For more than half a century Warren Buffett has shown impeccable timing. So perhaps it should come as no surprise that the first biography he has authorized was published in late September as news of the financial crisis that he had warned about dominated the front pages and just days after he had agreed to inject $5 billion into Goldman Sachs (GS).
Much of the legendary investor's story has been told, notably in Roger Lowenstein's masterful Buffett: The Making of an American Capitalist. But in The Snowball: Warren Buffett and the Business of Life, former Morgan Stanley (MS) insurance analyst Alice Schroeder provides a much more penetrating and personal look at the Oracle of Omaha.
Schroeder's portrait is the product of five years of research that included unprecedented access. She describes an obsessive man emotionally damaged by his mother's rages who nevertheless knew what he wanted and how to get there from an early age. Here readers will again encounter the burger-eating, Cherry Coke-swilling, aphorism-spouting outsider familiar from previous accounts. But The Snowball (to succeed, find wet snow and a really long hill, advises Buffett) is more perceptive than other works, getting deeply inside the head of the man who achieved such amazing long-term investment returns that some academics believe them to be a fluke.
Buffett himself has attributed his success to "focus." Schroeder writes: "He ruled out paying attention to almost anything but business—art, literature, science, travel, architecture—so that he could focus on his passion." As a child, Schroeder relates, Warren carried around a coin-changer as his prized possession, and when his dad offered him a trip at age 10, he asked to go to the New York Stock Exchange (NYX). Not long after, Buffett read a book called One Thousand Ways to Make $1,000 and announced to a friend that he was going to be a millionaire by the time he was 35. "That was an audacious, almost silly-sounding statement for a child to make in the depressed world of 1941," Schroeder writes. "But…he was sure he could do it."
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Thursday, October 2, 2008
Fidelity's Anthony Bolton calls bottom of stock market
Anthony Bolton, London’s best-known stockpicker, said yesterday that he had never seen retailing and media shares looking so cheap and that he had begun to put his own money into the equity market at the height of the current financial crisis.
Mr Bolton, president for investments at Fidelity International, said that the UK stock market seemed to be at or near the bottom and he had become much more optimistic in the past two weeks. “Shares [in some sectors] are as cheap as I’ve seen them in my lifetime,” he said, citing consumer cyclical sectors such as retailing and media as particular bargains.
After pausing several years in adding to his stock market investments, he said he had put fresh personal money into Fidelity equity funds two weeks ago and on Monday – the day the US bank bailout plan was derailed. “For the first time in a couple of years, in the last few weeks I’ve started to feel optimistic,” he said.
Mr Bolton made his reputation as the stockpicker behind the Fidelity Special Situations Fund. Between its launch in 1979 and 2007, when he stood down from running it, he multiplied investors’ money 147 times. He rose to prominence when he orchestrated the ousting of Michael Green as chairman-designate of ITV, and acquired the nickname “The Quiet Assassin” – a moniker he detests.
Mr Bolton told guests at a City lunch yesterday that the rally in markets would not be dramatic. “It’s going to be a protracted and slow upturn,” he said.
The bear market had gone on too long and, at 15 months, was already “long in the tooth” compared with previous share market slides. “In the last two weeks we have looked into the abyss that you get at the bottom [of each bear market],” he said.
Sentiment was so poor, Mr Bolton suggested, that the only way was up. Companies with low leverage would do well, he predicted. Measured by price to book values and enterprise value to sales ratios, many shares were egregiously cheap.
Media shares had underperformed the stock market for seven years, and it was time to buy them, Mr Bolton argued. A broad basket of financial stocks was also attractive. “I’ve got concerns about all the banks, but a lot of those concerns are already reflected in the price,” he said.
Mr Bolton said that investors in banks had been wrongfooted by banks’ opacity and huge off balance sheet assets and liabilities, which made them hard to analyse. “I’d never heard of SIVs [before May 2007],” he said. “I didn’t know they existed.” SIVs, or structured investment vehicles, were the huge off balance sheet funds through which banks invested in complex, and sometimes toxic, structured credit assets.
Mr Bolton said there did not have to be a big trigger for a turning point, although a US bailout might help. “It can just be when people stop selling,” he said. He preferred shares in developed markets. It was too early to buy in emerging markets.
Link to the original article
Mr Bolton, president for investments at Fidelity International, said that the UK stock market seemed to be at or near the bottom and he had become much more optimistic in the past two weeks. “Shares [in some sectors] are as cheap as I’ve seen them in my lifetime,” he said, citing consumer cyclical sectors such as retailing and media as particular bargains.
After pausing several years in adding to his stock market investments, he said he had put fresh personal money into Fidelity equity funds two weeks ago and on Monday – the day the US bank bailout plan was derailed. “For the first time in a couple of years, in the last few weeks I’ve started to feel optimistic,” he said.
