Buffett bags Marmon
Posted
Dec 27 2007, 04:08 PM
by
Matt Koppenheffer
With so much speculation over what would be the next big move from Berkshire Hathaway's Warren Buffett, his announced purchase of a 60% stake in Marmon may have been a bit of a letdown for public market investors. After all, rumors this year included him taking big positions in Countrywide Financial and Bear Stearns -- both of which might've made investors reconsider the state of financial services stocks.
As it is, the purchase is being seen as a vote of confidence for America in general from Buffett. And what of nobody seeing this one coming? Let's be serious here, Buffett's original thinking and great secrecy ahead of his investments have led to his great success -- if every Tom, Dick, and Harry had real insight into what he was planning to do, Warren might be in trouble.
Recently, the bigger question of the investment merits of Berkshire's stock has been a subject of conversation. Earlier in the month, Barron's published an article suggesting that Berkshire's stock was overvalued. Not surprisingly, many opposing opinions have come out, but there have also been those that agreed with Barron's opinion.
Berkshire is a favorite on CAPS and carries a five star rating. CAPS isn't without its Berkshire bears -- joeykid13, for example, calls the stock "emotionally overvalued" -- but recent sentiment has stayed very positive. Based on the comments rolling in over the past few days, it's Warren Buffett, as ever, that continues to attract investors to this stock.
Though I'm not a holder of Berkshire stock, I thought the stock looked pretty attractive when it was trading under $110,000 toward the end of last year. At its current $138,500 price tag, I'm not quite as bullish and agree with Barron's that the stock may be a bit overvalued. Of course, for holders of Berkshire, I wouldn't suggest selling just because it's slightly overvalued and I certainly don't think that betting against Berkshire is a good plan. Instead, investors interested in Berkshire are better off waiting for the price to fall a bit or the value of the business to catch up to the stock price.
(Full disclosure: I do not have a financial position in any of the companies mentioned.)
