“When a Nevada man nicknamed, ‘Forty-dollar Frank’ first purchased his dream vacation home in Tahoe, he gathered his family on the porch for a group hug… and to give thanks to 1 stock.”
That’s what we all want, right? The stock pick that changes our lives and makes life better or more fun?
And that’s what the Motley Fool is hinting at with their “millionaire maker” stock pick that they’re teasing to potential subscribers of Motley Fool Stock Advisor.
They give some other tantalizing hints about past riches made possible, too…
“A New Jersey man spent his time buying and selling model trains while making millions from this same stock.
“A man from Kansas saved his struggling small business thanks to this same stock.
“The Journal estimates over 300 families in Portland Oregon alone became millionaires due to this same stock.”
So that’s actually enough to ID the stock, if you happen to follow the story… but we’ll leave you in suspense for a moment. What else does the Motley Fool say about this one, and why do they think you should buy it now?
More from the pitch:
“Motley Fool CEO, Tom Gardner, is convinced that this stock is not done minting millionaires….
“… he’s issued a rare “triple-down buy alert” on this remarkable company.
“A ‘triple-down’ buy alert is occurs when Tom finds a company that he is so confident in that he pounds the table and recommends it for a third time.”
Apparently those “triple downs” have included a few of the Motley Fool’s biggest winning positions — like Netflix and Amazon starting in 2002, NVIDIA in 2005, Priceline in 2004, etc. Presumably there have been some that didn’t do well, too, but we don’t get any details on those.
And what specific hints does he drop about this stock?
“The balance sheet of Tom’s triple down is an absolute fortress (so you can sleep easily when you invest in this company)… it generated an astounding $22.3 billion in free cash flow over the last 12 months.”
OK, so no surprise that this is going to be a very big company — not many companies are big enough to generate that much cash flow. And one more clue:
“It’s only trading at just 1.4 times book value!
“So there is still time for you to cash in.”
Who is it, then? Well, sadly we have to downgrade that trailing cash flow to $21.5 billion now that we have the numbers from the September quarter (it was indeed $22.3 billion back in June), but this is, as you might have guessed, good ol’ Berkshire Hathaway (BRK-A if you bathe in a solid gold tub, BRK-B if, like me, you’re a bit more modest — each A share equals 1,500 B shares). If it’s any consolation, the quarterly cash flow doesn’t mean much for this company.
And, well, I don’t know what I can add to an understanding of Berkshire Hathaway — it’s by far my largest position, and I’ve owned the shares since 2005… though it hasn’t changed my life dramatically or enabled me to build a huge model train collection, sadly, those stories are about the folks who bought Berkshire shares when Buffett was much less well-known in the 1970s and early 80s. Those stories are pulled from a Wall Street Journal article that ran a few years ago, detailing the many millionaires created by an early “buy and hold” decision on Berkshire shares.
Of course, if you go back earlier it’s not millionaires you’re looking at, but billionaires — some truly massive fortunes are bouncing around Omaha thanks to the folks who joined up with Warren’s partnership in the 1960s. But still, buying in the 70s or 80s was extremely lucrative for the patient (and yes, you would have had to be patient — and sit through a few rough periods, Berkshire badly lagged the market for years in the 90s and the stock lost a third of its value in the tech wreck, then dropped in half from its highs in 2007 when the mortgage mania and financial crisis took down the market).
So what’s the story now? Well, apparently Tom Gardner