MIKE SEGAR
By now, everyone with a pulse has a theory about why Warren Buffett has pushed aside his usual aversion to technology companies and made a $10.7-billion (U.S.) investment in International Business Machines, which the famed investor disclosed on Monday morning.
Some of the more popular theories: IBM has been around for a long time, so Mr. Buffett understands this particular technology company; management at Big Blue is famously stable, which conforms to one of Mr. Buffett's requirements; and the multinational company operates at the front of the global economy, making it ideally positioned to benefit from growth.
Still, the big-dollar move raises a number of questions. Most pressing: Does Mr. Buffett fully understand the sophisticated technological services that IBM offers, and how do they provide a so-called moat around the company? After all, IBM is no Coca-Cola -- Mr. Buffett's preferred type of investment.
However, Mr. Buffett hasn't been shy about throwing a few curve balls this year, just as the market thinks it has his investing style pegged. His last big-name investment that had everyone shaking their heads was none other than Berkshire Hathaway, the company he controls. While Mr. Buffett has always shied away from stock buybacks, he made an exception in September, when he announced that he would buy back Berkshire shares when they traded close to their book value.
Some observers then figured that Mr. Buffett was out of investing ideas. It turns out, they were wrong. Mr. Buffett, it seems, isn't quite as predictable as some would believe -- and maybe that's his best asset right now.
David Berman