Do Bill Gates and Warren Buffett Know Something?
The Dynamic Wealth Report
March 16, 2010
by Brian T Mikes, Editor
Sometimes success isn’t about being creative. You can often achieve
success simply by copying what successful people are doing. Let me give
you an example.
Take Tiger Woods for instance.
Despite his recent marital problems, the guy is a pro. Over the years,
he’s refined his golf swing. It’s now a work of art. His swing is so
good it’s made him a billion dollars. And golfers everywhere study it
closely.
They look at how he grips the club.
How he addresses the ball.
Where he sets his head, shoulders, and feet.
They analyze every detail.
After breaking his swing down, these golfers try to mimic Tiger’s
movements. Everyone’s trying to improve their golf score. Watching
Tiger, analyzing his swing, and trying to copy what he does could be the
difference between a winning round… and being stuck with the bar tab at
the 19th hole!
Here’s the thing.
Copying successful people isn’t just for golf… or for sports. It works
in investing too.
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Just look at Warren Buffett. Hedge funds and mutual funds have been set
up to copy his investment strategy. Millions of people the world over
look at and analyze his every move. They are all seeking bigger and
better gains with their portfolio.
But Buffett’s not alone.
Take Bill Gates for example. You can learn a lot about investing by
studying one of the richest men in the world. Many investors think that
Bill… with all his knowledge of computers and technology, would be a big
investor in tech companies.
But that’s not the case.
Bill has so much of his money tied up in Microsoft (MSFT) stock that he
rarely, if ever, invests in the tech space. He’s got other places to put
all his hard earned money.
He throws it away… literally.
Bill looked at investments around the world and he decided to invest in
garbage… good old trash. Bill’s a big investor in Republic Services
(RSG). Republic is the second largest trash collector in the nation.
Not a bad gig if you ask me. Nobody wants piles of stinking, rotting
garbage heaped near their homes.
As it now stands, Bill owns slightly more than 14% of Republic… about
55.4 million shares. He bought a big chunk of these at more than $30 a
share.
So what’s so special about Republic?
If you look at the business, it’s decidedly un-sexy… and quite smelly to
boot.
But what’s attractive about this business is simple. Republic hauls away
customers' garbage and collects a fee. It’s a service everybody needs.
And it’s quite profitable.
As a matter of fact, Republic is doing quite well.
2009 was a good year… partially due to Republic’s acquisition of a big
competitor - Allied Waste. And 2010 is looking even better. The company
recently provided strong guidance for the year. They’re expecting
earnings to grow anywhere between 25% and 28% in 2010.
That means we could see earnings as high as $1.67 per share!
But that’s not all. The company is also seeing revenue growth in every
customer segment. Talk about firing on all cylinders.
Stronger sales and earnings are great, but the company is also paying a
regular dividend. Republic is shelling out $0.19 per share every
quarter. Clearly, they have strong cash flows.
I don’t know how it gets any better.
A simple business that’s steadily growing; Strong earnings and even
stronger cash flows; Add to that a nice dividend and you have a recipe
for a strong stock.
Best of all, right now the stock is trading for just over $28 a share. That means you can buy the shares for less than what Bill Gates paid.
And get this… Bill’s bridge partner, Warren Buffett, is also buying. You
might follow what these investing pros are doing and pick up some for
yourself.
The big talk this week is all about the CBOE… The famed securities
market recently took steps toward going public. Some estimates call for
the exchange to raise more than $300 million. The earliest we’d see an
offering is June or July.
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