Saturday, October 22, 2005

Update on the book and meeting with Gates, Tuck Omaha notes

If you'll recall from a couple of posts ago Buffett and Gates did a Q&A session for students at the University of Nebraska. Well, Fortune has written up an interview they did with them out there, along with some highlights from the Q&A. (As a side note, the name of my original post on this was "$90 Billion gets together in Nebraska." The title of Fortune's article? "The $91 Billion Conversation". They should have let me do the interview.)

Our friends over at Tuck made their annual Omaha pilgrimage this past week. Notes are here. Great quote: "
I love what I do; I'm not even that busy. I got a total of five phone calls all day yesterday and one of them was a wrong number."

More details on the Alice Schroeder biography came out:
"The Snowball: How Warren Buffett Collected Friends, Wisdom and Wealth", due out in 2008, and the winning bid was $7 million. Note, the deal is entirely with Schroeder, and Warren doesn't appear to be officially involved. I really don't see how this could end up very different or better than Lowenstein's excellent biography. And the article bizarrely ends with this,"Buffett is known to wear sweat pants and sweat shirts in his spare time. He is a longtime fan of hamburgers, french fries and Cherry Cokes, and enjoys bridge and playing the ukulele." Ok.

Wednesday, October 19, 2005

A Buffett Group link to Marketing???

From the GSB website...

"Marketing Fellowships to Provide Mentoring

To attract top students who are interested in marketing, Chicago GSB is establishing 10 fellowships that will provide $50,000 over two years as well as a mentor—a senior marketing executive who can share expertise and insights into the field.
Ready for students in the 2006–07 academic year, the marketing fellowships are underwritten by a challenge grant of $1 million from James Kilts, ’74, founder of the Kilts Center for Marketing at Chicago GSB and chairman, president, and CEO of Gillette. Among the donors who will provide both financial support and one-on-one mentoring are Lee Hillman, ’79, president of Liberation Investment Advisory Group; and David Whalen, ’81,president and CEO of A. T. Cross Company. “Given the Kilts Center’s remarkable faculty and programmatic innovations, we’re well positioned to attract the most talented students,” said dean Edward Snyder.
Kilts, who helped the GSB establish the center in 1999 with the Nabisco Foundation, said he looks forward to the effect the new fellowships will have over time. “Over five years of sustained support, those cohort of students will attract and recruit a new generation of MBA candidates for the field,” he said.

Kilts is chairman of the Council on the Graduate School of Business.

—Patty Houlihan"

Interesting that the CEO of one of Buffett's largest investments is pushing Marketing, rather than Finance. (Despite having taken Fama during his stay at Chicago)

Tuesday, October 18, 2005

More Buffett Transcripts and John Bogle on "Owner Capitalism"

I came across a few interesting transcripts the other day. The longest one, from Notre Dame in 1991, is posted here. Another one, from 1998 at the University of Florida, is available here.

Both are very long and require a nice cup of coffee to be truly enjoyed.

Also, if any of you follow the Motley Fool Radio Show, you'll know that John Bogle was on the other day. A great talk about how mutual fund owners don't own, but rather rent their businesses, as the average holding period keeps dropping. The talk is available on npr.org's Podcast Directory. They also interviewed the CEO of the Pampered Chef.

And BUD is still on sale.

Wednesday, October 12, 2005

Goodbye to a Superinvestor, $90 billions gets together in Nebraska, and a book coming?

The value investing community lost one of its all time greats, Bill Ruane, earlier this week. When Buffett unwound his partnership in 1969 he recommended his investors do one of two things 1) follow him into Berkshire Hathaway or 2) Invest with Ruane's Sequoia Fund.

In Buffett's classic The Superinvestors of Graham-and-Doddsvile speech (a must read for University of Chicago students trying to wipe their minds clear of any EMT nonsense - or twaddle as Charlie would say) he offers this praise:

Table 4 shows the record of the Sequoia Fund, which is managed by a man whom I met in 1951 in Ben Graham's class, Bill Ruane. After getting out of Harvard Business School, he went to Wall Street. Then he realized that he needed to get a real business education so he came up to take Ben's course at Columbia, where we met in early 1951. Bill's record from 1951 to 1970, working with relatively small sums, was far better than average. When I wound up Buffett Partnership I asked Bill if he would set up a fund to handle all our partners, so he set up the Sequoia Fund. He set it up at a terrible time, just when I was quitting. He went right into the two-tier market and all the difficulties that made for comparative performance for value-oriented investors. I am happy to say that my partners, to an amazing degree, not only stayed with him but added money, with the happy result shown here.

