StreetTalk: The Buffett Way 2006 - All there is to investing is picking good stocks at good times and staying with them as long as they remain good companies - BioPharm International

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StreetTalk: The Buffett Way 2006
All there is to investing is picking good stocks at good times and staying with them as long as they remain good companies


BioPharm International
Volume 19, Issue 7

As his investments in Coca-Cola and American Express attest, Buffett is a big fan of publicly traded US brands. Both Harley-Davidson and Mattel fit the bill nicely. "What he tends to stress is a long product life cycle and how enduring the brand is,'' David Braverman, a vice president at Standard & Poor's Portfolio Advisors in New York, told Bloomberg in May. "By that test, Harley-Davidson and Mattel make the cut.'' Braverman publishes a twice yearly "opportunities report" on companies he thinks Buffett will buy next. Both Harley-Davidson and Mattel are high up on his most recent list. Buffett has already purchased one brand name US company, sports-apparel maker Russell Athletic, for $600 million in cash.

In the annual report, Buffett says companies must have at least $75 million in pretax profit, consistent earnings, "good'' returns on equity, and "little or no debt'' to be considered. Valuations should be between $5 and $20 billion and company stocks must have a price-to-earnings ratio of 15 at a minimum. Companies on the Berkshire "In" list also must demonstrate steady earnings growth of 10% annually.

I see Berkshire continuing to hone in on value companies that possess solid global market prospects and that otherwise fit Buffett's traditional criteria.

Celebrity author and business/finance commentator for CNN and Fox News, Brian O'Connell has written for The Wall Street Journal and Newsweek, 79 Radcliffe Drive, Doylestown, PA 18901, 267.880.3144, fax 267.880.1939,


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