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


To: Shane M who wrote (1715)8/1/1999 9:55:00 PM
From: James Clarke  Read Replies (1) | Respond to of 4656
 
Have to sell a large mutual fund holding of my mother's and just want to slip in into some quality and reasonably valued stocks that she can hold for a while. I'm splitting it roughly equally into these six. I think two of them are Buffett companies and the other four are in the next zip code. In terms of value, forgetting where the market trades, I would say Clayton is a steal, Ambak, Crane and Disney are on the cheap side, and other two are just companies I want her to own that are reasonably valued.

Berkshire Hathaway
Ambak
Disney
Crane
Clayton Homes
General Mills

I know, Disney I said just a week ago is a few bucks off. But part of that might be a market call (see recent Value Investing Thread posts). For money I have to invest now, Disney makes more sense at 27 than most any other business of its quality at the current price.

I was convinced today when reading a Buffett book and I found this quote about why Disney is such a great business. Concerning Mickey Mouse - "The nice thing about the mouse is that he doesn't have an agent. You own the mouse. He's yours." What a wonderful business. They can reissue the classics every seven years or so. "Owning Snow White is like owning an oil field. You pump it out and sell it and then it seeps back in again." And then I thought about my own experience. My first baby is due in two weeks and my mother had a whole bunch of my old toys, and a bunch of videos ready for when the baby comes to her house. Virtually all the toys are one of two companies - Mattel or Lego. (I guess I didn't like Hasbro as a kid any more than I like it as an investor.) And the videos are 100% Disney. She already owns Mattel, so now she'll own Disney too.

I think she will be happier with these in ten years than with the mutual fund her broker sold her when I wasn't watching. It charges a 2% expense ratio to own what looks to me like the most popular stocks in the S&P, but somehow trails the index by 3-10% a year. I guess they buy them when they're popular and sell them when they're not - turnover of 130% a year!

Hopefully some food for thought. A few new names.