HILL
An Investment Opinion
by
Dale Wettlaufer
New Berkshire Purchases
Rumors that Berkshire Hathaway <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BRK.A and BRK.B)") else Response.Write("(NYSE: BRK.A and BRK.B)") end if %> has taken stakes in Wal-Mart <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WMT)") else Response.Write("(NYSE: WMT)") end if %>, clothing retailer Gap Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GPS)") else Response.Write("(NYSE: GPS)") end if %>, and Tupperware <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TUP)") else Response.Write("(NYSE: TUP)") end if %> appear to be true. Although the news is new, Berkshire made these investments a year ago. Under special disclosure rules that Berkshire can take advantage of because of Chairman Warren Buffett's status as perhaps the most-watched investor in the world, the company does not have to disclose publicly for a year certain investments that it has made.
The disclosure was originally made in Berkshire's 1997 first quarter 13-F filing, which is an accounting of equity holdings by asset managers and certain insurance companies. Though details are sketchy, federal filings reporting and analysis firm Technimetrics confirmed today that these holdings were reported in the filing. The SEC made the filing public before today, according to the folks at Technimetrics, but then again, the market doesn't react instantly to all public information on Berkshire Hathaway. Notable examples of market reaction lagging a filing include information on Berkshire's holding of Wells Fargo <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WFC)") else Response.Write("(NYSE: WFC)") end if %> that was contained in an International Dairy Queen proxy statement. So, the market isn't always that efficient in sopping up the marginal information that is out there.
While the Gap Inc. and Tupperware positions were not reported by any news agency that we could find, Bloomberg reported this afternoon that Berkshire's Wal-Mart stake stood at 4.39 million shares as of the end of the first quarter of 1997. Technimetrics reported that Berkshire purchased 1.075 million shares in that quarter for $29.98 million. That would put Berkshire's average cost around $27 7/8 per share, or about $30 below the current market price.
The Gap and Tupperware purchases were quite minor in comparison to the Wal-Mart purchase and in comparison to Berkshire's $34.8 billion in shareholders' equity. The purchase of 125,000 Gap shares for $4.1 million puts Berkshire's average cost basis of $32.80 well below the current quote at $60 7/16, while the purchase of half a million Tupperware shares for an average cost of $33.20 per share is underwater, as Tupperware closed today at $27 11/16.
Of all of the purchases, the most likely decision made by Warren Buffett (there are other investment decision-makers at Berkshire, as we will explain in a moment) is the Wal-Mart investment, as Berkshire is an experienced retailer. Its Borsheim's and Nebraska Furniture Mart stores are famed for their low-margin, high selection, high-turnover approach, much as Wal-Mart is. In addition, Berkshire Vice-Chairman Charlie Munger sits on the board of warehouse retailer Costco Companies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: COST)") else Response.Write("(Nasdaq: COST)") end if %>. Berkshire currently holds 555,000 Costco shares. The Gap Stores purchase looks to be more the handiwork of GEICO Chief Investment Officer Lou Simpson, though. The high-growth retailer is probably too fashion-oriented for Buffett, who likes consumer products that don't change all that much. As far as fashion goes, though, Gap's stuff is pretty middle-of-the-road. So, while it's hard to pin the investment on either Simpson or Buffett, if one had to guess, Simpson is probably the decision-maker here.
While Gap and Wal-Mart shares didn't respond to the news, it appears as though Tupperware did, gaining $1 7/16 to $27 11/16 today on 5.6 times its 30-day average trading volume. Possibly because the Tupperware position is underwater while the other investments have done very well in the last year, "value-oriented" investors flocked to that stock today. Investors should realize that these purchases were made a year ago and that Berkshire's position could have changed since then. The company could have sold the position entirely or reduced it since this year-old disclosure. One thing that Buffett and Charlie Munger have repeated numerous times is that the investor has to make decisions according to his own "circle of competence." Warren Buffett can't think for you (unless you buy his stock), but it sure looks as though some people today acted along those lines.
Judging by the performance of these three stocks over the last year, it's too bad that whoever made these decisions at Berkshire Hathaway didn't have more conviction in committing money to these ideas. At the time that these investments were made, Buffett was saying that things in the market were looking pricey -- but there's always value to be found in any market environment. Gap and Wal-Mart are both companies with characteristics that Buffett has talked about over and over again. They are both consumer franchises, their capital management is good, and they both have solid management teams. These are also things that Tom Gardner's Cash-King portfolio talks about on a regular basis, though Buffett might be a tad more concerned with purchase price than the C-K philosophy is.
In short, it's very interesting to those who are concerned with Berkshire Hathaway's investments to hear today's news. It may even spark some ideas. However, those who just run out and mimic Buffett's moves (or what are perceived to be Buffett's moves in the case of decisions made by Lou Simpson) are doing themselves a disservice. The way to outperform is not to follow the lead of others, especially when there is a year lag in the information on what Berkshire is doing.
Please see the Motley Fool's Conference Calls page for call information and links to synopses.
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Contributing Writers Yi-Hsin Chang (TMF Puck), a Fool Brian Graney (TMF Panic), Fool Two Alex Schay (TMF Nexus6), Fool, too Dale Wettlaufer (TMF Ralegh), Final Fool
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