Chasing Warren Buffett via the Web
By Mark Ingebretsen
Special to TheStreet.com
5/9/01 1:03 PM ET
URL: thestreet.com
Let's start with the facts: Warren Buffett, a.k.a. The Sage of Omaha, is the fourth-richest man in America, according to Forbes magazine, having amassed a fortune estimated at $28 billion.
Yes, he's dropped from the No. 2 spot, and he trails software moguls Bill Gates, Larry Ellison and Paul Allen. But give the guy credit. Buffett began growing his pile back in 1956, starting with just $100. His billions came not from launching a steroid-pumped software company, but from playing the market. Moreover, unlike some other legendary market players, Buffett didn't amass his wealth through white-knuckle speculation or ruthless leveraged buyouts, or LBOs. Rather, he used tried-and-true value investing principles.
Over the years, Buffett's made money for thousands of others as well. Stock in his flagship company, Berkshire Hathaway(BRK^A:NYSE), has been an incredibly consistent performer. If you'd bought it roughly five years ago, your money would have doubled since then, even after factoring in the Crash of 2000. Little wonder that following the recent gathering of Berkshire Hathaway shareholders -- they call themselves Berkies -- Buffett's reputation now seems to be at an all-time high (see a series of articles on Berkshire's recent shareholder meeting by TSC Contributing Editor Christopher S. Edmonds).
And these days, whether he's putting money into boring Midwestern energy companies or pseudo-hip clothiers like the Gap(GPS:NYSE), you can bet more people than ever are watching the Sage of Omaha's every move. That's because it really doesn't matter if those moves are extremely prescient or just plain lucky. Thanks to Wall Street's herd instinct, they often become self-fulfilling prophesies.
Case in point: In May of '98, Buffett told Berkshire Hathaway shareholders that the holding company would be paying $1 billion or so in federal taxes. Astute analysts surmised that the relatively high payout to Uncle Sam was the result of realized capital gains. Buffett was selling, in other words. A couple of months later so was everyone else, as the correction of '98 gathered steam. Clearly, following Warren Buffett can make you money.
The Belly of the Beast
So here are some suggestions on how to shadow the Sage of Omaha as he careens through the market. The obvious place to start would be Berkshire Hathaway's official home page. Actually, homely page would be a better name for it. Buffett -- ever skeptical of the Internet economy -- is apparently not one to pour a lot of money into a Web site, and BH's Web site is proof of that. All it contains is a really dull-looking list of links. Visitors are invited to shop for jewelry at Borsheim's or get their cars insured at Geico, both companies being in the BH fold. You can also order $20 T-shirts boldly emblazoned with the Berkshire logo -- a fist clutching a wad of bills.
Also on the BH site are, of course: recent annual reports and news releases, along with Buffett's sometimes folksy letters to shareholders. Good stuff. But if you're going to beat the market to the punch by following this guy, you're going to have to dig deeper.
What's in a Name?
One way to do that is by tracking the Securities and Exchange Commission filings made by Buffett and Berkshire Hathaway. Maybe include BH's vice chairman Charles Munger for good measure. The official SEC EDGAR database site will let you do searches using their names. Pay $9.95 to subscribe to a Web site called, ironically enough, FreeEDGAR, and you can set up an alert that will sound whenever Buffett or BH or whoever files any sort of statement with the SEC.
All Buffett, All the Time
Another way to shadow the Sage is to take part in the discussions and rants at financial chat sites like SiliconInvestor (SI) or The Motley Fool. One thread on SI called Buffettology is entirely devoted to Buffett chat. Contributors are requested to read the book Buffettology by Mary Buffett, Warren Buffett's former daughter-in-law. And they're asked to defend their trades based on Buffett-like investing principles.
Sometimes you can find news, too. One poster on the Motley Fool meticulously compiled links to news articles that came out of Berkshire Hathaway's recent shareholder meeting. A posting in early April caught BH's disclosure to the SEC that it owned some 8 million shares of the Gap. Since BH's April 2 announcement, the shares have risen from about $23 to $29, although some claim Buffett's average cost basis in the stock may be higher than that.
Another, less frequently visited SI thread tracks Berkshire Hathaway Class B(BRK^B:NYSE) stock, the less-expensive shares issued by Berkshire Hathaway, "less expensive" being a relative term. Class B shares recently closed at $2,293, vs. about $69,000 for BH's Class A shares.
Fan Clubs, Books and Software
Those two SI threads only scratch the surface, however. Numerous Buffett fan sites can be found all over the Web. The Toronto Investment Club, for example, gushes over Buffett's investing prowess. The site also tracks Buffett media mentions and recent speeches. A Web site called Warren Buffett Links does just what its name says, though it's a little out of date. And if you want to read some of Buffett's most memorable quotes, go to the Web site called Simple Ways to Build Wealth. Among the sayings listed there is the now classic contrarian cry: "Be fearful when others are greedy and greedy only when others are fearful."
Perhaps that's a bit too pithy, though, so to delve deeper into Buffett's psyche you could read some of the many books written about him. The online bookstore Cyberhaven.com maintains a nearly complete list, along with reviews. One title conspicuously absent from the list -- perhaps because it's hard to find -- is Invest Like Warren Buffett, Live like Jimmy Buffett. Believe it or not, the two are said to be distant relatives.
Finally, after you've pored over a book or two, you might try out a $65 software program that purports to mimic Buffett's investment methodology. The program can be found at a Web site called Sherlock Holmes Investing. The site attempts to use Sherlock Holmes' investigative methods to discover the kinds of value stocks liked by Buffett.
But why do all this work yourself, when you could simply buy a few shares of Berkshire Hathaway stock itself -- either the classic or lite version? Just how much is the stock really worth, you might ask? One Buffett fan has published an intricate financial model, complete with documentation. According to that model, Class A shares of Berkshire Hathaway are worth upward of $112,751, more than 60% above their recent price of $69,000. Talk about a value stock! |
