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Some Experts Long on Convention, Short on Wisdom

By    |   Friday, 14 Jan 2011 10:27 AM

One year ago, I wrote an article defending the greatest investor of all time, Warren Buffett.

Buffett, who has earned $200 billion in his lifetime, was called a hypocrite and incompetent for berating Kraft’s management for issuing shares for their acquisition of Cadbury.

I also said the following: By splitting the stock for the Burlington shareholders, it allows Buffett to split the shares 50 to 1. This should raise the price of Berkshire shares for three reasons, I said at the time.

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• Many parents who want to buy their kids shares of Berkshire B shares will be able to do this for less than $100 dollars per share.

• It is likely, because of the split, that Berkshire will be part of the S&P 500. The only thing holding them back is that they don’t have enough shareholders.

• Short-sellers like Doug Kass and others who brazenly shorted the stock will be less apt to short a stock like Berkshire now with its increased volume, especially if it becomes member of the S&P 500.

Shareholder value will be unlocked by the combination of the low price and the fact many mutual funds that mimic the S&P 500 will have to buy it. Nobody, post-Cadbury, will be obliged to buy Kraft. Or at least no more than before.

Buffett has always said he wouldn’t split the stock just to unlock value. So this whole deal was “designed” by the genius himself to do just that but make it look like it’s for the small Burlington shareholders. Genius.

Many pundits who tried to predict Mr. Buffett’s mental demise were simply dead wrong.

In fact, everything I predicted happened just as I said. Those who believed me when I said Berkshire would be higher in one year now achieved at 25.4 percent annual gain

Of course everyone who bought every recommendation last year from The Dividend Machine newsletter has seen similar results from their investments, including some more than 50 percent annually.

When seeking out safe, high-yielding investments, make sure the people you listen to have a proven track record as a real investor. Don’t listen to some media pundit trying to make a name for themselves by criticizing the greatest investor ever.

About the Author: Bill Spetrino
Bill Spetrino is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of the Dividend Machine. Discover more by Clicking Here Now.

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One year ago, I wrote an article defending the greatest investor of all time, Warren Buffett. Buffett, who has earned $200 billion in his lifetime, was called a hypocrite and incompetent for berating Kraft s management for issuing shares for their acquisition of...
bill,spetrino,warren,buffett,Conventional,Wisdom
421
2011-27-14
Friday, 14 Jan 2011 10:27 AM
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