Widely regarded as one of the best investors of all time, it’s completely unlikely that Warren Buffett would ever need to ask an AI chatbot for help. Yet I couldn’t resist the urge to test ChatGPT and find out what tips it might offer the Oracle of Omaha.

So I posed the following question to it: “What advice would you give Warren Buffett if he asked you?”

To its credit, it provided a witty and accurate first response that went like this: “If Warren Buffett asked me for investment advice (which, let’s be honest, is about as likely as him switching from Coke to Pepsi), I’d probably flip the question around and ask him for advice instead!”

Good that it knows its limitations and recognises true intelligence. However, it did entertain my hypothetical question by providing the following points.

• Consider AI more seriously: unsurprisingly, this was top of its list. Warren Buffett has famously compared AI to nuclear weapons in the past. Recently, his Berkshire Hathaway fund sold a large stake in its main AI-focused holding, Apple. ChatGPT feels this was a mistake.
• Look beyond the US: Buffett is known for primarily focusing on US stocks while ignoring critical emerging markets like India and Southeast Asia. ChatGPT thinks these rapidly growing demographics offer exposure to diverse economic trends that could shape future markets.
• Dividend stocks: with interest rates rising, the benefits of dividends shouldn’t be ignored. The regular payments can help reduce the overall volatility in a portfolio. Buffett loves cash-generating businesses but ChatGPT feels he should also consider some high-yield dividend stocks.
• Green energy is here to stay: a true traditionalist, Buffett is a fan of fossil fuel energy stocks like Occidental Petroleum. However, ChatGPT thinks he may be wrong to ignore the rise of green energy.

AI stock picks

Based on the above criteria, the chatbot felt Buffet would be wise to consider some of the following stocks: Alphabet, LVMH, Reliance Industries, Texas Instruments, NextEra Energy and Siemens.

I then asked if it knew of any UK stock that might appeal to him if he was using the above criteria. The answer was hardly surprising — Rolls-Royce (LSE: RR.). It’s a truly international company with operations in the UK, US, Europe and Asia.

The FTSE 100 aerospace and defence giant is already developing AI-powered autonomous naval ships. It also uses the technology for predictive maintenance and simulations to optimise efficiency and reduce costs.

A key risk is the escalating uncertainty of trade in the US, with President Trump dropping new tariffs left, right and centre. As one of Rolls’ largest markets, any change there could put a strain on future profits. Not to mention the related risk of supply chain disruptions.

On the plus side, it recently restarted its dividend programme. After a four-year break, it’s kicked dividends back in at a 30% payout ratio to underlying income. Initially, this won’t equate to much more than a 1% yield but it’s a positive development nonetheless.

The company is leading the charge in developing small modular reactors (SMRs). These mini-nuclear power stations have been lauded as critical for the future of green energy. It’s also working on sustainable aviation fuel, green hydrogen and electric aircraft.

For investors who agree with the points above, it looks like a stock worth considering. 

Saying Palantir (NASDAQ:PLTR) shares are overvalued because the price-to-earnings (P/E) ratio is 424 is – I think – a mistake. It’s like saying someone can’t climb Everest because the mountain is big.

Someone’s ability to get to the top of Everest depends on their mountaineering skills. And the value of Palantir’s stock comes down to its future growth prospects – which I think are outstanding. 

Valuation

There’s more to valuation than P/E ratios. Don’t believe me? – here’s Warren Buffett in the Berkshire Hathaway Annual Shareholder Letter from 2000:

“Common yardsticks such as dividend yield, the ratio of price to earnings or to book value have nothing to do with valuation except to the extent they provide clues to the amount and timing of cash flows into and from the underlying business.”

This isn’t to say the P/E ratio is irrelevant (in the same way the height of Everest isn’t irrelevant to the question of whether or not someone can climb it). But it isn’t the only thing that matters. 

Ultimately, the value of a stock comes down to how much cash the company is going to make and when it’s going to make it. That’s as true of Palantir as it is of anything else.

