Sunday, February 20, 2011

Warren Buffett Stock Picking Secret, Revealed!

Want to bet more like Buffett? You can. We've just learned one of his major stock picking secrets! When Warren Buffett puts money to work he obviously evaluates many factors; but it appears one factor stands head and shoulders above the rest.

And that’s pricing power.

According to Bloomberg, “The single most important decision in evaluating a business is pricing power,” Buffett told the Financial Crisis Inquiry Commission in an interview released by the panel last week.

“If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by 10 percent, then you’ve got a terrible business.”

And that leads to an obvious question. Which companies have pricing power?

For insights we turned to our own Oracle - Anthony Scaramucci of SkyBridge Capital, a leading alternative asset manager with more than $7 billion under management.

He tells us Buffett's pricing power thesis leads him to these three names.
    * Philip Morris [PM  61.43    0.59  (+0.97%)   ]
      - How they get pricing power: They sell cigarettes, an addictive product. Also he says there are very high barriers to entry.
    * Walter Energy [WLT  121.98    -6.32  (-4.93%)   ]
      - How they get pricing power: They provide of metallurgical coal a necessary element of steel production.
    * Loral Space & Communication [LORL  78.91    -0.19  (-0.24%)   ]
      - How they get pricing power: They control 70% of the market.

Get all the details. Watch the video now!

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