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How to get stock tips via the Buffett code

(This article appeared in The Chicago Sun-Times, May 8, 2005)

By David Roeder, Sun Times Columnist

John Price says he's figured out how to sell Warren Buffett in a box. Make that in a software package, to be precise. Price is a mathematics and finance scholar who a dozen years ago decided to make a study of Buffett, the Omaha billionaire whose annual letter to shareholders of Berkshire Hathaway (BRK-A, BRK-B) serves as a Talmud for capitalists.

Price has reduced what he's learned about Buffett's philosophy and actions into binaries and entered them into a program he is selling for an annual subscription of $997. He calls it Conscious Investor (Curious Investor having been taken, I suppose) and claims that following the principles therein have helped him beat the market easily since June 1997.

The software contains 10 years of data on 6,000 U.S. stocks and screens them according to Buffett's purported priorities. The subscription updates the data. And what does the virtual Buffett advise? "Look consistently at high return on equity and return on capital. That's where the managers are consistently delivering for shareholders,'' Price said. The other rule: Invest only in businesses that you understand.

Among the companies passing the program's stock screener lately are Bed Bath & Beyond (BBBY) and Walgreen (WAG). BBBY "is growing 25 percent a year'' and WAG "is building hundreds of stores. Their sales growth is more than same-store sales,'' Price said. Buffett has no known stake in either company.
Buffett doesn't endorse the software, nor has he complained about it, Price said.

Ultimately, he looks at Buffett's approach as labor-saving. Price said it shows the advantages of long-term investing, a style in which "it's the company that's doing all the work creating shareholder value. With short-term trading, you're doing all the work.''

John Price is CEO of Conscious Investing. Email:


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