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Monday, November 14, 2011

IBM and Buffett

I have been trading IBM for almost 2years now.  I was expecting a multiple expansion in the name, but during this market turmoil, it showed a much different more resilient characteristic. I figured it was multiple money managers buying up shares due to the 2009 company performance, and how well earnings held up during a full blown credit event.

Well, we now know it was massive purchases from Berkshire Hathaway.

Multiple expansion takes place when a float gets reduced. This only adds to the thesis.

With this news, IBM will test its all-time-high while becoming overbought.  Tough to enter at current levels.

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