The Buffett Partnership Letters (Part I)

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Oct 01, 2006
When problems strike investors, they tend to look for ways to enhance their knowledge and regain their confidence. Recently, I got stuck in what I consider to be a value trap – James River Coal. I purchased the stock because smart money (activist Pirate Capital) was getting involved, the stock looked cheap on my projections and the company looked like it stood to benefit from the cyclical upswing occurring coal. It turns out smart money can wrong, management severely cut guidance and, in doing so, destroyed my projections, and the cyclical upswing in coal swung downward.