More Troubles From Europe

The stock market is down slightly this morning on more concerns from Europe that Mario Monti, the interim Prime Minister of Italy, is trying to form a government. The government held a bond auction today that didn’t go very well. When you’re in the bond market’s doghouse, there’s not much you can do. The auction of a billion euros’ worth of five-year notes went off at a yield of 6.29%.

The other news this morning is that Berkshire Hathaway ($BRKA) has bought a $5.5 billion stake in IBM ($IBM). Warren Buffett also said that he strayed from his usual method of selecting stocks:

Buffett, in a CNBC interview, said he bought about 64 million shares of IBM, which cost around $10.7 billion. Berkshire started buying the shares in March with a goal to build a $10 billion position, he said.

Buffett also said IBM did not know that he was building a stake, and that the company was finding out about his investment for the first time as he said it on CNBC.

The legendary investor said he has always looked at IBM’s annual report — his preferred method of identifying companies to invest in — but this year, “I read it through a different lens.”

Buffett said follow-on conversations with various technology executives throughout the Berkshire conglomerate convinced him to start building the stake.

Last month I pointed out that IBM has grown 18-fold over the last 18 years which is nearly 18% annualized.

Posted by on November 14th, 2011 at 10:13 am


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