The equation

Right now, Palantir has a market cap of around $190bn and a 10-year government bond comes with a yield of 4.5%. So to justify its current valuation, the business needs to make around $86bn by 2035.

That’s $8.6bn per year and the company managed just over $462m in 2024. That means there’s a lot of growing to be done, which could be inferred from the P/E ratio. 

To generate $86bn by 2035, Palantir is going to have to grow its earnings by over 50% per year. Again though, this only gives an idea of the scale of the challenge. 

It’s big, but it isn’t impossible. Just as an outstanding mountaineer can climb Everest, an exceptional business can achieve that growth – the question is whether or not Palantir is exceptional enough.

Palantir’s prospects

There’s a mountain to climb, but I find it hard to imagine a business with better prospects for doing it than Palantir. It provides real value to customers and a huge addressable market. 

During 2024, the company signed up companies from bottled water manufacturers to insurance brokers. And in the last three months alone, it brought on another 82 new customers.

As a result, US commercial revenues grew 64% in the fourth quarter of 2024. And there’s currently no visible competitor in sight, which is why CEO Alex Karp thinks there’s decades of growth ahead. 

That’s not to say there are no risks at all. The company acknowledges that the rise of artificial intelligence is likely to raise regulatory and legal challenges and investors can’t just ignore these.

Foolish takeaways

It’s not clear to me whether or not Palantir shares are good value right now and there are other opportunities where I think this is more obvious. So I’m focusing on other investments for my portfolio.

One thing I am clear on, though, is the idea that a high P/E multiple means the stock is overvalued is far too simplistic. With any shares, the question of value comes down to the underlying business.

It has not been a great few days for Barclays (LSE: BARC), with the company’s retail arm suffering from widely-publicised technical problems on a grand scale. Still, given that Barclays’ shares are up 98% over the past year alone, at least its investors are laughing… all the way to the bank.

I do not own shares in Barclays, or indeed any British bank right now. That is because one risk I see is a weak economy leading to higher loan default rates, hurting profits.

But I am increasingly concerned by a different, long-term risk I think the recent Barclays debacle highlights.

Voluntarily sacrificing competitive advantage

If an app goes down, having a physical network of branches can really come into its own. It might not though. An offline app, or one not working correctly, can be symptomatic of wider technical problems that also affects branches and cash machines.

Sometimes however, having a branch network can be really helpful for customers. That is one competitive disadvantage I see in purely digital financial services providers.  

Meanwhile, banks with branch networks increasingly see them as a competitive disadvantage due to the costs involved. Just last month, Barclays closed branches in towns from Barnard Castle (County Durham) to Ystrad Mynach (Wales). British banks have dramatically reduced their physical footprint in the past decade and that looks set to continue.

Might banks struggle versus pureplay digital rivals?

The problem is, I am not convinced that legacy banks have the right skill set or motivation to compete in digital platform provisions as well as more focused rivals. HSBC recently announced plans to close its international payment app Zing, even though it only launched last year.

Is that because the international payment market is unattractive? I do not think so. Wise has an £11.3bn market capitalisation and in its most recently reported quarter was used by over 9m customers.

There is an ongoing massive growth opportunity for digital firms like Wise and Revolut. Not only can they charge customers for money transfers, there are also profit opportunities in the difference (‘spread’) between exchange rates used in certain transactions and lending customer deposits out at higher interest rates than they pay.

In other words, such firms could eat the lunch of traditional banks. In the long run, that could be very bad news for revenues and particularly profitability at long-established banks.

What I’m looking for when assessing bank shares

Banks have big competitive advantages, which include strong brands, large customer bases and a physical presence that can offer customers convenience and reassurance.

Metro Bank and building societies like Nationwide have been focusing on those strengths, albeit with mixed results. Meanwhile, FTSE 100 banks including Barclays, NatWest and Lloyds have been going in the other direction.

