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Wednesday, February 27, 2013

MARKET INTELLIGENCE CENTRE: Which five 'Buffett stocks' are company insiders buying?


 Tuesday, February 26, 2013 1:48 PM 
"The Oracle of Omaha," Warren Buffet is one of the most-famous investors of all time. He has one of the strongest track records of any investor in history, resulting in everyone wanting to "trade like Warren".
Of course, it is impossible to trade like Buffett. He can pick up the phone and dial CEOs directly. He can get special preferred stock deals. He also has the capital to make purchases few of us can.
One thing we can do, is find out what stocks he likes, and try to mimic his investments as best as possible.
A recent video from Wall Street Journal highlights five stocks that Buffett owns that have seen large insider buying during the last 90 days. With Buffett behind these stocks, and insiders expressing optimism, they are worth a look.
Here are the five stocks, and how they have been performing.
1. American Express (AXP): Buffett has been a long-term believer in credit-card issuer American Express. Jan Leschly, one of the company's directors has recently bought a sizable stake in the company. The stock is up 17.9% over the last 52 weeks and is currently in a strong upward trend. With a P/E of 15.9, we believe there is still value left in the stock. With the economy continuing to rebound, and consumer spending remaining positive, we like American Express.
2. General Motors (GM): Buffett has been a long-time believer in auto-maker General Motors. In November there was a $100,000 purchase made by one of the company's directors. After a strong second half of the year in 2012, the stock got off to a rocky stock in 2013, and has traded down 7.9% since the start of the year. Earlier this month the company missed its fourth-quarter earnings forecast, which has accelerated its recent selling. With ongoing weakness in Europe, this is probably a stock we would not buy into at the current time.
3. General Dynamics (GD): The military defense contractor General Dynamics is Buffett's 24th largest holding, and recently there was a $330,000 purchase made by one of the company's directors, William Osborn. The stock has recently seen selling pressure, as investors worry about the impact of scheduled budget cuts, or sequestration, on the entire defense industry. Another reason for recent selling was a large earnings miss in January for its fourth quarter. Over the past twelve months, the stock has traded down 5%. Due to the uncertainty surrounding the defense sector, we would not be interested in setting up a new position on the stock at the current time.
4. DaVita HealthCare Partners (DVA): DaVita is a recent buy for Buffett. He first got into the company in 2011. Buffett has been adding to his holdings through February, and currently owns in excess of 14 million shares. Buffett is a director of the company, and owns over 10% of its stock. The stock has been in a strong upward trend since the latter part of 2011, and is currently just shy of its 52-week high. The stock is getting a little expensive with a P/E of 21.1, and while we like the future of the company, we would prefer to wait for the stock to sell off a bit before jumping into a new position.
5. Liberty Media (LMCA): Buffett first got into Liberty Media in late 2011. The company's chairman, John Malone, recently took a bullish stance on the stock, purchasing 490,000 shares of the company. The company recently spun off its Starz cable network, which is expected to accelerate the company's growth. The stock is in the middle of selling pressure, which is creating a nice buying opportunity. It currently has a P/E of just 7.4 , and we like the stock at its current level.
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Posted by Darren Rickard at 8:55 AM
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