Buffett Bails Out on Stake in Bell Industries

Famed “buy and hold” investor Warren Buffett has apparently taken the money and run, cashing in a quick profit on his 5.3% stake in El Segundo-based Bell Industries and joining other major stockholders in realizing windfalls from the recent run-up in the company’s shares.

In a telephone conversation Friday with Bell Industries President Tracy A. Edwards, Buffett said he had sold his stake in the company because his “investment goals have been met,” Edwards said. The executive said he called Buffett on a matter unrelated to the stock price and learned inadvertently of the sale.

Edwards said he did not know exactly when Buffett sold the shares or at what price.

Buffett, chairman and chief executive of his Omaha-based holding company Berkshire Hathaway Inc., was unavailable for comment. As of Monday, he had not formally notified the Securities and Exchange Commission of the stock sale.

Bell Industries shares zoomed as much as 80% after it was disclosed last month in an SEC filing that billionaire Buffett had paid roughly $2.5 million for 506,700 shares of the electronics manufacturer as of Dec. 1.

Buffett never revealed when he began snatching up Bell Industries shares. But despite the small size of the investment, Buffett’s purchase still surprised Wall Street observers because he has studiously avoided high-technology stocks.

The no-technology investment strategy has cost Berkshire Hathaway, whose Class A shares have lost 7% in the past year, an uncommonly lackluster result for the Omaha sage, and one that has pundits wondering whether Buffett has lost a step.

Berkshire stock closed at $52,200 per share on the New York Stock Exchange on Friday.

Bell Industries stock reached a 52-week high of $9.13 a share on Dec. 27, up from $5 on Dec. 10, the last trading date before Buffett’s stake become known. The stock has since fallen back, closing on Friday unchanged at $5.88 on the NYSE. There was no trading Monday in observance of the Martin Luther King national holiday.

Bell Industries also said Monday that because equity in the company had fallen below minimum requirements to stay listed on the NYSE it plans to move trading of its securities to the Nasdaq Stock Market within the next 60 days.

Bell sold its graphics imaging business in September 1998 and its electronics distribution business last January. It subsequently made two cash distributions to shareholders totaling $67 million, or $7 a share.

The company’s current annual sales are about $240 million, and shareholders’ equity is about $28 million.

Edwards said the company had the option of presenting a plan to stay listed on the Big Board but declined. The move to a listing on the technology-heavy Nasdaq “will align Bell with peer-group stocks,” he said.