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Strategies & Market Trends : Buffettology -- Ignore unavailable to you. Want to Upgrade?

To: LauA who wrote (1615)	6/18/1999 2:39:00 PM
From: LauA	Read Replies (2) \| Respond to of 4691

The MAT info I received sounded suspiciously similar to WSJ article. The jist was that MAT had stuffed the channel (ie, TOY) who was now resisting. MAT will be 6-9 months working down inventory. NB I'm not sure that this info is independent from the WSJ source, however it came from someone who certainly is in position to know. Lau

To: LauA who wrote (1615)	6/19/1999 3:46:00 AM
From: James Clarke	Read Replies (2) \| Respond to of 4691

Two Buffett favorites are near their recent lows right now. I hesitate to say that either is a buy, but 40 for Gillette and 60 for Coke are very interesting levels for short term investors. Coke drives me crazy. They reported news in the last week that would have lopped 40% off of any other stock, and Coke goes down 5 dollars. Gillette lost 11% today after announcing yet another earnings shortfall - but so far both stocks refuse to break. I still believe I can will get my shot at both 25% lower in the next three years, so I would buy neither at this price. Part of that prediction is my view of the market valuation, and part of it is that we are seeing the darling status of these two companies gradually being chipped away. (two years ago both were supposed to be guaranteed to grow earnings at 15%+ per year. Many investors still think that today, even though the evidence mounts to the contrary. I'll buy my shares from them when they finally capitulate.) As an owner of BRK, I am very very happy about the General RE acquisition because it diluted the ownership of Coke and Gillette near their highs. This may have been one of the most ingenious moves Buffett has ever made - how do you sell Coke at the high if you're Buffett? If the market finds out you are selling, it won't be at the high any more, and even Buffett can't sell 10% of Coke without somebody noticing. And he has said over and over again he will never sell it. The tax impact of a sale would also be very painful. So what does he do? Issue a lot of Berkshire shares at their peak to create an insurance goliath. Ten years from now, everybody will recognize the brilliance of this move. For now, I sleep easy knowing that the significance of Coke and Gillette to BRK's intrinsic value is much lower than the market thinks. Now the game is insurance, and I've got the biggest horse in the race. In the game Buffett chooses to play, the biggest horse wins, and BRK is big enough to dictate what game is played. And he's got $15 billion in cash (assuming we are not going to find out in a year that he sold half his Coke position at 75. It would not surprise me, and it would make me very happy. There is a reason he refuses to talk about current activity, and has special filing requirements with the SEC.) I see BRK as a bear market play - which is ironic because Wall Street thinks a bear market would kill BRK. I say just take the market down 30% and let Mr. B do what he does best. With $15 billion in his pocket. The stock would go down, but as a long term investor I have no problem with loading up on BRK B shares at 1500. My first child arrives in August and I am waiting for a bear market to start the college fund. And no, I am not naming him Warren. Or her Buffy. (My wife vetoed the idea early on despite the suggestions from this thread.) JJC