Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Buy Berkshire instead of Vanguard S&P (BRKA) -- Ignore unavailable to you. Want to Upgrade?

To: Didi who wrote (213)	2/23/2000 9:19:00 PM
From: Didi	Read Replies (1) \| Respond to of 313

Is Berkshire a buy? What?s Berkshire Hathaway without Warren Buffet? Investors may not have to worry about that answer for a while. There?s apparently no truth to reports of an ailing tycoon at the helm of Wall Street?s most expensive stock. And by the way, maybe it?s not such an expensive stock right now after all. In fact at the Kiplinger Web site, Steven T. Goldberg writes for the Smart Investor column that Berkshire Hathaway may be a real bargain right now. Berkshire Hathaway class A shares (BRK.A: news, msgs) have lost almost a third of their value in the past year, but Goldberg says most of that slide has been caused by the depressed insurance industry, the most important of Berkshire?s operating businesses, and lackluster performance of some of Buffet?s biggest blue-chip holdings like American Express (AXP: news, msgs), Coca Cola (KO: news, msgs) and Disney (DIS: news, msgs). Buffet also has about half his investment money in cash and bonds, which has hurt returns. Goldberg says now may be a good time to buy Berkshire. He says at current prices, Berkshire Hathaway is selling at 20 percent over book value, compared to the Standard & Poor?s 500 stock index which is trading at 10 times book value. As for Geico, Berkshire?s big insurance investment, Goldberg says the company has a lower cost structure than its competitors and could see soaring profits once its marketing expenses slow. One money manager calls Berkshire a collection of good businesses with a pile of stocks, cash and bonds. Another says the stock is now trading at its lowest valuation relative to book value since 1983 and calls it a great buying opportunity. And as for Warren Buffet?s health, Goldberg says the chat room rumors are denied by Buffet?s office and friends. Read the full story cbs.marketwatch.com

To: Didi who wrote (213)	2/23/2000 9:46:00 PM
From: Didi	Read Replies (1) \| Respond to of 313

Microsoft Investment Unusual for Buffett BY STEVE JORDON WORLD-HERALD STAFF WRITER Berkshire Hathaway Inc. disclosed in a public filing Tuesday - a day after company Chairman Warren Buffett again spoke of his aversion to technology stocks - that the Omaha conglomerate had invested in the world's leading computer software company. Berkshire owned 167,500 shares of preferred stock in Microsoft Corp. as of Sept. 30, according to a Securities and Exchange Commission filing. Berkshire also disclosed that it owned 1 million shares in Robert Half International Inc., a personnel services company, and 1.86 million shares in Cox Communications Inc., although those purchases may have been made by an investment manager for a Berkshire subsidiary. Then valued at $16.7 million, the Microsoft investment was relatively small for Berkshire, which has upward of $40 billion in stock holdings. But symbolically, the move was noteworthy for Buffett, an investment guru who has shunned technology stocks in the past. Last year, while the technology-heavy Nasdaq composite index jumped 86 percent, Berkshire's Class A shares lost nearly 20 percent of their market value. And Berkshire's book value failed to beat the performance of the broad-based Standard & Poor's 500 Index for the first time since 1980. Buffett has said in the past that he doesn't favor technology-related investments because he doesn't understand them. Monday, in a talk with business students at Midland College in Fremont, Neb., he called the share prices of many high-tech companies "very crazy." However, Buffett has been a personal friend of Microsoft chief Bill Gates for years and occasionally invests in companies with a technology edge to them. George Morgan, a vice president with Kirkpatrick Pettis Investments in Omaha and a longtime Buffett watcher, said that because of the relative smallness of Berkshire's Microsoft investment, "you can probably read too much into it." Berkshire bought preferred shares, which are typically less volatile than common stock. Microsoft's preferred shares also paid a 2.75 percent quarterly dividend. In December, Berkshire converted the preferred shares to common stock in Microsoft. Morgan said it's not likely that the investment represents a sudden change of strategy by Buffett or that it took Gates years to persuade Buffett to invest in Microsoft. Buffett has separate investments of his own, which usually are not made public, and there's no telling whether he owns Microsoft shares personally, Morgan said. Microsoft's share prices have more than doubled since September, so Berkshire's investment apparently has gained value. But the SEC filing didn't say when Berkshire first purchased the shares or what it paid for them. Nevertheless, Morgan said, the Microsoft disclosure is interesting. "Buffett is not totally stubborn," he said. "It could be that there's an indication he's warming up (to technology) a little bit, either warming up or accepting the apparent reality that that's the direction the world is headed for the moment." In addition, Microsoft doesn't fit the stereotype of the overpriced technology stock because it has a huge share of its market and is profitable, while many technology companies have high stock prices even though they aren't profitable. Buffett also may be attracted to the relatively low stock prices of many well-run companies outside the technology sector. "There's an awful lot of high-quality companies that on a value basis are extremely cheap," Morgan said. "Eventually, the market will recognized that." "In the meantime, he may be in a position where he's beginning to see the value that is there" in technology stocks. Morgan said Buffett may perceive that major technology stocks such as Microsoft will carry their true value into the future while other companies with high-flying stocks may have a pullback. "For the Microsofts . . . of the world, the fat lady hasn't sung yet," Morgan said. According to the SEC filing, the Robert Half and Cox investments may have been made by Louis Simpson, who runs an investment portfolio for Geico Corp., a Berkshire insurance unit. Simpson is known to have general freedom to make investments as he sees fit for Geico. The filing came after the SEC turned down Berkshire's request to keep the information confidential for a longer period of time. Berkshire has argued in the past that the standard quarterly disclosure rules unfairly influence the market. People could make erroneous investment decisions based on the reports, Berkshire has argued, since the company may have changed its holdings by the time of the report. But the SEC rejected the latest confidentiality request and ordered the disclosures anyway. The SEC allows money managers to file the information confidentially if they can show that disclosure would disrupt their trading strategies. Berkshire stocks were trading down Tuesday. At noon, Class A shares were at $49,300, down $1,600 from Friday's close. Class B shares were at $1,616, down $70 from Friday. Bloomberg News contributed to this report. omaha.com