Buffett, CNBC, Wells Fargo & Manipulating Investors

I had lunch with a colleague yesterday, during which we discussed Warren Buffett's appearance on CNBC that morning.

As I related Buffett's comments about his displeasure with the Kraft purchase of Cadbury, my friend and I agreed that Buffett couldn't very well announce his intention to dump the former's stock. But, on reflection, I'm surprised he went as far as he did to castigate Kraft's management. When Buffett begins to sell out of Kraft, his activities, as a 9.8% owner, are sure to draw attention among brokers. It won't be long before those in the business of moving largish blocks of equities know who is selling.

On the other hand, Buffett shrewdly used the appearance to 'talk his book' about Wells Fargo. The nearby chart of Wells' and the S&P500 Index's prices over the past five years illustrate that Wells has underperformed over the period.

Perhaps, with a dividend, Wells has managed to pull even with the index.

For the risks entailed in holding individual equities, especially large banks for the past few years, this hardly covers the risks Buffett took.

How astute, then, for him to spend precious minutes of an appearance on a major business cable television channel, on the day of Wells' earnings announcement, touting the stock?

Everyone knows Buffett's Berkshire Hathaway owns a lot of Wells. Buffett, in a style reminiscent of Lee Cooperman's attempt to tout Home Depot a few years ago, smacks of something close to a violation of SEC regulations. His comments were hardly analysis, and he spoke generally about the management, in contrast to, say, this morning's piece in the Wall Street Journal that was quite critical of Wells.

I continue to be amazed at what this guy gets away with in public. He may as well begin his remarks with,

'Hi, I'm Warren Buffett- and you're not. I want to take few minutes here on CNBC to publicly identify our institutional equity and fixed income holdings, in hopes that my reputation will cause investors to stampede into positions in my holdings, thus driving up their value today, and in months to come.'

Buffett is careful to criticize derivatives, which are trickier to manipulate, and tend to have smaller markets, making entry and exit tougher for investors of Berkshire's size. To my knowledge, Buffett doesn't engage in short-selling, either.

Instead, he continually wraps himself in seemingly patriotic investing. You know, basic equities for the long term. But look at Berkshire's recent 2- and 5-year performances relative to the S&P500 Index. The firm trails the S&P in the shorter term, and leads, but not by much, and only over the past year, for the longer period.

CNBC's willingness to give people like Buffett free air time to talk their books is one reason I rarely pay attention to topics that aren't strictly news or debates on economics or the equity markets between reputable pundits.

Appearances like yesterday's by Buffett, to me, cheapen the network and give it the image of simply being a camera for rent to favored asset managers. And not necessarily outstanding asset managers, either.