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

To: Mark Marcellus who wrote (22748)	12/13/2005 11:43:40 PM
From: Paul Senior	Read Replies (1) \| Respond to of 78507

Mark Marcellus. Okay, I will look further at DEO and at least put it on my watch list. I glanced at it briefly a couple weeks ago. They're having some problems with Guinness - sales dropping as pub consumption drops due to cigarette smoking bans. Perhaps the drop off is temporary. Another thing for me was that I did see somewhere where Buffett might be buying DEO stock recently, and I found that odd and somewhat hard to believe. Because, a couple years ago when he visited Europe, the media were rife with rumors that he was going to make an offer for DEO (all of it). So if he didn't buy shares then (Nothing was publicly announced that I saw.), and if the stock was around $40 or maybe $45 then, why would he buy now with the stock near $60. (This is my opinion - possibly I've got dates, prices, etc. all wrong.) I just figured, I misread that he was buying now. finance.yahoo.com Here's though where I see now a BusinessWeek report dated last week where Buffett or his surrogate have bought DEO: yahoo.businessweek.com Not sure if I would call DEO a value stock. However, I'm not surprised it might be a stock Mr. Buffett would like at current price. The p/e (now 17+, forward maybe 14+ ) is high, imo, for a food company. OTOH, I believed a p/e of 14 was too high for Kraft when Mr. Buffett bought it, and I was wrong (The company was sold at a big profit for Buffett.) I know or highly suspect that Buffett likes food companies (and wines - and Guinness for sure - are food products, right? -g-). DEO offers a decent dividend and great profit margins. That's diminished somewhat by the high price you pay for each dollar's worth of DEO's sales. ------ DEO and STZ operate in the same space. If people listen to Cramer, he usually touts buying what he calls "best of breed". My opinion is we want to be right when we pick something within a sector - we want the stock to go up, preferably more than any other stock in the sector that we didn't pick. My experience is that I generally pick the wrong stock if I have to pick one. The stock that rises could be the one with the most leverage, or the one that's lagged the others, or perhaps the one that's already the winner and has risen the most, or the one with the insider buying, or the one with the lowest p/e, etc. etc. etc. Whatever one I choose, it always seems to be something else that's the really good performer - assuming there's any performance at all. SO, to reduce my problem and alleviate my discomfort, I almost invariably go with trying to buy a package - if not all- of the key players in a given sector. (In other words, I'm not concerned with finding "best of breed", whatever that is.) So... I will focus on DEO, and likely buy an exploratory position of it also. (All this a long-winded way of saying I endorse your 3 part, 3 part, 2 part approach!!)