Firm fits Buffett's template

SARASOTA — A prominent stock picking and investment advice operation, the Motley Fool, lavished high praise on local manufacturing stalwart Sun Hydraulics.

The site, www.fool.com, listed the Sarasota-based valve manufacturer as a potential winning pick in a series of stories on what companies would look good in an imaginary Warren Buffett portfolio. The website says it has no idea if Buffett has Sun Hydraulics (symbol: SNHY) on his buy list. But the Motley Fool's analysts studied a recent Securities and Exchange Commission filing in which Buffett stated the qualities he looks for in a stock investment.

“As the world's third-richest person and most celebrated investor, Buffett attracts a lot of attention,” the site states. “Thousands try to glean what they can from his thinking processes and track his investments.”

Buffett, according to the site, looks for consistent earnings power; good returns on equity with limited or no debt; management in place; and a simple, non-techno-mumbo-jumbo businesses. Sun, the site says, goes four-for-four.

• Earnings, save for a decline in 2010, have been strong for a decade;
• Return on equity has been solid, the site reports, with 29% over the past year, and 20% on average over the past five years. It has no debt.
• Al Carlson, CEO, has run the business since 2000, and has 30 years in the fluid power and hydraulics industry.
• The business of making and selling valves is easily explained and, according to the Motley Fool, isn't “particularly susceptible to technological disruption.”

“So, is Sun Hydraulics a Buffett stock?” asks the Motley Fool. “It could very well be. The company exhibits several quintessential characteristics of a Buffett investment.”

Sun's stock rose slightly after the story was published March 8, up 22 cents, to close at $29.49 a share that day. The 52-week high of the stock is $36.23 a share.