Note To Buffett Fans: Don't Confuse RIM And Netflix With Value Plays

Includes: BB, NFLX
by: Rocco Pendola

I just have to laugh. After Research in Motion (RIMM) imploded the first time, several contributors and commenters on Seeking Alpha referred to the stock as a "value play." On the heels of RIM's most recent post-earnings implosion, some of the same people - and some new voices - are doing the same thing. I don't care what Warren Buffett says, Yogi Berra owns this one - "This is like deja vu all over again."

And now, as the bearish long-term story plays itself out, a considerable chorus calls Netflix (NASDAQ:NFLX) a value play. Even my good friend and fellow Seeking Alpha contributor Robert Weinstein is bullish for the time being. So much so that Bob and I have wagered a bottle of beer. Bob ventures that NFLX will see $140 before it sees $120. I disagree.

Anyhow, as the great Yogi Berra also said, "You can observe a lot just by watching." And while world-renowned value investor Buffett is everybody's go-to guy, he probably would not take too kindly to people using his words to justify buying shares in broken companies.

A major difference exists between Buffett and everyday hacks like us. Buffett could hop a flight to Los Gatos, Waterloo or maybe even to Miami Beach or to Hollywood, but, me - and you - we're taking a Greyhound. Buffett has the power to buy and sell both RIM and Netflix tomorrow without Balsillie, Lazaridis or Hastings ever knowing what hit them. We don't. When Buffett opens a position in a company, he automatically wields massive influence. When you or I purchase 100 shares, we're lucky if we even get a free drink at the annual shareholder meeting.

Simply put, you're not a value investor like Warren Buffett, so stop quoting him and misusing his words to justify long plays on dead stocks. It's like me comparing myself to Lance Armstrong as I struggle up a category three climb. If Buffett buys RIMM and NFLX, neither his impetus or sentiment aligns with yours. Buffett's perspective, reasoning and ability to make an impact within the company renders him distinct. Not to mention his billions of dollars.

When a stock collapses, it does not automatically become a value play. The underlying company must be strong. It's long-term story must remain intact. Maybe Balsillie, Lazaridis and Hastings all have plans. Maybe they're all smarter than the rest of us, like Buffett apparently is. I don't know. What I do know, however, is that barring something extraordinary or meaningful M&A activity, both RIMM and NFLX are destined to wallow in the teens.

Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in RIMM, NFLX over the next 72 hours.