Do Bill Gates and Warren Buffett Know Something?
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.
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.
Category: Stocks
