Investments You Can Make in Good Company

Lest I be accused of hero worship, I'll spare readers another Warren Buffett
lovefest article. Yes, Buffett is a living legend, and yes, he is arguably the
best investor of all time. But these facts are nothing new, and more articles
than I can count already have been written about the man and his methods over
the years. Buffett has been elevated to something akin to a demigod in the minds
of many value investors, and the art of investing like Buffett is a subject that
has been thoroughly beaten to death by the financial press. With all of this as
a caveat, I'll let readers in on a little secret: I do like to keep tabs on
what Buffett is buying or selling. It never is a good idea to blindly ape the
trades of another investor even one with a track record like Buffett's.
Because of the time lag in reporting with the SEC, an investor you follow might
very well have sold the position you are copying by the time you buy it. And
what makes sense in that investor's portfolio might make no sense at all in
yours . Still, given Buffett's penchant for long investment time horizons,
he's a little easier to follow than most. And, again, his track record over
the years make him a man worth watching. Imagine my pleasure when I saw
Berkshire Hathaway 's (NYSE: BRK.B ) updated portfolio holdings for the third
quarter of 2011 (see Warren Buffett's portfolio ). Three out of Buffett's
five new additions were Sizemore Investment Letter recommendations. Warren
Buffett initiated positions in SIL recommendations DirecTV (NASDAQ: DTV ), Intel
(NASDAQ: INTC ), and Visa (NYSE: V ). His other two additions were pharmacy
chain CVS (NYSE: CVS ) and defense contractor General Dynamics (NYSE: GD ).
While I was not invited to Buffett and partner Charlie Munger's strategy
sessions before these purchases were made (I'm sure my invitation was lost in
the mail), I have a pretty good idea of what Warren Buffett sees in DirecTV,
Intel and Visa. Each is a leader in its respective industry, and all three
benefit from durable, long-term macro trends. Let's start with DirecTV, the
world's largest provider of paid satellite television. Given that
TV-over-Internet options like Netflix (NASDAQ: NFLX ) and Hulu are increasingly
crowding the turf of traditional paid TV and given that the paid TV market in
the United States already is saturated Buffett's choice here might raise a
few eyebrows. I can assume that Buffett's rationale was the same as my own:
DirecTV is a direct play on rising living standards in the fast-growing markets
of Latin America, where it already has 11.1 million subscribers (vs. 19.8
million in the United States). Latin American revenues were up 46% in the third
quarter, thanks primarily to subscriber growth. But even in the United States
where everyone already has paid TV service in one form or another revenues were
up 8%. Not bad, given the precarious financial situation of the average
American. DirecTV also is very reasonably priced at just 10 times expected
earnings. Moving on to Intel, my only question to Warren Buffett is "What took
you so long?"