HSBC’s recent experience shows that competing with purely digital platforms is hard work. I am not convinced large retail banks have the optimal cost structure to do so. Slashing costs like branch networks might seem smart, but I fear it could just eat into their existing competitive advantages.

I could be wrong and Barclays may go from strength to strength.

But I always look for a competitive advantage when buying shares. Long term, I find bank shares like Barclays and Lloyds unattractive given their strategy, and will not consider buying them.

So far, 2025 has hardly been thrilling for the BT Group (LSE: BT.A) share price. After closing at 144.05p on 31 December 2024, the stock now stands at 140.6p, down 2.4%.

BT shares beat the market

However, shares in the former telecoms monopoly have jumped 28.2% in 12 months, during which time the FTSE 100 rose 12.5%. That said, the Footsie has easily beaten BT stock over five years — up 14.8%, versus a fall of 6.2% for the owner of EE, Plusnet and Openreach. All figures exclude cash dividends.

Also, BT shares offer a market-beating cash return. Currently, BT shares deliver a dividend yield nearing 5.8% a year, well above the sub-4% on offer from London’s main market index. And reinvesting juicy dividends into new shares helps compounding, boosting’ returns over the years.

In the value graveyard?

Over the last decade or so, many broker reports warned that investing in European telecoms groups has produced inferior returns for shareholders. Indeed, some describe this sector as a ‘value graveyard’ or a ‘high-yield trap’.

The problem seems to be that while many telecoms stocks — including BT shares — deliver decent dividends, their share prices have seen multi-year declines. For example, the BT share price is no higher today than it was at the start of 2009. In other words, the company’s valuation is unchanged in 16 years. Yikes.

Though BT’s shares don’t look expensive to me today, nor do they look wildly cheap. Looking back, the ideal time to buy BT would have been in April 2024, when the share price seemed compelling value. Personally, I don’t see this stock moving upwards strongly in 2025-26. My expectation is it will fail to break above £2 without exceptionally good news.

For these and many other reasons — a balance sheet heavy with debt, plus a vast pension scheme to cope with — I’m not a buyer of BT right now.

One FTSE 100 stock my family already owns for passive income is Legal & General Group (LSE: LGEN). L&G was founded in 1836, so it has nearly 200 years’ experience selling life insurance and investment products. Currently, the group administers assets worth around £1.4trn for roughly 10m clients (both individuals and organisations).

While working in UK financial services, I became a big admirer of L&G’s management and business acumen. However, L&G’s share price has dropped 5.8% over the last 12 months and 24% in the last half-decade. Then again, like BT, this stock offers a tasty dividend.

With its share price at 234.9p, L&G delivers a whopping cash yield of 8.8% a year — one of the highest in the London market. What’s more, this payout has risen steeply since 2014. The company is also buying back its shares to boost future returns to shareholders. In addition, one of its core businesses (pension risk transfers) is doing record volumes.

On the other hand, as one of Europe’s leading investment managers, L&G and its shares usually suffer when asset prices slump. This was painfully demonstrated during the Covid-19 collapse of spring 2020. Even so, I intend to keep a tight hold onto this high-yield stock for many years to come!

Dividends from UK stocks are never, ever guaranteed. So putting all an investor’s eggs in a single basket can decimate passive income when disaster strikes.

As we saw during Covid-19, even companies with rock-solid business models and strong balance sheets can cut, cancel, or postpone dividends at a moment’s notice.

Share pickers can reduce this threat by having exposure to a diversified selection of dividend-paying shares. An investor who has a large wad of cash can spread that across multiple shares instead of parking it all in a single choice.

Diversification doesn’t mean investors need to settle for sub-par returns either. Indeed, if current broker forecasts prove accurate, a £15k lump sum invested equally on these two shares would provide £1,350 in dividends in 2025 alone.

There’s good reason to believe these stocks are worthy of further research as they could provide an excellent long-term passive income too.

