This is somewhat off-topic because I believe this to be a good long-term investment, and not appropriate for the goals of this blog.
It was disclosed yesterday that Buffet took a stake in the used car dealer Car Max. It's funny that he would do this, because I've thought long and hard about investing in them myself and I consider myself to be more of the Warren Buffet school of investing, slow and steady wins the race. The stock was near its 52 week low after a pretty decent run up in 2006. I liked their business model, and even told my friend Mona to check them out when she was in the market for a used car. However, the stock was punished after they announced they reduced their forecast.
Used cars have generally been the domain of sketchy used-car lots and individual sales. Carmax is changing that and making a business of having a national brand. I believe they can succeed because it's a niche I believe somebody needs to fill. People feel safe when they buy a known brand. That's why McDonald's and Starbucks is so successful, despite the fact that there is almost always a better local alternative. For a business that people distrust as much as used-car sales, having a recognizable brand will help to alleviate some of those fears. With only 86 stores in 39 markets, they still have lots of room to grow.
Again, I am not going to invest in them for this blog, but I may take a position in my long-term portfolio. This is a multi-year play. I don't buy everything Buffet does, but when he and I have the same idea, I use it as an additional data point. I might hold out a little bit longer. I've avoided almost all things consumer related, as I have believed for quite some time that we would hit a recession soon. Car purchases, even used-car purchases, will be affected if this happens. However, this is still a bearish call on the economy, which I have, so I might look into buying in soon.