Tuesday, January 22, 2008

Guess who is buying stocks?

While nearly everyone else is selling and running out the door, one of the greatest investors of all time is doing just the opposite. Hmmm

Warren Buffet’s Berkshire Hathaway continues to add to it’s positions through this market turmoil. He bought another 1.2 million shares of Burlington Northern Santa Fe, BNI, on Wednesday through Friday of last week paying an average of $77.10 a share. BNI is holding steady and closed at $76.51 on Tuesday.

I wonder if he is kicking himself for jumping in too early? If he had waited until this week, he could have bought the stock for $708,000 less. Probably not. Once he makes a decision about a stock, he buys in increments until he gets to his final desired holding amount. With all the cash that he has on hand right now, I imagine he will be adding even more BNI.

BNI is a good solid company, but I am not sure what is attracting Buffet. Growth is projected to be moderate, debt to equity is way too high for my comfort zone at 76%. I have read some speculation that he is interested in other assets that BNI holds, namely real estate. It’s that kind of insight into a business that is not readily available to the average investor that puts the individual at a distinct disadvantage. Not only is he able to undercover the gems, but he also has more access to information to detect the potential time bombs about to explode.

I fully intend to follow his lead and make some purchases in the near term, but instead of searching and screening for undervalued, strong balance sheets - maybe it's time to pick up a few more B shares, BRKB.

Since we’ve had a series of bad market days that can really test one’s confidence and resolve in sticking with an investment plan, I included this link to a short flick for a little inspiration.


  1. I know this is an old post, but that makes it more interesting. Pulling up the stock right now on June 25th, it is at $100.47! That is very impressive compared to what alot of other markets have done in that time frame. Also the week after your post it went up to around $82 and stayed well above that since.

  2. Thanks. I appreciate the comments. Buffet did it again and picked a winner even in this difficult bear market!