Phoenix Group

Dividend yield: 10.4%

Today, Phoenix Group‘s (LSE:PHNX) the only FTSE 100 share with a double-digit dividend yield. But unlike many ultra-high-yielding shares, I think predicted dividends here look pretty secure.

You see, as a major life insurance provider and asset manager, it collects vast amounts of cash via policy premiums and management fees that it can distributes by way of dividends.

It generated £950m of cash in the first six months of 2024 and is on course to achieve cash generation of £4.4bn in the three years to 2026. With a Solvency II capital ratio of 168%, it has a good buffer to at least meet this year’s predicted dividends should earnings come in on the low side.

There’s a danger Phoenix’s share price could fall if interest rates remain at current levels, hitting overall shareholder returns. But rising long-term demand for financial planning services — combined with its cash-rich balance sheet — still makes it worth close attention among patient investors, in my book.

The Footsie firm’s heavyweight brands SunLife and Standard Life give it added strength to capitalise on this rapidly growing market too.

Risk reducer

Dividend yield: 7.6%

A lump sum investment in the iShares World Equity High Income UCITS ETF (LSE:WINC) is an effective way that investors can diversify their portfolios while still only directly holding only one or two shares.

As an exchange-traded fund (ETF), it’s designed to hold a basket of different assets and thus spread risk. In this case, the fund — which was created in March 2024 — focuses on 276 dividend-paying stocks from across the globe.

What’s more, these equities span a multitude of sectors including information technology, financial services, healthcare, telecoms and consumer goods.

On the downside, a chunky 71% of the fund is invested in US companies. As a consequence, it may be more vulnerable to a regional downturn than a more globally diversified fund.

Yet on the other hand, its large portfolio of US shares also provides enormous opportunities, like the growing digital economy (through the likes of Nvidia) and rising global healthcare spending (tapped through Novartis shares).

Its 7%-plus dividend yield’s one of the largest among all UK-listed ETFs. I think it could prove to be a brilliant buy to consider for long-term passive income.

UK-based Yü Group (LSE:YU.) has electrified investors with a staggering 1,463% share price surge over five years. The AIM-listed utilities supplier for small businesses now commands a £327m market-cap, up from just £16.8m in 2019. But with growth rates moderating — the stock’s flat over nine months — shareholders are asking, what’s next for this AIM success story?

What does Yü Group do?

Yü Group provides gas, electricity, and water to UK SMEs — a £50bn market often overlooked by larger rivals. Unlike traditional suppliers, it combines flexible contracts with smart meter installations and energy efficiency consulting. Since its 2016 AIM listing, Yü has capitalised on two supportive trends. These are SME demand for specialist providers as energy costs surged post-Ukraine invasion and a regulatory push for smart meters and electric vehicle (EV) charging infrastructure. This niche focus helped revenue rocket from £112m in 2019 to the £644m forecast for 2024 – a 475% increase.

Why has it ignited?

The valuation data reveals three explosive growth phases:

Metric	2019	2024	Growth
Market-cap (£m)	16.8	327.3	1,847%
Enterprise Value (£m)	16.8	211.8	1,161%
EPS (p)	-0.36	210.8	Turnaround

Yü Group’s financial transformation has been remarkable, shifting from a loss-making position with a negative price-to-earnings (P/E) ratio in 2019 to a profitable state with an attractive 9.3 times P/E today.

This turnaround’s underpinned by robust cash generation, with net cash ballooning to £81.9m in 2023, enabling the introduction of a growing dividend (0.67p per share in 2024 compared to none pre-2023).

Operational efficiency has also improved significantly, as evidenced by the compression of the EV-to-EBITDA ratio from 21 times in 2021 to a forecast 4.3 times for 2024. As noted by Armchair Trader, Yü’s success can be attributed to its asset-light model and focus on high-margin add-ons like EV chargers, which have helped margins outpace revenue growth, positioning the company for continued financial strength.

