Almost all investors would agree that it doesn't pay to bet against Warren Buffett.
While his track record is far from perfect, taking Berkshire Hathaway (BRK.A, BRK.B) from a $30 million textile operation in 1965 to a $350 billion conglomerate in 2015 is proof positive that "The Oracle of Omaha" is usually correct.
Even more so, Buffett is almost never wrong when making big bets -- think American Express (AXP), Coca-Cola (KO), Wells Fargo (WFM), Geico and even The Washington Post.
So, everyone took notice when Buffett disclosed a $10 billion investment in IBM (IBM) a few years ago. The Oracle usually doesn't bet big unless he's certain of the outcome.
But so far, that outcome has been a nearly 30% decline in IBM's share price since Buffett began buying. But true to form, he's continued to accumulate Big Blue stock even as the price has dropped. Berkshire is IBM's largest shareholder, and recently disclosed additional third-quarter purchases that took its stake to 8.3% of the company.
BRK also took a $2 billion charge against its IBM investment during quarter -- yet Buffett had said that Berkshire will not only recoup its initial investment, but ultimately profit.
So far, the market doesn't agree, and everyone is wondering whether The Oracle has lost his touch. You can't blame the skeptics for doubting an 85-year-old man's investing acumen, and many investors see IBM as tech dinosaur in a land of sexy companies like Alphabet (GOOG, GOOGL) and Facebook (FB).
Now admittedly, readers of my column know that I'm a big Buffett devotee. But I honestly believe that IBM does present risk-averse investors with an attractive investment opportunity.
The New York Times recently had a long article about how IBM is reinventing itself, hiring hundreds of design engineers. Many wouldn't have considered going to IBM in the past -- but today, some of the best students from Stanford and the like are choosing Big Blue over Silicon Valley.
Investors seem to be laser-focused on IBM's declining legacy businesses and ignoring its rapid growth in other areas, such as cloud services. But players would do well to contemplate CEO Ginni Rometty's point that IBM is the only tech company that's been around for more than a century.
That's due to Big Blue's track record of reinventing itself time and time again. If that happens once more, Berkshire's IBM investment won't be the first time that Buffett saw something in a company that the rest of the market missed.