Buffett Lecture at University of Florida

I just reread this talk. This is one of the best that I have read. Definitely worth a read.

Link

I also found this video...

12 Ways to Make Your Kids Financially Savvy

Nice article on teaching kids about $$.

Link (subscription required)

CEO Pay

Here is a nice article on escalating corp. pay from the NYT. OUCH.

YOU may not know Frederic W. Cook, but if you are a shareholder or employee who has watched executive pay rocket in recent years, you are likely to be acquainted with his work.

As the nation’s leading executive compensation consultant, Mr. Cook and his colleagues at Frederic W. Cook & Company are probably responsible for creating more wealth for executives over the last 20 years than any other pay advisers.

Link

And this is why...

We own Berkshire Hathaway.

As the US hurricane season begins, Omaha, Nebraska-based Berkshire is increasing its property and casualty sales just as rivals scale back. Buffett's prices are as much as 20 times higher than the rates prevalent a year ago, said Kevin Madden, an insurance broker at Aon Corp in New York. On some policies, premiums equal half of its maximum potential payout, he said.

Link

Behavioral Finance

Presentation by Whitney Tilson on Applying Behavioral Finance to Value Investing

From 2004.

WSJ.com - Warren Buffett, Unplugged

More Buffett Goodness

WSJ.com - Warren Buffett, Unplugged

Berkshire's Hurricane Loss

10Q came out today... looks like Berkshires total estimated loss for Katrina & Rita is ~3 billion

During the third quarter of 2005, Hurricanes Katrina and Rita struck the Gulf coast region of the Unites States producing the largest catastrophe losses for any quarter in the history of the property/casualty insurance industry. Berkshire presently estimates the total industry losses from the two hurricanes to be in the range of $60 billion to $70 billion although the final figure could vary significantly. Estimates of Berkshire’s losses from these events were recorded in the third quarter of 2005 and are subject to change as additional information concerning the nature and amount of losses becomes known. Losses incurred as of September 30, 2005, are summarized in the following table. Dollar amounts are in millions.

GEICO	$118
General Re	602
Berkshire Hathaway Reinsurance Group	2,268

Link

WSJ.com - Huge Flood of Capital to Invest Spurs World-Wide Risk Taking

Huge Flood of Capital to Invest Spurs World-Wide Risk Taking

Now this scares me.

The result is that global investors are diving into a wide range of riskier assets: emerging countries' stocks and bonds; real estate and real-estate-backed debt; commodity funds; fine art; private-equity funds, which buy stakes in nonpublic companies; and the investment contracts called derivatives, including a kind structured to permit the sophisticated to take huge bond risks.

For good measure, many investors use today's low interest rates to borrow money to amplify their bets. This "leverage," in effect, thus enlarges the already overflowing pool of investment capital. As these markets draw more investors, whose buying pushes up their price, prospects rise that a reversal could cause widespread pain.

This risk taking for lower and lower yields can't happen forever...
Link

Where Warren Buffett and Bill Gates Turn for Advice

Fortune has a great article on Bill Gates & Warren Buffett

The billionaire buddies answer questions—first for 2,000 Nebraska students, then for FORTUNE—on subjects ranging from who they trust to give them feedback to what they consider their biggest successes outside of business. Plus: Warren Buffett, journalist…?

Link

Barron's Online - The Once and Future King of Beers

Nice article on BUD.

At current levels, investors can buy Anheuser-Busch for less than Buffett likely paid. Chances are, over time, they won't be disappointed. The stock is trading for only 16 times analysts' 2006 earnings estimates of $2.56 a share, about in line with the overall market, but well below its historic price-earnings ratio of 22.

...
The brewer also operates in a recession-resistant business, and boasts one of the world's most valuable brands. Return on invested capital is close to 20%. Bears likewise give short shrift to Anheuser's large share of the fast-growing Latino market in the U.S., and its push into emerging markets, such as China, which could provide a long-term boost to sales.

Link

Discussion on independent directors...

Here is a great discussion on independent directors...

...even the most conscientious and dutiful directors, who spend at most a few dozen hours every three months attending to their duties, simply will not know as much about the business as the CEO who is on the job full-time day in and day out. In short, Hank Greenberg had a point even if he made it with a blunt instrument.

Increasing the power of directors, as many proposals for reform would do, in and of itself does nothing to address the underlying issue of the asymmetry of information, knowledge and understanding of the business that exists between CEOs and their boards. For that reason, shifting power from the CEO to the board may do more harm than good.

