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Buffett... The Cloner?


theasiareport
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Cloning has received quite a bit of flack recently... but lets look at history

 

From Buffett The Biography, by Roger Lowenstein:

 

"Buffett was fanatical about following Graham's footsteps. He invested in stocks held by Graham-Newman Corp, Graham's investment company, such as Marshall Wells and Timely Clothes".

 

Of course I doubt cloning is, or isnt good objectively speaking. As Graham said... it was not so much the idea but the reasoning and line of thought that led to the idea.

 

In other words, no substitute for hard work!

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I believe Snowball made reference to that. They called it coattailing back then.  He was coattailing somebody and made reference to some kind of doll that has a doll inside it that has a doll inside it... forget what the doll is called. Let me search the pdf when I get home....

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yup, the man Buffett cloned is Gurdon Wattles, who own American Manufacturing, which in turn owned Crane, Mergenthaler Linotype, and Electrical Auto-lite, so it was like one company in side another and inside another, hence the reference to Russian dolls

 

I think this gave Buffett some of the ideas of making Berkshire a holding company.

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"He [Lou Green] said to me, 'Why did you buy Marshall-Wells?'

 

"And I [buffett] said, 'Because Ben Graham bought it.'"

 

...

 

"Lou looked at me and said, 'Strike one!'

 

"I'll never forget the way he looked at me when he said it."

 

It dawned on him: "Warren, think for yourself." He felt foolish.

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I think there is a difference between coattailing and cloning. With cloning, you just copy someone's idea. With coattailing, you get the idea from someone else, but do your own thinking. Phil Fisher got his ideas from others, but he probably understood the businesses better than his sources.

 

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With coattailing, you get the idea from someone else, but do your own thinking. Phil Fisher got his ideas from others, but he probably understood the businesses better than his sources.

 

It's possible I mis-use it, but this is exactly how I use the term cloning. And cloning (/coat-tailing) is a perfectly viable way to discover stocks. I imagine damn near every manager does it to some extent.

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