Charlie Munger once shared a simple tip at the 2012 Berkshire Annual Shareholder meeting:

"The other thing that is helpful in reverse is to look at what other smart people are buying. That is not a crazy search method as a way to sort opportunities to consider."

-Charlie Munger

I love this approach! Finding stock ideas by watching what the pros do can be a great starting point, but they're just that - ideas.

Without your own good reason for buying a stock, you won't develop conviction. Remember, a stock is a piece of a business.

There's an old saying: "You can't borrow conviction." If you copy someone else's stock pick and it drops 20%, or they sell while you're still holding, what will you do without your own solid reasons for owning it?

I had been researching Agree Realty (ADC) while REITs were getting crushed in early 2024. Using a website called CEO-buys.com, I saw CEO Joey Agree had personally spent $470,000 buying his company's stock in just over two months.

People buy stock for one simple reason: they expect it to go up! What better confidence boost than seeing the CEO put their own money on the line?

So on February 21st, 2024, I bought my first ADC shares.

The result? My investment is up almost 40% with dividends reinvested!

But it doesn't always work out this nicely! Take Arbor Realty (ABR). CEO Ivan Kaufman went big in November 2023, spending over $2 million on company stock.

Yet since that first purchase on November 1st, 2023, Arbor has returned a measly 1.36% with dividends reinvested.

Even worse, they just announced a 30% dividend cut on May 2nd, 2025.

So no, buying just because the CEO is buying is definitely not a "no-brainer."

Many investors track what Warren Buffett's Berkshire Hathaway buys through a website called 13f.info, which shows what big money managers are doing each quarter.

But here's something many people miss: Todd Combs and Ted Weschler, Berkshire's investment managers, can buy and sell stocks without Buffett's approval! They have a lot of freedom, even though they check in with him occasionally.

Check out Ulta Beauty (ULTA). Berkshire bought shares in the second quarter of 2024, sold most in the third quarter, and completely exited by the end of 2024.

Reuters reported that the filing "did not say whether Buffett did the buying, though his portfolio managers Todd Combs and Ted Weschler normally oversee Berkshire's smaller stock investments."

Imagine buying Ulta only because "Berkshire did"—then watching them dump the shares while the stock dropped 25%. Without your own reasons for owning it, you'd be left wondering: Should I follow them out or stay in?

Let's end on a positive note! Warren Buffett personally bought Apple (AAPL) in 2016, saying:

"We bought about 5 percent of the company (Apple). I'd love to own 100 percent of it... We like very much the economics of their activities. We like very much the management and the way they think."

-Warren Buffett

Using February 1st, 2016, as the start date, Apple has delivered a stunning 736% return with dividends reinvested.

So we have two wins (Apple and Agree Realty), one flat result (Arbor), and one loser (Ulta). The lesson? Smart people buying something doesn't guarantee success.

As Peter Lynch wisely put it:

"Know what you own and why you own it."

-Peter Lynch

Charlie Munger also gave us this gem:

"It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent."

-Charlie Munger

Trying to do less dumb things instead of more smart things is an approach I think we can all benefit from copying.

I'd love to hear about when following a CEO or fund manager worked (or didn't) for you! I'll make sure to respond to every reply.

😁THANK YOU to all who responded to the last newsletter!!

Check out the portfolios and podcasts, or see what’s cooking on YouTube.

And now, here is this week's portfolio activity...

Dividends Received This Week ~$0

None.😩

Dividends Received Year to Date~

$1,880.17

Stocks Sold (AVERAGE)

None

Stocks Bought (AVERAGE)

3 Vanguard Intl. Dividend Appreciation ETF (VIGI) | $86.50

Notable Ex-Dividends This Week + SSD Score

5/12 Apple (AAPL), 0.52% | 99VS
5/12 Rollins (ROL), 1.16% | 83VS
5/13 Visa (V), 0.67% | 99VS
5/14 Target (TGT), 4.65% | 80S
5/15 Microsoft (MSFT), 0.76% | 99VS
5/15 TJX Companies (TJX), 1.33% | 80S
5/15 Pool Corp (POOL), 1.66% | 69S
5/16 The Hershey Co. (HSY), 3.21% | 80S
5/16 Sherwin-Williams (SHW), 0.90% | 87VS
5/16 The J.M. Smucker Co. (SJM), 3.87% | 80S
5/16 Starbucks (SBUX), 3.04% | 60BS

🎙️Podcast of the week🎙️

Are Your Mega-High Stock Div...

May 9 · Tracey Ryniec's Market E...

40:03

Fellow Chicagoan Tracey Ryniec is talking the safety of 5 dividend stocks with high yields... A few she mentioned are Whirlpool (WHR), Pfizer (PFE) and Chevron (CVX).

🎦If you missed it, I bought my first international dividend ETF...but was it the right choice?

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🎶Random music from the Dapper Dividends Jukebox🎶

Canons - Bad Dream