What’s next? Here’s the roadmap…

While growth’s slowing, the valuation suggests there’s room for upside:

Valuation Metric	2024 (Forecast)	2025 (Forecast)
P/E Ratio	9.3x	8.6x
FCF Yield	30.9%	19.2%
EV/Revenue	0.3x	0.2x

Yü Group’s growth prospects are underpinned by several key drivers. Firstly, the company has significant room for market share expansion, currently holding just 1.3% of its £50bn addressable market. Secondly, Yü’s successfully pivoted towards technology-driven solutions, with smart meters and EV infrastructure now accounting for 30% of revenue, up from 5% in 2020.

Lastly, recent deals suggest potential for international expansion into European SME markets. However, these opportunities are balanced by notable risks. Energy price volatility remains a concern, as evidenced by the dip in EBITDA margin from 8.6% in 2022 to 3.9% in 2023 during gas price spikes.

Regulatory changes, such as potential windfall taxes or margin caps, could also impact profitability. Additionally, analysts forecast a modest annual EPS decline of 1.7% through 2026, suggesting a potential slowdown in earnings growth.

An interesting proposition

At 9.3 times forward earnings and with a 3.9% dividend yield, Yü isn’t pricing heroic growth. Yet its cash-rich balance sheet (£4.89/share) and leadership in an underserved market suggest durability in growth.

While the 1,463% rocket ride’s unlikely to repeat, patient investors could still reap steady returns as this AIM stalwart matures. It’s not the type of company I normally consider, but I’m going to give this one closer attention.

Searching for the best FTSE 250 momentum shares to buy this month? Here are two I think are worth considering after their impressive starts to 2025.

Clarkson

Helped by strong trading news in early January, Clarkson‘s (LSE:CKN) share price is up a healthy 10.4% since the start of 2025.

And despite the threat of global trade wars, I think the shipbroker could have further to go.

Last month’s update showed that Clarkson expects full-year underlying profits to be “slightly ahead of current market expectations“. The firm’s impressive form is due to a variety of factors, including strong sale and purchase activity in the newbuild and second-hand markets, and robust charter rates.

With supply growth issues persisting, the outlook for charter rates in the short-to-medium term looks robust as well.

Clarkson is a share I think patient investors should consider buying. Its share price might experience turbulence during economic downturns. But over a longer time horizon I expect it to grow, supported by the significant structural opportunity of rising global trade.

At £43 per share, Clarkson’s share price has near enough doubled in the last decade alone.

The broker’s enduring commitment to raising dividends provides a not-insignificant bonus for investors, too. In 2023, it increased cash rewards for the 21st straight year. It’s a record City brokers expect to continue for the next few years at least, too, resulting in a healthy 2.6% dividend yield for 2025.

Clarkson shares trade on a forward price-to-earnings (P/E) ratio of 15.5 times. This isn’t exactly cheap on paper, but in reality I think it’s good value given the firm’s leading role in a growing market.

Babcock International

Positive noises around defence spending have helped Babcock International (LSE:BAB) gain value in 2025 too. At 545p per share, this FTSE 250 stock is up 8% since New Year’s Day.

Babcock provides an array of training and engineering services to armed forces around the globe. Since war broke out in Eastern Europe in 2022, it’s witnessed a significant pick-up in business. Latest financials showed revenues up 11% between April and September.

The geopolitical landscape has become even more dangerous during the last few years. What’s more, Donald Trump has reclaimed the US Presidency. It’s a blend that could support further strong growth in Babcock’s sales.

Trump’s demand that NATO countries raise defence spending to 5% of their GDP could be especially significant. Members of the defence bloc currently only spend 2%, leaving room for substantial growth. As well as the UK, Babcock provides services to fellow NATO members Canada and France.

Cost overruns remain a constant threat to businesses like this. Just last year, Babcock absorbed a £90m charge due to higher costs of building Type 31 frigates for the Royal Navy.

But a bright demand outlook still makes the company an attractive stock to consider. And given its sub-1 price-to-earnings growth (PEG) ratio of 0.3, I think it’s worth a particularly close look from lovers of value shares.