There's no hindsight involved here. Bill was the only person I recommended to my partners, and I said at the time that if he achieved a four-point-per-annum advantage over the Standard & Poor's, that would be solid performance. Bill has achieved well over that, working with progressively larger sums of money. That makes things much more difficult. Size is the anchor of performance. There is no question about it. It doesn't mean you can't do better than average when you get larger, but the margin shrinks. And if you ever get so you're managing two trillion dollars, and that happens to be the amount of the total equity valuation in the economy, don't think that you'll do better than average!

Note Ruane continued to crush the market for years after this article was written.

A quick look at Leucadia National here. They have been called a "little Berkshire" more than one time, and some of it is justified. From the end of 1978 through the end of 2004, Leucadia's stock soared an annualized 33% (compared with 27% for Berkshire's A shares). I never quite understood the huge bet they made on WilTel though.

An interesting piece here from The New Yorker on "Last Best Chance" the Buffett backed film made to stimulate public support and political pressure on the Bush Administration and Congress to do something serious about the danger of nuclear terrorism.

1,800 very lucky University of Nebraska students joined Warren and Bill Gates for a Q&A session. Apparently, Gates won't be running Berkshire when the time comes to pick a successor. "It won't be me," Gates said of who would take over for Buffett, 75. "Berkshire's got a lot of great people who understand their system. If you have a fool.com subcription, a nice summary is written up here:

"Both Buffett and Gates said they wouldn't mind bearing a heavier tax burden when a student asked them their thoughts on adopting a flat tax rate. Buffett elaborated by saying that the current tax system needs to be more progressive. He got a round of applause after pointing out that many soldiers fighting in Iraq pay higher tax rates than he does.
'I frankly think it's very unfair..' -Buffett"


Finally, and I'm not fully sure if I believe this one. Cnnfn.com is reporting that "Investment guru Warren Buffett is planning to cooperate on a financial advice book that has prompted a bidding war among publishers eager to land the title, according to a newspaper report Wednesday."

We already knew Alice Schroeder was planning on writing a book about Berkshire - in fact she quit her job covering them as a research analyst to write it. And in the past Warren has indicated that he wanted to write a book, but said recently that he really didn't have time to do it. I also believe I heard him indicate that he would only do it with Carol Loomis. My guess is that Warren writes a forward and has a blurb on the back at most.

And BUD keeps getting cheaper.

Saturday, October 01, 2005

Buffett Partnership Letters, Clipper, Ridgewood, and Gabelli, Warren Goes after the Taxman

The original Buffett Partnership Letters have appeared here - don't take too long to read them. I believe Warren in the past has requested that they not be posted, so I'm guessing they will be gone soon. The Graham-Newman letters are up there too.

Berkshire is going after the IRS for $16.3 million, accusing the IRS of denying it $16.3 in tax deductions, and alleging that they made an "erroneous, wrongful, and illegal" interpretation of the tax code. Sweet.

In the mutual fund world, deep-value managers James Gibson and his crew are leaving the Clipper Fund. I never quite understand their undying bullishness on Freddy/Fannie, but they do write some interesting shareholder letters, which are linked over there on the right. Speaking of shareholder letters, apparently the Kaushal Majmudar of The Ridgewood Group writes a pretty decent, value oriented one. They also just started a blog, the first post of which makes a case for Berkshire being cheap - A view I've been hearing a lot of lately.

Finally, Mario Gabelli and his board are taking heat "for looting the assets of the company, breaching their fiduciary duties to its shareholders and oppressing its minority shareholders." Note Mario made $55 million last year. Which is about 500 times more than Warren got paid. I'll take the guy with the "THRIFTY" license plate.