Berkshire Hathaway's (NYSE: BRK-A)(NYSE: BRK-B) stock has a secret weapon. It stands roughly 68 inches high, has played a part in the fashion industry, pharmaceuticals, and has even been involved with royalty. This weapon is drop-dead gorgeous, and it recently hosted the Academy Awards.
By now, you've probably guessed that the secret weapon isn't an "it," but a "she" -- actress Anne Hathaway. Or at least that's what writer/director Dan Mirvish would have us believe.
Mirvish recently pointed out that Berkshire's stock got a 2.02% bump the Friday before the Oscars, and 2.94% the Monday after. But that's not all. He also shows that the following big days for Anne were also good days for Berkshire shareholders.
| Event | Berkshire Hathaway Stock Price Change |
|---|---|
| October 3, 2008: Rachel Getting Married opens | Up 0.44% |
| January 5, 2009: Bride Wars opens | Up 2.61% |
| February 8, 2010: Valentine's Day opens | Up 1.01% |
| March 5, 2010: Alice in Wonderland opens | Up 0.74% |
| November 24, 2010: Love and Other Drugs opens | Up 1.62% |
| November 29, 2010: Anne announced as co-host of the Oscars | Up 0.25% |
Source: Huffington Post.
Mirvish speculates that automatic trading robots are scouring the Internet for chatter about "Hathaway," and they mistakenly think investors are getting fired up about Berkshire, when really they're just gossiping about Anne. Obviously, Mirvish thinks very little of the hedge funds that build these automated trading systems, not to mention the math, computer science, and physics PhDs hired to build them.
Is it possible these hedge funds are really much bigger idiots than we give them credit for? Let's take a closer look.
The Hathaway connection
Berkshire's stock most certainly was up on Oct. 3, 2008, but there was more than an opening for Anne going on. Just two days prior, the stock had jumped almost 5% after Buffett got a dandy deal on perpetual preferred stock from General Electric (NYSE: GE).
Meanwhile, on Feb. 8, 2010, did Anne Hathaway's movie push up Berkshire's stock? Or were investors anticipating the heavy buying from index funds that would be forced to add Berkshire to their holdings after it replaced Burlington Northern Santa Fe in the S&P 500?
The March 5, 2010 gain we can write off even more quickly, since the S&P gained nearly double Berkshire's jump that day. What good is the Anne Hathaway signal if the stock still underperforms the rest of the market?
And of course, all good Fools know that the weekend of Feb. 27, 2011 something happened that was much more important than the Oscars -- the Berkshire Hathaway annual shareholder letter was released. My wild guess is that the stock gains that Friday reflected anticipation about the letter, while Monday's pop was due to Buffett's bullish outlook in the letter.
Looking from the other side, I could also point out that when The Devil Wears Prada opened on June 30, 2006, Berkshire's stock was down 0.6%. Get Smart was no better for Berkshire's stock; it was down 0.8% on that opening day. Berkshire's stock didn't benefit from the chatter after Anne's ex-boyfriend confessed to fraud, either, since the stock dipped 0.8% that day.
Fun and games with Mr. Market
We humans are pattern-loving animals, drawn like flies to candlelight when there's an opportunity to try and connect dots. When it comes to the stock market, some investors can rival baseball players for their renowned superstitions. The so-called Super Bowl indicator is a favorite, but you can find plenty of other odd beliefs, ranging from the low volatility supposedly tied to the Chinese Year of the Rabbit to the idea that investing ideas can be sniffed out of chart patterns.
But whether it's superstitions, 24-hour news coverage, or tick-by-tick tracking of stock prices, there's no shortage of noise for investors. As such, it could be that one of the most important skills for an investor is the ability to filter out all of that noise.
As for me, I'm a fan of Anne Hathaway and a fan (and shareholder) of Berkshire Hathaway. I just prefer to enjoy each of them separately.
