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alstry (35.02)

Buffett the BSer???? Is there any integrity left???

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May 16, 2009 – Comments (13)

Few have read as much about Buffett as Alstry.  Few have admired Buffett more than Alstry....up until recently.

The one character trait that stood out more than any other was integrity....it was the "x" factor that separated him from most others......

NOT ANY MORE....

Last year, Buffett wrote an op ed piece that American's should be pouring their money into the stock market....which turned out to be some pretty ill timed advice....especially for someone sitting on tens of billions of cash.

Buffett recently has gone out of his way to say what a great company Wells Fargo compared to every other publicly traded company.  He has really pumped Wells stock.  He even went so far as to make the following quote on Wells:

"If I had put all my net worth in one stock, that would be the stock."

http://www.cnbc.com/id/30535245/

This weekend, there are headlines after headlines how Warren is buying EVEN MORE Wells shares at these depressed levels last quarter.

As the share price dropped below $9 this quarter, a small fraction of what he paid just a few years ago, you would think based on what Warren was saying, he really loaded up the truck and purchased a ton of shares.  After all, we are talking about Warren Buffett, and if anyone has deep pockets Warren does. 

This was the man that poured $10 BILLION dollars into Goldman Sachs just recently...a competitor of Wells.  This was the man tha just said he would put his entire net worth into Wells Fargo....

so just how many shares did Warren buy in the first quarter????  how much did he increase his percentage ownership....did he double his position, triple it.....more?????? 

Drum roll please.....

Buffett purchased approximately 12.4 million shares....yes 12.4 million shares....approximately $100 million dollars depending on exactly when he purchased and what he paid for the shares.  For the average person, 12.4 million shares would be a lot, and $100 million would be a big deal....but for a person who controlled almost 300 million shares before the quarter started.....it is LESS THAN a 5% increase in his Wells Fargo position and approximately 1% of the amount he invested into Goldman Sachs around the same time.

Is Warren BSing and talking up his book due to the fact that he is worried about his earlier substantial Wells Fargo investment????  When Warren is a waffler...is there any integrity left in the markets???

Few are as disappointed in Warren as Alstry.....but maybe he has a good reason for saying he would put all his money into Wells but gave Goldman 100 times more????

When you can't trust Warren....who can you trust????????????????

Prepare.....Don't Fear!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

13 Comments – Post Your Own

#1) On May 16, 2009 at 5:45 PM, alstry (35.02) wrote:

Could you please support your statement with some factual evidence to back up your very concise assertion???

or are you simply talk talk talk???

guess what my guess is?????

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#2) On May 16, 2009 at 6:11 PM, hardrive118 (< 20) wrote:

there are limits to how much he can own--he doesn't have a choice to buy too much more.  does anyone doubt that wells fargo isn't doing well?  look at how their income and loan portfolio has grown has grown a lot  BAC and C 's income is diluted by share dilution and expected loan loses.  the accounting for writing off bad loans changed at the end of 2008.  WFC income is real.  BAC and C is made up.  

check out a book called "the buffet portfolio".  during the early 90's banking crisis, he said the same good things about wells fargo.  he already has a huge stake and he's gonna benefit from that.  

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#3) On May 16, 2009 at 6:16 PM, alstry (35.02) wrote:

With credit card losses now exceeding 10%.....

Auto Loan Defaults exploding.....

Mortgage defaults reaching record levels....month after month

And commercial real estate just beginning to implode.....

With millions more of job losses and business failures ahead........What is the outlook for any bank??????????

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#4) On May 16, 2009 at 6:23 PM, SkepticalOx (99.44) wrote:

alstry,

I enjoy most of your posts, but this one is a tad bit off the mark. When Buffett says he's buying American stocks now (and therefore implying that you should too), he made it explicitly clear that he wasn't sure in the short-term where the stocks were going, but that in the long long run, he believes it would be a lot higher then than it is now.

Secondly, his WFC comment was regarding HIS personal net worth, not Berkshires (if I'm not mistaken), but even this is just a hypothetical statement to begin with. If you bought WFC at its low, when apparently he first said this statement to a class of university students, then you'd have tripled your money.

Regardless, Buffett says he usually does give stock tips, and as investors, you should do your own research regardless of what Buffett says. His profile as an investor is vastly different than everyone elses.

