Comparing Warren Buffett to “The tortoise, not the hair”, Greg Cavana in Money Morning Australia was citing The Oracle of Omaha’s increased investment in Britain’s largest supermarket chain, Tesco.
On January 19, The Guardian reported that
Buffett’s Berkshire Hathaway investment firm increased its stake in the world’s third biggest retailer from 3.21% to 5.08%, a regulatory filing showed on Thursday . Dated 13 January, the filing came a day after Tesco warned that trading profit for 2012/13 would be flat as the firm stepped up investment in its home market following its worst underlying Christmas sales performance for decades.
On January 18,Tesco’s stock closed at 14.02. As recently as Oct 27, 2011, the stock reached a high of 17.54.
Cavana describes Buffett as “the ultimate tortoise”, he wrote
This approach is what sets Warren Buffett apart from 99.9 per cent of investors. After investing in a company for 5 years, with the stock price going nowhere, most investors would ‘throw in the towel’ and sell after a profit downgrade and 16 per cent price plunge.
It’s the emotion of it all. We’re fixated on price. If the price is not doing what we want (moving steadily higher) we get restless. Sharp price movements invite an emotional response.
This is Warren Buffett’s strength. He avoids the emotional response because he focuses on the business not the stock price. Business value (and therefore share price value) is hard to grasp. It’s subjective. And you have to believe that in the long run value will always rise to the top. You just don’t know how long the long run really is.