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Fools. You Made A Very Bad Call

Reported by Bruce Jackson, The Motley Fool.
Thursday, April 19, 2012
Topics in this article:
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World's kookiest billionairesBillionaires and their eccentric and outlandish publicity stunts.

In today’s packed edition of Take Stock, we look at Warren Buffett’s shocking prostate cancer news, one Fool’s trip to Omaha, Share Advisor‘s forthcoming biotech special, and our ‘very bad call’ on Maverick…

If Warren Buffett is ever far from the headlines, this isn’t one of those weeks.

Buffett – whose $44 billion fortune makes him the world’s third richest person – hit the headlines again this week with news he’d been diagnosed with prostate cancer.

Cue the plethora of articles, including from we Fools, here and here. The headlines were as unsurprising as they were plentiful – even though prostate cancer is very common among octogenarians (and Buffett’s announcement confirmed there was no sign of cancer elsewhere) – the ‘C’ word still makes an impact.

Die with it
Motley Fool Share Advisor Investment Analyst Dean Morel showed his versatility and general knowledge…

“Prostate cancer is seldom a killer in old men and is very common. The saying goes, you die with prostate cancer, not from it.”

Glad to hear it.

Dean is busy putting together our special Biotechnology edition of Share Advisor, the Motley Fool’s subscription-only ‘best of the best’ share recommendation service.

There is no shortage of ‘moonshots’ among the biotech crowd.

Every company is working hard to find new answers to difficult problems, but only a few will succeed.

Dean is putting in the hard yards to sort the wheat from the biotech chaff to bring you his single best ASX biotech idea and another 6 ASX biotech companies for your watchlist.

It’s a challenging and highly technical area – and Dean is knee deep in compounds, molecules and phase II trials so you don’t have to be.

The special biotechnology issue of Share Advisor will be published next Thursday April 26 after the market closes.

Now back to Buffett…

The cancer news gave a new kick to those who believe Buffett should be publically naming his successor as CEO of Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) – his diagnosis adding to his advancing years as the case for the prosecution.

We’re unashamedly Buffett fans here at the Fool – it’s hard not to be given the man’s track record and his public record of, well, just plain common sense investing advice – and we’re prepared to back his judgement on this topic too.

The board know the anointed successor and unless and until this latest diagnosis becomes life-threatening, incapacitating or both, we simply don’t need to know. Sure, the financial media (ourselves included) would have something new to write about, but it really doesn’t change anything.

One cheap stock
As an aside, Berkshire Hathaway shares are trading at close to the lowest multiple of book value in years.

Investors have taken their own decision, and any so-called ‘Buffett premium’ that was once in the share price is well and truly gone now.

What’s left is an amazing portfolio of operating businesses and investments in shares of the likes of Coca-Cola (NYSE: KO), American Express (NYSE: AMEX) and IBM (NYSE: IBM).

Both Bruce and Scott Phillips are happy shareholders in Berkshire Hathaway. So happy, they’ve made it their largest holding. If nothing else, it allows them to sleep very soundly every night.

One Fool goes to Omaha
Other than Buffett being in the news of late, the other reason we mention his name is that we’re now only a few weeks away from the Berkshire Hathaway AGM – an event that is unmatched for its type.

For years now, up to 35,000 investors have converged on Omaha, Nebraska – Buffett’s home town, and the Berkshire headquarters – for the event that has come to be known as the ‘Woodstock for Capitalists’.

Buffett and Berkshire vice-Chairman Charlie Munger sit at a table in front of those tens of thousands of shareholders, media and financial analysts and answer questions for the best part of 6 or 7 hours – with no notice and no pre-screening.

80-year old rock stars
The hoopla that surrounds the event is just as spectacular.

The stadium in which the AGM is held – used to hosting rock concerts or basketball games – hosts display stands from many Berkshire companies – everything from See’s Candies to Fruit of the Loom clothes and even kit homes!

There are shareholder days at some of Buffett’s Omaha-based subsidiaries such as the Nebraska Furniture Mart, and shareholders plan well in advance to eat at Buffett’s favourite restaurants.

It’s definitely a weekend for the die-hard Buffett fans – and you’ll be pleased to know that The Motley Fool will be represented at the meeting by our own Investment Analyst, Scott Phillips, who will be joining some of our US colleagues from Fool.com at the event.

Scott will be sending us regular dispatches from Omaha, so keep an eye on your inbox during the first few days of May.

Given the choice, I think Scott would rather go to the Berkshire Hathaway AGM in Omaha than Disneyland, Boston or the Grand Canyon – and that’s exactly how we like it. We live and breathe investing – and we enjoy bringing you our best ideas and sharing our experience.

We’ve challenged Scott to come back to Australia bearing at least one Buffett-signed $A20 note, preferably more. Wish him luck.

Our ‘very bad call’ on Maverick
Finally, it wouldn’t be a Take Stock if we didn’t mention Maverick Drilling & Exploration (ASX: MAD).

We received an anonymous email from a reader who said…

Fools, Very bad recent call on MAD. You upset a lot of your readers. Guess I will not be subscribing to you and will be telling everyone not to do so.

Tough gig this share-tipping lark.

A stock goes up 600 per cent in the space of a few months, you advise Share Advisor subscribers to take part profits, and you get accused of making a very bad call.

We can’t wait to see the hate mail when we do truly make a wrong call.

If there’s nothing more certain in investing, it’s that you will make some bad calls. Remember, a strike rate of 6 out of 10 is considered to be enough for a successful investing career. (Don’t worry, we have higher aspirations!)

When you have stocks that rise 600 per cent, the good calls should outweigh the bad ones.

To date, Motley Fool Share Advisor has avoided making any bad calls…as of writing, 9 out of 10 picks are in the green, the two biggest winners each up more than 50 per cent, with the only loser being down 4.5 per cent.

As we said to our reader, we have no incentive to upset anybody. We hope MAD goes on to bigger and better things.

We just thought the downside outweighed the upside. We’ll re-assess after the resources upgrade. If we got it wrong, we’ll put our hands up and admit it. Many readers will still have a lot riding on MAD, as Bruce and Dean do.

Very exciting events
Dean and Maverick executive director Brad Simmons swapped emails again this week, and Brad has once again kindly agreed to update us after the company releases its reserves upgrade, likely next week.

As ever, it should be a fascinating update and insight into Maverick’s business. To whet the appetite, Brad told Dean…

We have a string of very exciting events ahead over the next few months.

We’ll bring that interview exclusively to Motley Fool Share Advisor subscribers.

Until next time, as ever, we wish you happy, profitable investing.

If you’re looking for investing ideas, look no further than “2 Stocks Warren Buffett Wishes He Could Buy”. The size of Warren Buffett’s company, Berkshire Hathaway, means his investment universe is now limited to very, very large businesses, but individual investors don’t have that limitation. Click here now to find out the names of two companies we’ve used Buffett’s own criteria to identify. But hurry – the report is free for only a limited time.

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The Motley Fool’s purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Click here to be enlightened by The Motley Fool’s disclosure policy. Bruce Jackson has an interest in Berkshire Hathaway and Maverick Drilling and Exploration.

02/10/2014 02:16Sydney, Australia. 2 October,2014
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