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

To: cfimx who wrote (802)	12/28/1998 1:51:00 PM
From: Beltropolis Boy	Read Replies (1) \| Respond to of 4691

>this is a key distinction with Buffet stocks. There are plenty of Buffet companies in the universe of all stocks. Plenty for people like us, but not for him. Buffet NEEDS to really look at what are called LAGRE cap or better yet, MEGACAP companies. >WE (as non Forbes 400 folk,) on the other hand, have a much LARGER universe of companies to draw from. It is the ENTIRE universe of stocks. In some cases, a Buffetoligist could buy 100 shares of a $20 MICRO CAP stock and have it be a really meaningful position. It would still be a BUFFET style company, just not one he would BE ABlE to consider. He may in fact LOVE the smaller company though, more than his big ones!! excellent point and an excellent example of such a micro-cap would be bank of granite (NASDAQ: GRAN), a 92-year old, $320M bank out of granite falls, NC. buffett has deemed granite "a fabulous operation" and gone so far as to invite its founder, john forlines, to his last three annual meetings (and perhaps more importantly, to his exclusive sunday brunch). <vbg> until very recently (i.e., 3Q FY98), granite had a string of 62 straight quarters of earnings growth. it's still maintaining 45 consecutive years of raising dividends and increasing annual profits. it's believed that no other american bank has matched such a mark. the point, of course, is consistency. "It's so much more efficient than any of those larger banks that had to be put together, it makes you kind of wonder about the underlying rationale" of bank mergers, says WEB. for the record, granite's earnings decline occurred due to an increase in its loan-loss reserve; the inability of one of the bank's borrowers, a textile-related plant, to repay loans which the bank had made for a period extending over several years. and honest granite took the entire charge, roughly $3M, in the third quarter. nonetheless, granite's earnings on average assets is at 2.3% and its capital-to-asset ratio is 18.14%. according to american banker, granite's non-interest expenses as a percentage of revenue ("efficiency ratio") is 38%; 60% is about the norm for similarly sized banks. -chris.