Let's just be honest here, headlines that mention Warren Buffett -- of Berkshire Hathaway (NYSE: BRK-A)(NYSE: BRK-B) fame -- attract attention. And why wouldn't they? The guy is an absolute beast when it comes to investing, so it shouldn't be surprising that peoples' ears perk up when they hear he might be buying something.
It should also be no wonder then that rumors sparked by The Wall Street Journal that Buffett might be looking at Countrywide Financial (NYSE: CFC) sent the shares up 10%. But what is the likelihood that Buffett is really looking at Countrywide?
It'd be tough for me to tackle this any better than my pals at The Motley Fool did earlier today, so I suggest you check out that video clip.
From my perspective, the bottom line is that sure Buffett could be looking at Countrywide, but he could also be looking at a whole host of other beaten down stocks, bonds, etc. Those that are familiar with Buffett's style know that if there's one thing that he avoids like the plague, it's tipping his hand when he's going to do something. The only reasons that Buffett ever reveals his moves is 1) the opportunity has passed and he's no longer buying, and 2) he has to because of SEC rules.
So what's probably a good idea in this market is to put on your Buffett hat and try to think like he would when looking for good deals out there, but avoid jumping all over rumors of what Buffett might be doing (the Countrywide rumor probably won't be the last). Besides, you may be able to find something out there that he'd like even better, but is out of his wheelhouse because it's too small.
-AvgJoe
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2 comments:
Mr. Buffett always has a well planned out informed investment strategy, and although he could have gone for any beaten down mortgage company right now (There are plenty to choose from) This decision makes the most sense. He has a few board members with very close relationships to Countrwide's board (http://www.newsvisual.com/newsvisual/2007/08/berkshire-hatha.html) which I'm sure gives him a bit more insight into Countrywide.
Well, I now think that it's even more unlikely that Berkshire will invest directly since the Bank of America investment (Berkshire owns a BoA stake), but that is a pretty cool diagram you linked to.
-Joe
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