Advertising stock feasts on Buffett

Warren Buffett, the legendary stock-picker whose shrewd eye for investments has made him the second richest man in America, has delivered a much-needed vote of confidence to the advertising market by investing £33m in one of the world's biggest advertising companies.

Shares in advertising firms soared today after it emerged Mr Buffett had bought 500,000 shares in Omnicom, the world's third-largest advertising company and owner of agencies Abbott Mead Vickers and TBWA.

WPP, the world's largest advertising group, saw its stock surge 6% to 458.25p in early trading after it emerged that one of the billionaire investor's firms owned 500,000 shares in Omnicom.

Omnicom stock rose 11% overnight and even shares in beleaguered Interpublic climbed 6% despite major accounting problems at the group.

A US regulatory filing showed that Geico, the car insurance unit of Mr Buffett's Berkshire Hathaway investment company, held 500,000 shares in the advertising giant.

The decision indicates Mr Buffett believes advertising shares have reached rock bottom and will begin to climb.

Mr Buffett's prowess as a stock market investor is such that wherever he puts his money, hundreds of fund managers and private shareholders follow.

He was dismissed as a has-been after he missed out on the dotcom wave, preferring to invest in businesses he understood.

But he has since won back his reputation after making huge profits despite the technology slump, based on investing in, as he put it, "such cutting-edge industries as brick, carpet, insulation and paint".

Omnicom boosted the advertising sector at the end of last month when it reported a sharp rise in third quarter profits.

Elsewhere in the UK advertising sector, shares in Aegis, owner of the Carat media buying network, gained 6% on the back of the Buffett investment, and stock in Cordiant Communications, owner of the Bates Worldwide group, also rose 6%.

Lord Bell's Chime Communications also recovered some dignity after yesterday's disastrous 75% plunge following a shock profit warning.

The shares were up 61% at 14.5p in early trading, but still some distance below their pre-warning price of 35p.