The original initiated price of this coverage was $3,376. The underlying security experienced a 50:1 split on 1/20/10, which adjusted the initiated price and target price of this coverage.
The biggest financial news of the week -- bigger than earnings, bigger than Citigroup's TARP losses, bigger than anything going on in politics -- is a stock split.
Not just any stock split, though. For the first time in nearly a decade and a half, ankle biters like us can own a piece of Warren Buffett's wisdom without suffering the emasculation associated with trading a single-digit number of shares:
Recently, I was explaining the concept of ProofTrader to a colleague, and his first response was the very smart query, "what would Warren Buffett's PT Score be?" After thinking about it for a while, I decided that Buffett would probably land somewhere in the 70's or low 80's. He has proven to make consistently solid investments over time (lately seeming like his own self-fulfilling prophecy), but on the other hand most people don't usually invest in BRK shares looking for quick 2- and 3-baggers. To get a score significantly above 90, you'd probably have to be the Warren Buffett of daytrading, which is incidentally a beast that we hope finds this site some day. Anyway, it might be an interesting experiment to plug the Oracle of Omaha's wisdom into a bot account and see what comes out.
But I digress; you want to read more about how Buffett will save MY PT Score. :) I rarely call anything easy money, and this might be my first confidence 10 coverage ever. All analysis of his businesses and the economy aside, Buffett's wisdom is so unconditionally revered by so many people who would buy shares in his company if only they perceived it to be affordable, that the volume after this 50-to-1 split will go up by way more than 50x. People will flock to it and not even know why, and guess what, it doesn't matter why, as long as they buy it.
I ask you this: In 1996, the last time Buffett effectively split his stock (by introducing the B shares, locked to the price of the A shares and with reduced voting power), did you have an online trading account? Did you even have a stock broker? My guess is >50% of you answered "no" to the latter and >99% of you answered no to the former. Imagine the impact of so much new money blindly backing a particular stock. Fourteen years ago, Buffett was initially concerned that fund managers would crookedly skim high management fees off the sale of his B-shares. This time, I think his main concern might have to be the creation of a bubble in his own stock. "The Buffet Bubble of 2010." Buffettubble. Ok, I'll stop now.
What's the risk? To me, there are only two possible losing scenarios. The first is if the BRK shareholders reject the 50-to-1 split. The second is if old Warren kicks the bucket. I'm feeling ok about our chances on both of those. No need to overthink this one. Be a lemming, get rich.