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IBM Bottoming and Ready for Long-Term Play

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On March 16, 2016

In Super Stock

I have looked at IBM many times within the past year but I have not made a purchase yet.  One of the main reasons is that big investors like Warren Buffet continue to purchase more and more stock every quarter.  With a low PE and a nice dividend, there really isn’t much downside in the stock.  We have seen a recent run up in the stock price and it looks like it could have reached a bottom.  It started a decline beginning in 2015 but there is plenty of growth to go into the stock.

Why haven’t you invested in it yet?

I still need to do my due diligence in the fundamentals and technicals.  I still don’t understand all parts of the business.  The numbers look good.  The technical indicators need some more positives.  I’m willing to wait until I see a good trend on the technical side but I also need to see some good recommendations for the stock.

When Warren Buffett continues to buy, he must know something that normal investors do not have access to or inherit knowledge that it will be a great long-term play in the future.  Naysayers will say that he does not invest in technology stocks so his purchasers might be risky to his investors.

It would be nice if some more big names start accumulating IBM.  I believe we should see this happen more often as the technical indicators work to the positive.  This wouldn’t be a stock I would purchase right now but I would continue to watch and add to your radar.  In the past week, I have already mentioned a couple stocks Ford (F) and Walmart (WMT) that will work well for you since you get a nice dividend while you wait for the stock price to rise to its market value.

Warren Buffett likes to buy when people are fearful and sell when people are outright bullish.  He is an investor that is mainly for long-term growth but is known to make mistakes as well.  He bought Tesco thinking it would be a great global player in the retail space but he had to sell when he found out that it would take much longer than expected to get the returns to his investor and he was not happy with the management.

IBM still could be in a downward trend and Warren Buffet would happily continue to purchase if he believes the long-term growth play.  I recommend you watch his purchases quarterly.  Of course, if he ends up making a mistake, it is much easier for us to get out compared to him.  You might see him sell a little saying that he needs to “rebalance the portfolio” or any other reason.  I would see this as a reason to sell or remove it from your radar.  Either way, I think this is one to look further at and it should play out nicely in your portfolio.

Invest in Strong Companies and Do Will

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On December 4, 2014

In Super Stock

As investors, we always want to find something that is under the radar.  We want something that hasn’t been priced high yet.  We want to be able to get the stock before it takes off.  Remember when you are doing this you are competing with investment firms and professional stock traders that have a limitless amount of tools at their exposure and they do this full time.  If you wish to make consistent returns, it is best to stick with strong names that will do well for the long-term.

One high-flyer that has continued to go up is Micron (MU).  This stock has continued to run up well and even with the past dip it has already started moving up again.  It is worth taking a look at.  I couple other good names to look at include IBM and Home Depot (HD).

Markel – The Next Warren Buffett Stock

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On March 2, 2010

In Super Stock

For people looking for similar to Berkshire Hathaway, I suggest Markel (MKL).  It’s like a little baby Berkshire with a stock price in the three digit range.  Actually when you purchase this stock you are purchasing Berkshire Hathaway since the fund invests heavily on good stocks.  The CEO follows the value investing theories of Warren Buffett and Benjamin Graham.  The price is at $353 which is close to the 5-year low.  At this price, it is a definite bargain and it won’t be there for too long.

What does Markel do? They are a insurance company, but they do ‘niche’ insurance. You won’t find them providing insurance for automobiles or health care. They insure weird stuff like derby horses, commercial buildings against disasters (hurricanes, earthquakes), high-value motorcycles, personal watercraft, airplanes, and even energy-producing activities.

If you look at the stock price, you’ll notice a huge drop in 2008. There was the immediate effect of wall street that brought the price down. In addition, there was the losses from insuring the buildings covered against the Hurricane Ike and Gustav. However, it still managed to pull off a profit for 2009. The secret sauce is lots of the company is just like Berkshire. They invest in other companies.

Tom Gayner, Chief Information Officer, follows the Warren Buffet philosophy. He looks for companies that are long-term profitable, high return on equity, and a low stock price. About $1.3 billion of the company consists of a large portfolio of big name stocks – 3M Co. (MMM), Abbott Laboratories (ABT), Campbell Soup Co. (CPB), The Walt Disney Co. (DIS), General Electric Co. (GE), International Business Machines Corp. (IBM), PepsiCo Inc. (PEP), The Procter & Gamble Co. (PG), and Wal-Mart Stores Inc. (WMT). Markel’s largest holding is probably Berkshire Hathaway (898 Class A shares valued at about $91 million and 31,418 Class B shares, worth about $106 million). With a market cap is $3.46 billion, their stock portfolio makes up a huge source of their business.

For those that are looking to buy long-term stocks , Markel might be a good one to look at. You don’t need to do the research of individually picking the stocks. You got a financially savvy stock guru that holds billions of dollars to back up your investment. If you read their latest 4th quarter report, Gayner states that his company is ready to handle the rising inflation. He’s prepared for the future and I’m willing to bet some money to agree with that.

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