“The Next Berkshire: The One Forever Stock That Could Make You Rich”

By Travis Johnson, Stock Gumshoe, March 20, 2007

It should come as no surprise that after only a couple weeks of posting my teaser sleuthing on this site, I’m already on my second “next Berkshire Hathaway” — as I’ve written on my other blog several times, and been guilty of myself, the search for the next Warren Buffett is one of the most evergreen pursuits in all of investordom.

This time it’s a little different — I posted Navellier’s tease about the next Warren Buffett a week or so ago, but this time it’s not the next Buffett but the next Berkshire Hathaway (a fine distinction), and it’s a tease from a different newsletter service.

Courtesy of Capital & Crisis, an advisory service I’ve not heard of before, comes the tease for a stock pick by Chris Mayer.

The scene is set clearly, as with all “next Berkshire” stocks — imagine investing in Berkshire Hathaway just thirty or so years ago, and watching your thousands turn into mllions.

And here are a few of the choice teaser quotes from the ad (there are more — this one is probably too easy to spend much time on):

“This is as close to “hands-free,” no-worries investing as you’ll ever get.”

Like “looking backward through a telescope at Berkshire itself in the 1970s.”

“Read this company’s ‘Operating Principles’ – part of its annual report – and you’ll feel like you’re reading pages ripped right out of the even more famous Berkshire Hathaway Owner’s Manual”

And then the more specific teaser clues:

Buffett owns over $800 million in shares of this company, already having more than doubled his money (this is a bit out of date, Berkshire’s holdings in this one are nearly a billion as of the last Berkshire Annual Report)

The head of the company engineered a massive turnaround for this firm, then retired, then came back to help them again when they were in a spot of trouble. He’s called the “Babe Ruth of his industry.”

This stock “Protects You From Mischief and Manipulation on Wall Street” and gives you “Real Cash Back.”

That last one, the “real cash back,” is a bit misleading — that refers to the very high book value of the shares, much of which is in cash. The company doesn’t actually give you any of it — or much of it, I should say, since they do have a small dividend of 1.5%.

And probably the last clue we really need: Book value stands (as of the writing of this email, I guess) at $382 per share.

Wow! Amazing! What kind of stock could have that kind of book value?

Well, since we’re talking about a big Buffett investment, it won’t surprise you to hear that the stock price isn’t managed or split — so it’s trading up around $550 at the moment. If you look at it like that, that the company is trading at roughly 1.3X book, it’s not as impressive (though it’s still pretty good). And they’ve got plenty of cash, about $1.5 billion of it as of the last filing, or roughly a quarter of their $6 billion market capitalization.

So this one “Forever Stock?” The Stock Gumshoe put all those clues into his thinkomatic and tells you that Capital & Crisis’ promised “Next Berkshire” is …

White Mountains Insurance (WTM)

I’ve actually looked at this company before as part of my personal portfolio musings, and decided that I prefer both Berkshire Hathaway itself and Markel (MKL) in the insurance space. Part of the reason for this is that the Babe Ruth of WTM, Jack Byrne — who also turned GEICO around decades ago and appears to be trying to whip his son, Patrick Byrne of Overstock.com, into shape — isn’t going to be a Director forever, and White Mountains continues to make small insurance acquisitions but hasn’t diversified into the kind of profitable non-insurance investments we see from Berkshire and Markel.

That’s not to say that I have anything against WTM — I don’t, and I don’t expect anyone will be terribly disappointed with a investment in this very solid insurance company … it’s certainly not a scam pick or a totally misleading one like some that I see in my email spam. But I don’t personally see the next Berkshire Hathaway here.

But thanks to your friend the Stock Gumshoe, you at least know who Chris Mayer thinks will be the next Berkshire … and you didn’t have to subscribe to anything to find out.

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16 Comments on "“The Next Berkshire: The One Forever Stock That Could Make You Rich”"

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Anonymous
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Anonymous
March 20, 2007 9:26 pm
I enjoyed “The Next Berkshire: The One Forever Stock…” The comprehensiveness of our research is unequaled. I continue to be amazed at the scope of your investigations in so many different sectors of the economy. If you have the time, I have another challenge for you. I am referring to Mike Schaefer’s “The Pure Energy Report” in which he tauts a $3.50 coal-bed methane energy services company that he says will be the next BJ Services. The company is working in the Powder River Basin and, according to Schaefer, will be the “easiest 471.4% gain you’ll ever see in 24… Read more »
Anonymous
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Anonymous
March 30, 2007 12:16 pm

Did anyone uncover the $3.50 CBM? I have done some research, but unable to find any information on this company.

