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Strategies & Market Trends : Buffettology

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To: Bob Rudd who wrote (2943)	12/17/2001 6:06:38 PM
From: Paul Senior	Read Replies (2) of 4690

How about some discussion regarding FRE, FNM, and/or MTG? FRE & FNM are "insurance-type" companies that once interested Mr. Buffett (ref: Hagstrom's "The Warren Buffett Way") finance.yahoo.com Looks to me from this chart that there's not much difference in performance between FNM and FRE: finance.yahoo.com Some of the top institutional holders are the same for both companies. I arbitrarily started looking at FRE: I'll restate 3 problems ID'd by S&P: Mortgage debt market is mature. FRE has grown double-digits, but its large size now might have to slow. FRE business is dependent on Congress, which might/could alter rules to hurt the competitive advantage FRE now enjoys. The housing market may not be so good in future - issues with the economy and employment levels. A quick look at historical p/e's for this company shows that low annual p/e is between 9-11 (excluding extreme years) and high annual p/e is between 14-24 (dropping extreme years) for past 10 years. Yahoo shows current p/e about 13.4 now, 13.1 projected for next year. Looks like FRE's p/bk is 3. In past 5 years, p/book has been much higher, but in the 5 years before that, p/book has been less than 3. Of course, earnings have increased every year for at least the past 11 (as far back as my S&P data). Anybody here with an opinion as to this stock's suitability now as a Buffett investment? Or if there are Buffett or Wesco followers here who follow either of the two others or similar stocks, I'd appreciate any comments related thereto. aside: I notice Mr. Buffett's picks of DNB and MCB are at new highs today.

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