Allied Irish Banks (AIB) first caught my eye when it showed up in a screen I was conducting while searching for value stocks. With a forward P/E of 7, PEG of .38 and a price to book ratio of 1.24, the shares seemed like real buried treasure for a value investor. In addition to its very attractive valuation, the bank offered a generous dividend yield of 5.39%, which has enjoyed 15 consecutive years of double-digit percentage growth.

The preceding numbers were certainly promising and immediately made Allied Irish Banks a top candidate for accumulation. However, my enthusiasm was tempered by the recent problems at financial institutions related to the real estate fallout and dislocation in financial markets. I couldn’t help but wonder what skeletons in the bank’s closet might be lurking for me. Would there be a surprise write-down in assets as we have witnessed at countless other banks over the last few quarters? Given the valuation of AIB, it seemed this question was on the mind of a lot of potential investors.

The recent revelation that Warren Buffet has built a large stake in Kraft Foods (KFT) sent its shares higher as investors clamored for a piece of the action. The nearly 6% increase in the price of Kraft shares since Mr. Buffet's disclosure confirms that the Buffet bandwagon effect is still alive and well. People are still following the value investor's every move, pouncing when the opportunity arises to skim a quick percentage off the frothy top inevitably left in the wake of the battleship Berkshire. However, has the wisdom of crowds failed to reveal a larger, more promising trend predicted by Mr. Buffet?