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

To: LauA who wrote (14189)	3/29/2002 1:56:41 PM
From: Joan Osland Graffius	Read Replies (1) \| Respond to of 78740

LauA>>Right now I think that someone buying a drug basket containing MRK, SGP, and BMY will do OK. Talk about big and confusing! But their internal rates of return are good. Demographics are on their side. MRK is one of only 9 or 10 AAA rated companies in the market. Nice write up, thanks. I recently purchased an initial position in MRK. The management at this company seems to be honest and certainly is not hiding the issues facing the company. They recently put up a good presentation on their site of the road map that the company is pursuing. Also like the AAA rated bonds. Have you done any analysis on SGP and BMY? TIA, Joan

To: LauA who wrote (14189)	3/29/2002 2:16:13 PM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 78740

LauA, >during the last two years I bought BRKb's under >$1400/share ... WSC was selling below $200/share. Agreed. >During the past year it has been possible to buy >AXP, G, GLK, GMT, and HMSV I did not ask for what Buffett bought. I asked for companies with management on the level of Buffett. None of these are. :-( It's enough to spend one glance at AXPs CEO's pay to ascertain that. Actually, I can repeat: "Except of BRK and WSC there are no such companies". And even inside BRK things break once in a while - see Buffett's comments on GenRe. Yeah, like you said, there are opportunities to invest and make money. I am invested 100% myself. But I would say that Buffett is disingenuous if he believes that any companies can achieve his standards of business conduct. Maybe he realizes this, because he tolerates in his investments the same things that he criticizes in his letters. Stock options? Sure, look at AXP, GMT. Complicated, impossible to understand off-balance-sheet entities? Sure, look at KOs relationship with its bottlers. GMT also looks complex. Management originated ego-mergers? Sure, look at G and KO - Buffett stopped KOs acquisition of Quaker though. High debt levels? AXP, G, GMT. Negative ROE? GLK. Low insider ownership? All of them. I don't think these are reasons not to invest in companies above. Actually, I have looked at them and will look at them again. All I am saying that I would not buy any of them on the belief that their management is of the same quality as Buffett. And even if I would buy them, I would not "buy and forget" as I could do with BRK or WSC. Jurgis - it is a jungle out there