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#5) On May 16, 2009 at 6:33 PM, catoismymotor (32.33) wrote:

Alstry,

I must admit that I agree with most of what you have to say about this situation. I believe St. Warren of Omaha feels that it is his duty to speak well of the banking system. He probably believes if he utters a discouraging word about them the economy could take a measurable hit, effecting the remaining wealth of his investors. And that would cause him to take HUGE amount of heat that no one would want. I would like to put a few shots of whiskey in him, then ask him for his unfiltered opinion. You know what I mean? Kinda like SideShowMel0329 did in the first comment.

Cato

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#6) On May 16, 2009 at 6:33 PM, alstry (35.02) wrote:

I understand the emotion in this blog...I had a bit of trouble with it before making it.....turst me on this one.

But in the end...I have to call em as I see them.

Buffett made an investment in Goldman that no one else in America could have......and the investment was ENORMOUS!!!!!

His investment in WFC was effectively immaterial in Q1....less than less than 1/5 of one percent of Berkshire's net assets.....and somewhat inconsistent with his recent WFC hyperbole for a person of his stature.

If someone could clarify the situation...Alstry will be the first to retract.

 

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#7) On May 16, 2009 at 6:53 PM, DamnYouGreenspan (< 20) wrote:

Alstry, Berkshire can't own much more of Wells Fargo without becoming a bank holding company. I don't think they want the regulation that would entail, so I doubt that it has much to do with it's investment merit. 

I didn't know Warren had such dedicated followers. This is one of few matters where I am not contrarian, Buffett is indeed awesome.

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#8) On May 16, 2009 at 7:07 PM, checklist34 (99.73) wrote:

alstry, i think that buffet didn't buy shares of GS, but rather preferred shares + warrants at very favorable interest rates. 

correct me if i'm wrong, but i think thats true.  Same with GE when it was 20.  He didn't buy sotck at 20 and ride it down to 5, he bought preferreds with huge interest rates.

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#9) On May 16, 2009 at 7:38 PM, alstry (35.02) wrote:

chk,

You are right.  He purchased preferreds at VERY favorable interest rates and got tons of warrants as a kicker.....not only that, there is a prepayment penalty if GS wants to pay off early.

Damn,

As far as coming up to the limits of being a bank holding company...it would be nice to know how close.

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#10) On May 16, 2009 at 7:42 PM, starbucks4ever (98.82) wrote:

He just purchased 100 mln worth of shares and the price exploded, so he took a break. That's how I read it. There was nothing sinister about it unless you choose to be paranoid.

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#11) On May 17, 2009 at 1:19 PM, tpc616 (< 20) wrote:

You lost all respect for Buffett for this?  I'm not sure who's the sensationlistic BSer!  Besides, your quotes and interpreitation are not entirely accurate and taken out of context.   

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#12) On May 17, 2009 at 1:47 PM, SPARTANBURG (< 20) wrote:

Alstry,

Thanks for your contrarian views.  The crisis certainly made many institutions, previously thought almighty, seem frail and unworthy.

I would say in my mind Buffett is one of the untouched diamonds of the financial system and probably a beacon of good ol' American sense and international yearning.  He may yet be demystified by this ordeal.

However, I don't think the article you have incluede concerning Bancorp and Well Fargo has any thing that remotely diminishes or blemishes 50 years of impeccable style,ingenuity and trustworthiness by the greatest of them all.

However, we are wiser.  After all Citi, Bear Stearns, Legg Mason, Goldman, Merrill kneeled.  Vigilance in their views and announcements is today's authority.

 

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#13) On May 18, 2009 at 3:19 AM, debtRichQuick (< 20) wrote:

Alstry,

 I think we should be fair to Warren. When I first read your opinion, I thought, WOW...but after reading the article, I felt like you took what Warren said out of context.

 <<recalling that Wells shares fell below $9 earlier in the year, he said at that price, "If I had put all my net worth in one stock, that would be the stock.">>

Key words here to me are "at that price".

It was at that price for about 4 trading days that had about 25% more volume than the 3mo average. A major position couldn't have been taken in that time "at that price".

I also thought seriously about snagging some WFC shares at just under $9, but couldn't pull the trigger just yet. Mainly because I agree with you that it is likely things will get worse in the short term (I still disagree with 30% unemployment). I'm still very optimistic about the opportunities in the new GREEN economy emerging. I find it exciting to see things taking shape.

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