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Plus read all the Q&A.. superb

From the Sequoia Fund Shareholders' Meeting May 2005

Big Names May Be in Bargain Bin

Down the road, investors might look back on today's markets and bemoan that the best bargains were hiding in plain sight.

...

More than 20 of these companies with a market value of more than $5 billion posted operating cash flows over the most recent 12 months at least double those earned in 2000. Their shares, however, have lost ground over that stretch.

WSJ.com - Heard on the Street

Berkshire Overview

Here is a nice current overview of Berkshire Hathaway in case someone needs a primer.

A Finger on the Pulse of Berkshire Hathaway and Warren Buffett - from Wharton.

Business Blog

I have been following this blog for the last couple of weeks. Jeff Matthews Is Not Making This Up

I look forward to it every day. Highly recommend it.

Today he highlighted an article in the WSJ about real estate.. Check it out.

No, I’m not talking about adjustable-rate mortgages—everybody, including my dog Lucy, knows about all the ARMs being sold. And I’m not talking about interest-only mortgages—the commotion over which has probably reached my cat Marvin, it’s so overblown. I’m not even talking about the so-called “Freedom Loan” ol’ Ben pushes—called the “Prison Loan” by his competitors.

I’m talking about “low documentation” loans:

Link

Annual Meeting updates...

Whitney Tilson uploaded the 2005 notes for the Berkshire and Wesco annual meetings. Well worth reading!

He writes the best summaries that I have come across.

Link

Poor Charlie's Almanack

Just bought this book. Cant put it down. Charlie Munger is at the top of the heap IMHO.

Link

Bill Miller Interview

Miller's fund, Legg Mason Value Trust (LMVFX), has beaten the Standard & Poor's 500 every year for the past 14 years. While other managers have outperformed the index over that period, no one has come close to beating it every single calendar year. Over lunch at Legg Mason's Baltimore headquarters, Miller talked about the lessons he's learned from Santa Fe, his contrarian investing philosophy and the stocks he thinks will keep his winning streak alive.

Link

Unlocking Hidden Debt

Traditional debt-to-equity ratios don't work for many companies because the largest single indebtedness -- operating leases -- is in many cases not on the balance sheet. This is most true of multi-unit operators like retailers and restaurant companies, but it can apply to virtually any company that uses operating leases heavily. Fortunately, a quick review of the annual report section on leases and a good rule of thumb can unlock the true leverage picture, often with surprising results.

Link

Tweedy, Browne papers/speeches

Lots of good reports here...

Link

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Robert Woodward, The Washington Post reporter, asked Warren Buffett how he analyzed stocks:

• “Investing is reporting. I told him to imagine an in-depth article about his own paper. He’d ask a lot of questions and dig up a lot of facts. He’d know The Washington Post. And that’s all there is to it.”
  
• “You need a moat in business to protect you from the guy who is going to come along and offer it (your product) for a penny cheaper.”
  
• “If (you go into a store and) they say ‘I don’t have a Hershey bar, but I have this unmarked chocolate bar that the owner of the place recommends,’ if you’ll walk across the street to buy a Hershey bar or if you’ll pay a nickel more for the (Hershey) bar than the unmarked bar or something like that, that’s franchise value.”
  
• “How much more fruitful it is for us to think about whether the product is likely to sustain itself and its economics than to try to be questioning whether to jump in and out of the stock.”
  
• “If I’m thinking about investing in a specific company, I try to size up their business and the people running it. And as I read annual reports, I’m trying to understand generally what’s going on in all kinds of businesses. If we own stock in one company and there are eight others in the industry, I want to be on the mailing list for the annual reports of the other eight because I can’t understand how my company is doing unless I understand what the other eight are doing. I want perspective on market share, margins, the trend in margins – all
  kinds of things…”
  
• “It’s amazing how well you can do in investing with what I’d call “outside” information. I’m not sure how useful inside information is. But there’s all kinds of “outside” information around as to businesses. And you don’t have to understand all of them. You just have to understand the ones you’re thinking about investing in. And you can. But no one can do it for you.”
  
• “In my view, you can’t read Wall Street reports and get anything out of them. You’ve got to get your arms around it yourself. I don’t think we’ve ever gotten an idea from a Wall Street report. However, we’ve gotten a lot of ideas from annual reports. Charlie?”
  