Shares of Palantir Technologies (NASDAQ: PLTR) exploded 27% higher today (4 February). This follows the software company’s fourth-quarter earnings, which once again crushed Wall Street’s estimates.

Incredibly, the share price is now up 1,557% since the start of 2023! As I write, this means a £20k investment made inside a Stocks and Shares ISA back then would have mushroomed into roughly £332k (discounting currency moves).

That even leaves fellow AI stock Nvidia in the dust — it’s up ‘just’ 700% in this period.

Unfortunately, I’ve never owned the stock, despite considering it a handful of times since it went public in 2020. Should I now rectify this costly oversight? Let’s take a look at the earnings.

Palantir scores a hat-trick

For the fourth quarter, Palantir reported that revenue grew 36% year on year to $828m. This was better than the $776m that analysts were expecting (beat number one).

Next, the company’s adjusted earnings per share (EPS) climbed 75% to $0.14. Again, this was higher than Wall Street was anticipating ($0.11). So that was beat number two.

Finally, management offered better-than-expected guidance for 2025. It sees full-year revenue of $3.75bn (31% growth), higher than the $3.52bn that was previously expected.

What we have here then is a big double beat (on the top and bottom lines) and a guidance raise. Palantir’s revenue continues to accelerate!

Why is this happening?

The thing that’s fuelling all this growth is the company’s Artificial Intelligence Platform (AIP). This is helping organisations and enterprises harness AI to analyse vast amounts of data, automate complex tasks, and maker smarter decisions. It can uncover patterns and forecast future trends in real time. 

The numbers speak for themselves. US commercial revenue in the quarter rocketed 64% to $214m, while US government revenue jumped 45%. Its customer count grew 43% as it closed 129 deals worth at least $1m, 58 deals of at least $5m, and 32 deals worth no less than $10m!

Eccentric CEO Alex Karp is always worth quoting. In Palantir’s letter to shareholders, he said: “We have the products and reach of an established incumbent and the speed, growth, and agility of an insurgent startup. It is that most lethal of combinations.” 

In Q3, he said that a “juggernaut is emerging“. In Q4, the CEO confirmed that the “software juggernaut has indeed emerged“.  The juggernaut, of course, being Palantir.

In many ways, Karp reminds me of David Goggins, the former Navy SEAL turned motivational speaker. If I want motivation to get up on a cold morning to go for a run, or finish that last mile, I could put on one of his rousing YouTube speeches.

Likewise, if I ever doubt the AI revolution has legs, I can tune into Karp’s quarterly commentary on AI. Reassuringly, he says: “We are still in the earliest stages, the beginning of the first act, of a revolution that will play out over years and decades.”

Insane valuation

Make no mistake, these numbers are mightily impressive. However, I’m still left with the impression that this high-quality stock is grossly overvalued. Based on the 2025 forecast, it’s now trading at a price-to-sales (P/S) ratio of around 64.

In my experience, it’s dangerous to invest at this multiple. So I think investors considering the stock should tread carefully.

Barclays (LSE: BARC) shares have looked seriously undervalued to me for quite a few years. The past 12 months have finally seen some big action, with the share price up 92%.

What that means is a £20,000 investment in Barclays shares a year ago would be worth £38,400 today. Add approximately £1,090 in dividends, and we’d be just a shade short of doubling.

The climb has cut the forecast dividend yield to just 2.8%. But even with that, I still think the Barclays share price looks cheap. And it seems City analysts agree, with a big majority Buy consensus out there.

Still too cheap?

There’s an average share price target on Barclays of 316p, which is 9% ahead of the 290p price as I write. Some might not see so great a potential there, especially as the target range stretches from 230p to 375p. That means at least someone out there expects Barclays shares to fall.

But looking at forecast valuations, I can see plenty of scope for further potential gains. Does an expected price-to-earnings (P/E) ratio of 8.5 sound low? It does to me, even before I check out earnings forecasts for the next two years. They could drop the P/E to not much above six by 2026.

