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

To: Michael Burry who wrote (216)	6/29/1998 8:22:00 PM
From: Shane M	Read Replies (1) \| Respond to of 4691

Michael, I read Grove's _Paranoid_ book a while ago, and enjoyed it. Always on the lookout for "strategic inflection points," although I wonder if you can determine a priori who's gonna come out of one on top. If you're interested in tech stocks I recommend _The Gorilla Game_. I recently started a small position in ITWO, the leading vendor in databases for supply chain management. These things look expensive, but when they're growing revenues at 100% a year (and projected to keep growing for many years) it doesn't take them long to grow into their shoes. And with the added benefits of proprietary standards, the early leader can effectively lock out competition and gain near monopolistic pricing power. This is essentially the hunt for the next MSFT, INTC, CSCO, ORCL, AMAT, etc. Regarding RDHS: I sold my position there following last quarter's earnings, but am still following it and fully expect to reenter the stock should it's price slide much further. This is a great example of a Peter Lynch "cookie cutter" company, and they seem to be able to execute as well or better than anyone else in the business. I'm interested to see what happens with margins next quarter. They slipped last quarter, and I wonder if their performance is beginning to gravitate more to the median. Shane

To: Michael Burry who wrote (216)	8/1/1998 3:15:00 AM
From: Jurgis Bekepuris	Read Replies (2) \| Respond to of 4691

Michael and James, I looked at a bunch of Buffett'y stocks through the Michael's "Buffett's spreadsheet". The results are astonishing. First of all, how I selected the stocks: ROE for 6-7 years >15%, consistent earnings, debt/equity < .40. I don't claim that I got them all, because I started with my own list and not a mechanical screen. I will cite the low conservative) predicted return. If you want to suggest any additional companies, please let me know. So now for results: The highest return is: ORCL! 26%. Note that this uses low PE of 29. This is hardly surprising, but interesting anyway. The second highest return is XXX 23% Sorry, it's a small-mid-cap that me and my friends want to buy. I'll let you guys know later. :-) The third highest return is remarkable: KO 18% This may partially explain why Buffett won't sell KO. The return may be unatainable, because it uses 50% ROE and high PE numbers. Other interesting data: SUP, ADBE, LLTC, LDL, UM, APCC, MSFT and INTC are all in 14-15% return area. The interesting part is that MSFT and INTC fall there, even though they are thought expensive. The not so remarkable result is that AMAT is projected to return 5%. But then AMAT is a cyclical stock. Conclusion? If you believe in ORCL's future - buy ORCL. Otherwise, load with a selection of 14-15% returners or wait for deeper correction. Jurgis