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Warren Buffett's New Tricks for Elephant Hunting
Who says old dogs can’t learn new tricks? Who Says Elephant Can’t Dance?
Not Warren Buffett. Not IBM. But how does an 82-year-old bargain hunter learn new tricks of buying tech stocks at new high prices and predicting future tech trends? Well, he read a corporate turnaroud playbook written for IBMers. He read it not just once, but twice.
The book, Who Says Elephants Can't Dance?: Leading a Great Enterprise through Dramatic Change, is written by Louis V. Gerstner, Jr., former IBM CEO, the man who masterminded the historic turnaround of Big Blue. I have to admit that it is one of the best business books I have ever read, with practical insights on turnaround, strategy and culture. I highly recommend it to anyone interested in business and management. It is a must-read case study for deep-value investors interested in turnaround situations.
In the IBM playbook, there is an investment checklist, put forth by Mr. Gerstner, that could have played a key role in moving Warren Buffett further away from bargain hunting value investor into a new world of growth investing in the tech field.
Click here fr More on the Checklist that Transformed Warren Buffett
Mr. Gerstner looks for five key factors when evaluating a stock:
1. LEADING A GROWING MARKET
2. INCREASING MARKET SHARE
3. GENERATING CASH
4. INVESTING CASH WISELY
5. ACTING LIKE OWNERS
For more details of Mr. Gerstner's framework for investment analysts, please turn to page 268-271 of Who Says Elephants Can't Dance?: Leading a Great Enterprise through Dramatic Change