The key weakness of Barclays, compared to other FTSE 100 banks, looks to be that low dividend yield. It might be tempting to go for Lloyds Banking Group instead, for its 4.7% yield. But Barclays is significantly more diverse, and is still big in international corprorate banking.

Remember when other banks dropped that business like a hot potato in the wake of the financial crash? Because Barclays didn’t, it could be in for a boost from the expected relaxation of banking regulations in the US. I’m wary myself, because if there’s one thing that banks never seem to do it’s learn from their mistakes. There’s got to be a risk that the drive for short-term profits could send banks rushing headlong into the next crisis.

What next?

Barclays plans to return at least £10bn to shareholders between 2024 and 2026, prefering share buybacks to dividends. At Q3 time, Barclays said it aims “to keep total dividend stable at 2023 level in absolute terms, with progressive dividend per share growth driven through share count reduction as a result of increased share buybacks.“

What do most long-term investors do with dividends? Buy more shares, right? Barclays’ approach should help keep trading costs down.

What might £20,000 invested in Barclays today turn into in 12 months from now? I don’t expect another near-doubling. And I’d never invest in the hope of making quick gains.

For those with a long-term view, Barclays does face risk from falling interest rates. Cuts have slowed in the UK and are on hold for now in the US. But when rates come down more, bank margins should drop and put pressure on profits. Still, if I didn’t already own some bank shares, I’d be considering Barclays today and think other investors might do well to do further research.

Fevertree Drinks (LSE:FEVR) shares haven’t worked out well for UK investors recently. But the stock jumped 25% last week on news of an investment from the US – and there might be more to come.

I’m very ambivalent about the announcement that caused the stock to surge. However, news that a director has been buying a lot of shares since then has caught my attention. 

US expansion

The reason Fevertree shares have been climbing is because US beverage giant Molson Coors has made an $88m investment for 8.5% of the business. And there are some obvious benefits for the UK firm. 

The company has been looking to expand across the Atlantic, and Molson Coors has a huge distribution network. So access to this – plus marketing support – could be a big benefit. 

On top of this, Fevertree’s balance sheet is in pretty good shape. As a result, the company intends to return cash raised in the $88m investment to shareholders via share buybacks. 

This, however, is where I start to get mixed feelings. The firm has just sold 8.5% of its shares at £6.93 per share and plans to use the cash to launch a buyback at around £7.78.

This makes the move risky for Fevertree – selling things at one price and then buying them at a higher one is a way of losing money. Investors need to hope the distribution benefits are worth it. 

They could well be – and growth in the US could give overall sales a huge boost. But the immediate winner is Molson Coors, which now owns a lot of shares worth 25% more than it paid for them.

Insider buying

Since the Molson Coors deal, however, something else has happened. Fevertree’s Chief Financial Officer Andrew Branchflower has bought 31,688 shares in the business. 

The average price on this transaction is £7.85 – roughly where the stock is now – making the overall investment worth almost £250,000. That’s a serious investment by a company insider. 

Branchflower isn’t new to the firm either – he’s been with the business for over a decade. And that makes me think that he’s taking the new partnership with Molson Coors very seriously. 

The people that spend all their time working at a company will almost always have a better view than those that don’t. So when they start using their own money to buy shares, it’s worth paying attention.

I wouldn’t buy shares in any business just because someone else is doing so. And that’s true whether the person in question is Warren Buffett, a company director, or anyone else. 

I do, however, think this is something for investors who are interested in the stock to pay attention to. It might even be a sign the market is underestimating the firm’s prospects, even after a 25% gain.

Should I buy?

Fevertree’s latest deal involves selling shares at one price before buying them back at a higher one. That means there’s a risk it could end up looking silly if things don’t pan out as expected.

There’s a lot more to the deal than this and if things go well, it could look like a brilliant move. And management putting its money where its mouth is definitely makes me want to take a closer look.