The Daily Workshop Report
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (May 28, 1997)

Sports apparel maker NIKE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NKE)") else Response.Write("(NYSE: NKE)") end if %> has had one of those years athletes would call inconsistent. A year ago, it was trading around $50, then gradually climbed to the mid $70s by February. But then it slumped rapidly, all the way back down to the low $50s again.

Recently, it's been treading water. Today, though, rumors that BERKSHIRE HATHAWAY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BRK.A)") else Response.Write("(NYSE: BRK.A)") end if %> legend Warren Buffett is taking a substantial position in the stock have launched the stock roughly 5%, even in an otherwise dreary day for stocks.

Did the fundamentals change since last night? Of course not. But Buffett has been so successful for so long (pretty much putting paid to the idea that no one can outperform the "efficient" market), investors who can't afford the $43,000 a share it costs to grab a piece of Buffett's company are snapping up companies Buffett supposedly owns in order to piggy back on his returns the discount way.

Not that Nike is not a terrific holding. Over the last three years, the stock has only returned an annual gain for its shareholders of 63% a year. In addition, its balance sheet is pretty clean. According to its last quarterly report, Nike only has $289 million in long-term debt, less than the company has sitting in cash ($301 million). In addition, Nike's current assets ($3.5 billion) are more than double its current liabilities ($1.6 billion). Combine that with a global brand presence and two amazingly popular spokesmen (Michael Jordan and Tiger Woods) and Buffett - big surprise - may be on to something.

Monthly Growth Screens
(Jan. 3 to present)
30.23%  Relative Strength  
13.26%  S&P 500 Index  
8.94%  Low Price/Sales  
0.91%  YPEG Potential  
0.32%  Investing for Growth  
-4.30%  Unemotional Growth  
-11.87%  EPS Plus RS  
-22.66%  Formula 90  

Annual Value Screens
(Jan. 1 to present)
14.10%  Dow Jones Ind Avg  
13.50%  Dogs of the Dow  
7.89%  Beating the S&P  
7.39%  Unemotional Value  
7.39%  Beating the Dow  
6.31%  Dow Combo  
1.07%  Foolish Four