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

To: Shane M who wrote (221)	8/2/1998 2:44:00 PM
From: Jurgis Bekepuris	Read Replies (3) \| Respond to of 4691

Shane, I don't know if you use a mechanical screen to find Buffett stocks, but it seems so, since you comment that you don't know the business of some of them. I would not do it, because in Buffett's view business is everything. If business is "bad", there is no point checking the numbers. To paraphrase Lord Kaynes: "good numbers won't change bad business" :-P Couple comments on your stocks: >1. JOB - General Employment- temp svc firm, Generally, I don't even look at services companies. It's too difficult to figure out if they have franchise value, brand name or unique advantage. So I just assume they are commodities unless proven otherwise. That's even more true for small cap services. If you want more info, ask Mike - he knows something about sector from looking at OLS. :-) >2. PRST - Imaging technologies. ROE is far below Buffet's required. In addition, with a religious stock like PRST, I'd dig very deep before doing anything. >3. INVX - supplier to disc drive industry. No earnings consistency. Cyclical, presumed commodity. A friend of mine looked at it, but I did not. >4. CDWC - direct computer/software retailer. Commodity. No barriers of entry that I see. >5. CATP - Cambridge Technology Partners Services again. They may be hot, but I did not dig. >6. FAST - Fastenal - not familiar with their business. This one is very interesting. It's industrial company, and I remember looking at it before. The numbers are great - the projected return is ~20% - third highest in my current calculations. This is a qualified result though - I used the low PE of 35! If I use low PE 15, the return drops to ~11%. The company is probably business cycle cyclical, as all industrial companies are. I don't know much about its business, so I can't guarantee that they have a sustainable competitive advantage. I'll try to do more DD on this one. >7. COHU - Semiconductor sector - unfamiliar with business. COHU is a nice rather small semiequip. It actually also fell in 15% return area on Mike's spreadsheet. Drawback - the whole sector is cyclical. They are also not a leader, though they are niche leader, so they are not strictly Buffett company. >8. XETA - Semiconductor sector - unfamiliar with business. Me neither, but from the first glance does not look promising. They are in hotel/lodging local phone service industry (PBX). With market cap 40M there's probably gorillas in the business too (think of Lucent, NT and Co). >9. ORCL - Oracle, as you mentioned. >10. APCC - American Power Conversion No additional comment. Good luck Jurgis