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To: Thomas Haegin who wrote (1030)	2/12/1998 11:32:00 AM
From: Thomas Haegin	Read Replies (1) \| Respond to of 2068

Thread, a bit off-topic, but worth reading nevertheless: On SEC 13- filings and Buffet, etc. Reposting from Infobeat: ---------------------------------------- Finance - Money Daily for Thursday, February 12, 1998 Why you shouldn't follow in Warren Buffett's footsteps One reason: By the time you find out what he did, you're probably too late by Duff McDonald It has been a long time since precious metals like gold or silver have added much glitter to investors' portfolios. Gold is trading for around $300 an ounce, hovering around its lowest levels in years. And silver -- the maligned little sibling of gold -- traded for a mere $4.88 an ounce as recently as a year ago. Then Warren Buffett showed up. Last week, Buffett's insurance company, Berkshire Hathaway, announced that it had accumulated 130 million ounces of silver -- about 20% of the world's supply. By week's end, the metal had jumped 7%, from $6.78 to $7.24. Traders around the world attributed that rise to Buffett's Midas touch, an increasingly disruptive force that results in rapid increases or decreases in anything the man buys or sells -- or is even rumored to be considering. The list of stocks and bonds that have felt the power of Buffett's aura is not short. In the last year alone, Buffett-based rumors have had significant market effects: -On January 8, 1998, long-term U.S. Treasury bonds took a beating on rumors that Buffett and another market mover, George Soros, might be selling significant Treasury holdings. The 30-year bond fell 1 point that day, with the yield rising from 5.72% to 5.79%. That was the biggest shift in two months. -In August of 1997, Wells Fargo (NYSE: WFC) stock slid 6% in a single morning, on rumors that Buffett had sold almost his entire 8% stake in the firm. -And on May 28 of last year, Nike (NYSE: NKE) stock rose 6% based on rumors that Buffett had taken a liking to the athletic apparel company, a rumor many investors found easy to believe, given the company's brand power and obviously capable management - two attributes Buffett always looks for in a company. All this suggests a strategy. Perhaps a good way to make money -- or to avoid losing it -- is to find out what Buffett is reportedly buying (or selling) and get in on the game before the rest of the investing horde finds out. To do that, you'll talk to savvy investing friends and pull Buffett's Securities Exchange Commission filings off the Web to see what he's actually bought and sold. Piece of cake, right? Of course not.ÿ And there are at least two reasons why. The first one is this: Rumors are just that -- rumors. Just because you hear it doesn't mean it's true. Buying and selling stock based on something you heard on a bar stool is a poor excuse for an investment strategy. With Buffett, the rumor mill runs on overdrive, thanks to an obscure rule at the SEC that applies to his investment activity. It's called Instruction D of Rule 13F, and it states that if an investment manager can convince the SEC that disclosure of a position "would be likely to cause substantial harm to [his] competitive position," the manager can keep the position confidential. Buffett has qualified for the exemption, which means that investors analyzing his periodic filings can be viewing an incomplete portfolio -- in other words, reading tea leaves. So it's hard to know what Buffett's really up to.ÿ We still don't know, for example, how much (if any) Wells Fargo stock he sold last summer. One important exception to this rule: The exemption isn't granted for sales or purchases of stock in companies of which Buffett is a board member. Those transactions must be reported by the 10th of the month following such transactions. Buffett sits on the board of Coca-Cola (NYSE: KO), Gillette (NYSE: G) and the Washington Post (NYSE: WPO). A more important reason not to invest on what you think Buffett is up to is a little more fundamental. The man didn't make a fortune by investing in companies at any price. And no one else has done it by mimicking his moves. Any smart investor knows that the key to making a good investment in any company - even if it's the best company in the whole darn world - is to buy the stock at a reasonable price (i.e., before Buffett and his disciples move in). Just because Warren may or may not have bought shares in that company doesn't mean he bought them at a price anywhere near the price the stock is trading at when you hear about it. Buffett himself has stressed repeatedly in his letters to shareholders that buying a stock at the wrong price can easily wipe out the benefits of years of solid growth at the company after that purchase. To put it another way: Warren obviously liked silver when the metal was trading for less than $6 an ounce. He might not buy another earring's worth now that it's over $7. Buffett chasers did just that in February -- and might live to regret their haste. Our advice: if you admire Warren Buffett and his investing prowess, try investing the way that he does, not a step behind him. Buy good solid companies run by good solid management that make good solid products -- and don't pay through the nose for them. And don't pay any attention to the rumors. In other news... (skipped, -T.) ---------------------- (Adapted from the Fortune Business Report, on the Web at fortune.com In addition, comments may be sent to ÿÿÿÿ Money Online <money_online@moneymail.com> ----------------------------------------- Copyright 1998 InfoBeat, Inc. All rights reserved. InfoBeat Services are for personal use only. Commercial use or redistribution in any form, printed or electronic is prohibited. -------------------------------------------------------------