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Strategies & Market Trends : Value Investing

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To: Don Earl who wrote (16192)	1/19/2003 8:34:34 AM
From: Paul Senior	Read Replies (1) of 78702

Don Earl: regarding Berkshire. I have currently been re-evaluating an observation I have regarding buying stocks that Mr. Buffett buys. I have stated several times that I have found no losing situation if one buys any stock that he has bought if one buys as soon as possible (when filings are reported in the media) after he buys, and if one can buy at a price equal or less than the average price reported in his filings. Just to recap: this gets complicated because some of the buys are done by his surrogates. And some of the positions have been small or odd (to me) like the dinky REITs that showed up a couple of years ago that didn't seem like "Buffett" stocks. -------------------------- At this point, I've closed out my position in GMT, a stock I've held for many years. They are primarily now a rail car leasing company. I've made some buys and sells, but always maintained a small position in the stock. Considering this and the time value of money, I'll guess overall it's not been a profitable stock for me. It's a stock that Mr. Buffett owns and a business in which he's very knowledgeable. GMT pays a good dividend (which may not be sustainable). Its cost of funds (an important aspect for lessors) is higher than its main competitors because it's a smaller company (GE being #1). It's possible that GMT would be an acquisition for BRK because access to lower cost monies (BRK float) would improve GMT's performance. The questions I have asked myself are: how long am I going to be in this stock (GMT), and what am I expecting. I just don't see the upside potential. I do see a downside to current price, but if the stock broke new lows, I wouldn't be surprised to see a BRK buyout. In any case, this is one instance where a "Buffett" stock has not worked out for me. And where I suspect I have given it enough time - years - to deliver results. (I've had this stock before I knew Buffett owned it, and I may or may not have paid higher prices for my initial positions than he did. So he could be showing an overall profit on his position.) Paul Senior

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