Stock
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Stock
April 8, 2007 7:24 pm

Hi, dear readers. I did just get a chance to figure out Schaefer’s Coal Bed Methane company — it’s at http://stockgumshoe.blogspot.com/2007/04/coming-great-wyoming-flood.html

Cheers,
SG

Anonymous
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Anonymous
October 29, 2007 2:26 pm

Thanks! I found your sight by googling the teaser line “forever stock that could make you rich.”

Anonymous
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Anonymous
November 18, 2007 12:33 am

Hi there, I received the “…next Berkshire…” teaser today Nov 17 from the Motley Fool gang. In checking it out at the Gumshoe I see it was sleuthed out (from a different promo) back in March 2007. I guess they’re recycling or selling these?
PG

One Guy
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One Guy
November 18, 2007 1:55 am

The Fool’s “next Berkshire” is Markel, I wrote that one up separately — it’s a fairly similar insurance company to White Mountain … and yes, the Fool has been running that same promo for at least a couple years with the same stock teased, they tend to really stick with ones that work, I guess.

bizboy
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bizboy
December 11, 2007 11:49 pm

I am confused on which one to invest. what do you say sir ? i would really prefer your valuable advice

GigaBill
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GigaBill
February 26, 2008 10:35 am

Hey Anon!
On the CBM waste water cleanup stock… check out BCTE. Big Cat Energy… they hold patents on this technology. They are indeed on several well sites in the Powder River basin. Gumshoe has done them before… but their current price/share is below $1 so this may not exactly match the teaser you found.

GigaBill
out.

Mike
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Mike
April 6, 2008 10:50 am

WTM next Berkshire? No. I think your wrong. I am pretty sure its MKL and is trading around $465 a share right now, well below its 52 week high.

Mike
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Mike
April 6, 2008 10:54 am

STOCK: your blog doesnt come up…what is the name of that coal bed methane from schaefers? Thanks.

Gravity Switch
Admin
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April 6, 2008 11:26 am

Mike, it all depends who you ask. MKL was Philip Durell’s pick for the next Berkshire (and I prefer it, too, and own it), but WTM was this particular newsletter’s pick, ages ago.

Mike, the Coal Bed Methane stock has been a disaster over the past year, but it’s Big Cat Energy, I wrote about it last Spring or Summer.

steve
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steve
April 6, 2008 5:22 pm

i really like this site. its quite informative. can anyone shed some light on an article by The Penny Sluth(Warren Buffett Just Purchased 14 Million Shares of This Up-and-Coming Retailer

Learn the name of this stock plus nine others in this brand new report from StreetAuthority. All 10 of these stocks profiled in Paul Tracy’s brand new report entitled Top Ten Stocks for 2008 were chosen using the same time-tested fundamental principles that he’s used to generate consistent market-beating returns for FIVE consecutive years.

Read the entire report now… )

Kay
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Kay
April 7, 2008 6:02 am

Steve: reg. Warren Buffett Just Purchased 14 Million Shares of This Up-and-Coming Retailer..

KMX (CarMax) ?

E
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E
April 28, 2008 12:13 pm

Hi – I subscribe to Capital & Crises and they put a “sell” on WTM recently. They’ve had in the portfolio for almost 3 years. Not sure why they would still send this teaser out though. Usually the picks are pretty decent ones – I wish I had bought a lot more of them!

JF
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JF
August 27, 2008 8:54 am

Just to note… the C&C version of this promo isn’t still being sent out, partly because of the point E. makes on the trade and partly because the copy was just ready to make way for better things.

The MF version of the pitch is quite similar simply because of a misstep behind-the-scenes. But just to set the record straight, they’re two separate sales campaigns… with C&C’s WTM offer out there first, and the Markel piece out there second.

elgordo42
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elgordo42
February 14, 2009 1:31 pm

And after the Crash of ’08, Markel stock can be bought for about $300 a share. If nothing else, it is a nice way to buy into Berkshire Hathaway, which is Markel’s top equity holding. And it sure looks like a bargain compared to its Oct. 2007 peak price of over $550.

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