• Charles Munger: “It takes a long time to read an annual report – even if the business is a comparatively simple one. If you’re really trying to understand it, it’s not a bit easy.”
  

* Sources for the preceding quotations: Warren Buffett Speaks by Janet Lowe, and Outstanding Investor Digest.

Roundup of the Berkshire Hathaway Meetings

We just returned from the Berkshire Hathaway Annual Meeting...

Here are some good tidbits...Link

Buffett & Munger Goodness...Roundup of the Berkshire Hathaway Meetings

Ten Rare Lectures of Ben Graham

Herein please find ten rare lectures featured in The Rediscovered Benjamin Graham: Selected Writings of the Wall Street Legend, by Janet Lowe.

ABOUT THE LECTURES.
These lectures are from the series entitled Current Problems in Security Analysis that Mr. Graham presented at the New York Institute of Finance from September 1946 to February 1947

Link

An Economy On Thin Ice

By Paul A. Volcker
Sunday, April 10, 2005

Link

The 5 don'ts

If your financial adviser touts most of these, watch out. For instance, gauging a fund by its three-year track record is nuts.

Link

Great resource

Wow.. Check out these newsletters. Great stuff here.

Century Management Library

In fact the 2004 Newsletter is the best thing I have read in a while...

The scope of this publication is greater than any we have written in our 30-year history. The purpose in writing this report is to point out that financially speaking, we are living in historic times. It is extremely unusual for all major asset classes (stocks, bonds, and real estate) to have been bid up to what appears to us as unsustainable levels, all at the same time.

Today, we are seeing market conditions this country has experienced perhaps only four times in the last 80 years. However, each time these similar conditions occurred, they created enormous opportunities for great returns. Therefore, while we want to point out the financial problems that are worrisome, we also want to prepare you for the future investment opportunities they will create.

Motley Fool

Is it just me? or do others think the Motley Fool is now annoying.

Does anyone else find the Motley Fool way to focused on selling their subscriptions? Its hard to take them seriously anymore.

Free Cash Flow

Good article on researching Free Cash Flow

Link

Gaining an Investment Edge

More value investing goodness...

Gaining an Investment Edge
Breaking Into Money Management

Moneyball Inteview

Nice interview with Michael Lewis (author of Moneyball). I especially like the info on caring about your reputation and how this leads to inefficiencies in the market...

Part 1

Part 2

Part 3

The Munger Network of Mental Models

More investing wisdom from Munger.   Improve the way you think!  

http://www.focusinvestor.com/FocusSeriesPart3.pdf

Wesco Financial's Annual meeting

Whitney Tilson returned from Wesco Financial's Annual meeting...

My favorite quotes from his notes:

• "Tell truth and you won't have to remember your lies."
  
• [To be a good investor.. you have to like learning a lot]. . "But I'd inject one line of caution: there's an apocryphal story about Mozart. A 14-year-old came to him and said, "I want to learn to be a great composer." And Mozart said, "You're too young." The young man replied, "But I'm 14 years old and you were only eight or nine when you started composing." To which Mozart replied, "Yes, but I wasn't running around asking other people how to do it."
  
• "Any year that passes in which you don't destroy one of your best loved ideas is a wasted year."
  

Charlie Munger, who runs Wesco Financial, is the famed right-hand man of Warren Buffett. He is also a master investor in his own right. At Wesco's annual meeting on Wednesday, he shared his wisdom on keys to investment success, the importance of moral behavior, the outlook for Berkshire, and more.

Here is the Fool Article
Here are his full notes

Traits of Successful Money Managers

Successful long-term money managers, Whitney Tilson says, share 16 traits, divided equally between personal characteristics and professional habits. Understanding these traits not only helps you identify exemplary professional money managers, but may also help you understand how you stack up as an individual investor.

Link

More investing Wisdom...

Just read this on investor irrationality.... Good stuff.

Also printed this one from Charlie Munger .. Academic Economics: Strengths and Faults After Considering Interdisciplinary Needs This is a speech he gave to the economics department at UCSB last Oct. (I try to read everything from Munger.. he is brilliant)

"When Warren took over Berkshire, the market capitalization was about ten million dollars. And forty something years later, there are not many more shares outstanding now than there were then, and the market capitalization is about a hundred billion dollars, ten thousand for one. And since that has happened, year after year, in kind of a grind-ahead fashion, with very few failures, it eventually drew some attention, indicating that maybe Warren and I knew something useful in microeconomics. "