Buffett invests in Canada, but should you follow suit?

New York

WHEN Warren Buffett acts, investors notice. And after he took a roughly US$300 million position last month in Home Capital Group, a troubled Canadian mortgage underwriter, some investors saw it as a vote of confidence not only in that company, but also in Canadian stocks overall.

Al Rosen takes a different view. A veteran forensic accountant and independent equity analyst who predicted the collapse of Nortel Networks, the Canadian telecom company, two years before its 2009 demise, Mr Rosen has a message for people investing in Canadian stocks: Be wary.

It is a mystery to Mr Rosen why Mr Buffett bought into Home Capital Group, a company that has been the subject of a titanic battle between the investors who believe in the company and other investors - short-sellers - who do not. Certainly, Mr Buffett …