I would imagine that Warren Buffett, hailed by many as the world’s savviest investor, must be feeling a bit squeamish these days.

Buffett, the chairman of Berkshire Hathaway, isn’t fond of crowds when it comes to investing his billions.

He prefers to sing from his own song sheet.

He fancies dancing to the beat of his inner drummer. And he is not the least bit interested in being fashionable (his brown suit went out of style half a century ago).

Even when people were ridiculed for not buying into high tech three years ago, Buffett stuck to his Cherry Coke and Dairy Queen sundaes.

Buffett has also recently cautioned investors about the popularity of real estate and the probability of a correction in that market.

But now the Oracle of Omaha, who made his investors wealthy by buying rock-solid companies that pay attractive dividends, finds himself rubbing shoulders with many others in the investment game.

With a foggy economic outlook, war drums and corporate fraud driving investors batty, dividend-paying stocks – all but forgotten during the bull market – are coming back into fashion.

Just recently, two prominent Canadian investment gurus have been pitching the virtues of stocks in companies that distribute a portion of their annual earnings to shareholders in cash.

Brent McLean, president of Calgary-based McLean & Partners Wealth Management, expounded the virtues of dividend-paying stocks.

McLean told an audience of 450 investors at his firm’s annual conference, Outlook 2003, at the Roundup Centre that dividend-paying stocks “will be the No. 1 driver of stock prices in this decade, bar none.”

An animated McLean said it not once but four times, accentuating his point in fist-pumping fashion.

McLean & Partners, an independent firm that caters to clients with a minimum investment of $1 million, has outperformed the major stock market indexes during the bear market with its Dividend Growth portfolio.

One day earlier, Don Coxe, chairman and chief strategist for Harris Investment Management, said in a media conference call that any rebound in the stock market would be driven by “real companies that don’t cheat on earnings and which pay dividends.”

Coxe also virtually wrote off tech stocks.

“That game is over,” he said. “They won’t be back for 15 or 20 years.”

McLean, who lists Buffett as his favourite investor, cited several reasons why he believes there will be a resurgence in stocks that pay dividends. He said those equities are far less volatile and boast significantly higher returns than non-dividend stocks.

McLean & Partners screens companies with a margin-of-safety criteria in which companies must show a 10-year dividend growth, stable earnings and cash-flow growth, a conservative balance sheet, a discount to fair value in its share price, a favourable pension situation and quality corporate governance.

Based on that criteria, McLean singled out Pitney Bowes (PBI-NYSE), a company whose shares his firm recently bought, as a model organization.

“We see Pitney Bowes as fair value at $40 (US) and it’s trading at $33,” said McLean.

McLean & Partners also advised investors to be cautious on government bonds, overweight on China and Asia (except for Japan), selective on the popular income trusts and focused on asset allocation.

Coxe’s pessimistic outlook comes from his research of 200 years of history for his book, The New Reality of Wall Street, that is slated for release in May.

Coxe said there is “zero hope” for the Nasdaq exchange, where the high-profile tech stocks trade.

“The South Sea bubble and Tulipmania were more rational” than the tech mania that ended in March of 2000, said Coxe.

Coxe said he’s bullish on the TSX – he called the Canadian stock market his favourite in the G7 – and gold.

The main point that McLean and Coxe agree on is a positive outlook for dividend stocks.

So two more are singing from that song sheet. Soon, it may be a glee club – much to Warren Buffett’s chagrin.

* CHEERS: To Calgary, Small Cap Fund Capital of Canada.

Calgary managers of small-cap mutual funds stole the show in the latest annual Maclean’s magazine survey of Canada’s hottest funds, copping four of the top six spots in small-cap funds ranked by three-year compound annual returns.

The Norrep Fund, co-managed by Randy Oliver and Evan Spiropoulos of Calgary-based Hesperian Capital Management, ranked second with a three-year annual compound return of 29.2 per cent.

Calgary’s other hot funds were Bissett Microcap Class F, +21.13% (manager Garey Aitken); Mawer New Canada Fund, +19.88% (manager Martin Ferguson); and the Clarington Canadian Small Cap Fund, +17.33 (manager Leigh Pullen of QVGD Investors).

The top small-cap fund was the Toronto-based Resolute Growth Fund, up 45.39%. Complete fund rankings can be found at www.macleans.ca

* SAGE WORDS: “Bull markets are born on pessimism, grow on skepticism, mature on optimism and they die on euphoria. The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell.”

- Investing legend Sir John Templeton, Feb. 1954.



HOT ALBERTA STOCK: Flowing Energy Corp.
FLO-TSXV $1.20
Up 16 cents (+15.4%) on 240,700 shares (for week ending Jan. 31).
Investors have fallen head-over-heels in love with this junior oil and gas play which is up 500 per cent since last March and trading at an all-time high. The company has been aggressively accumulating properties in Alberta for its ambitious drilling program.



COLD ALBERTA STOCK: Gauntlet Energy
GAU-TSX $4.50
Down 90 cents (-20%) on 5,831,600 shares
(for week ending Jan. 31).
Are investors finished throwing down the Gauntlet? Not according to Canaccord Capital, which issued a note speculating the stock would drop to $4 before the selling is finished over the oil and gas company’s recent news that fourth-quarter production would drop
20 per cent over water woes. Canaccord based its information on “street sources we consider reliable.” Reliable street sources? Now there’s a new twist!