Mr Bolton made his reputation as the stockpicker behind the Fidelity Special Situations Fund. Between its launch in 1979 and 2007, when he stood down from running it, he multiplied investors’ money 147 times. He rose to prominence when he orchestrated the ousting of Michael Green as chairman-designate of ITV, and acquired the nickname “The Quiet Assassin” – a moniker he detests.
Mr Bolton told guests at a City lunch yesterday that the rally in markets would not be dramatic. “It’s going to be a protracted and slow upturn,” he said.
The bear market had gone on too long and, at 15 months, was already “long in the tooth” compared with previous share market slides. “In the last two weeks we have looked into the abyss that you get at the bottom [of each bear market],” he said.
Sentiment was so poor, Mr Bolton suggested, that the only way was up. Companies with low leverage would do well, he predicted. Measured by price to book values and enterprise value to sales ratios, many shares were egregiously cheap.
Media shares had underperformed the stock market for seven years, and it was time to buy them, Mr Bolton argued. A broad basket of financial stocks was also attractive. “I’ve got concerns about all the banks, but a lot of those concerns are already reflected in the price,” he said.
Mr Bolton said that investors in banks had been wrongfooted by banks’ opacity and huge off balance sheet assets and liabilities, which made them hard to analyse. “I’d never heard of SIVs [before May 2007],” he said. “I didn’t know they existed.” SIVs, or structured investment vehicles, were the huge off balance sheet funds through which banks invested in complex, and sometimes toxic, structured credit assets.
Mr Bolton said there did not have to be a big trigger for a turning point, although a US bailout might help. “It can just be when people stop selling,” he said. He preferred shares in developed markets. It was too early to buy in emerging markets.
Link to the original article
Warren Buffett: I Haven't Seen As Much Economic Fear In My Adult Lifetime
Here is a complete transcript of last night's Warren Buffett interview with Charlie Rose, airing on PBS. It was provided to CNBC by the Charlie Rose program.
Charlie Rose:
We are in San Diego, California this afternoon for a conversation with Warren Buffett. He is a man congressional leaders, the administration, and the Federal Reserve want to talk and talk to. He is the legendary chairman and CEO of Berkshire Hathaway. Its success has made him the world's richest man. He's admired for his investment results over a long period of time. He is trusted for his common sense and the fact that he's warned over the years, in his annual letter to stockholders, about some of the things that are contributing to the crisis facing America and the global economy. For all those reasons, we have come to see him in San Diego where he is attending the Fortune Magazine's most powerful women's summit. Later, he will be interviewed at a conference by the Fortune reporter and long time friend, Carol Loomis. We come this evening from the studios of our public television affiliate in San Diego, KPBS. I thank my friend, Warren Buffet, for taking time in a busy schedule to talk to us.
Warren Buffett:
My pleasure, Charlie.
Charlie Rose:
Let me talk of the news of today. You have announced an investment of $3 billion in General Electric, along the same terms as the the Goldman Sachs --
Warren Buffett:
Yeah, almost identical.
Charlie Rose:
Why GE?
Warren Buffett:
Well, I got a call this morning from a friend of mine at Goldman Sachs saying they might be interested in such an investment. I'm familiar with the company. I've known the management, the current management, Jack Welch before Jeff Immelt. I've known him for decades. And so I understand their businesses. We do lot of business with him, and GE has been -- I think it's the longest running stock in the Dow Jones industrial average. It will be 100 years now it will be around. I hope I'm around then, too. And it was an attractive investment. And we have had a lot of money around, over the last two years, and we're seeing things that are attractive now.
Read the full transcript
Charlie Rose:
We are in San Diego, California this afternoon for a conversation with Warren Buffett. He is a man congressional leaders, the administration, and the Federal Reserve want to talk and talk to. He is the legendary chairman and CEO of Berkshire Hathaway. Its success has made him the world's richest man. He's admired for his investment results over a long period of time. He is trusted for his common sense and the fact that he's warned over the years, in his annual letter to stockholders, about some of the things that are contributing to the crisis facing America and the global economy. For all those reasons, we have come to see him in San Diego where he is attending the Fortune Magazine's most powerful women's summit. Later, he will be interviewed at a conference by the Fortune reporter and long time friend, Carol Loomis. We come this evening from the studios of our public television affiliate in San Diego, KPBS. I thank my friend, Warren Buffet, for taking time in a busy schedule to talk to us.
Warren Buffett:
My pleasure, Charlie.
Charlie Rose:
Let me talk of the news of today. You have announced an investment of $3 billion in General Electric, along the same terms as the the Goldman Sachs --
Warren Buffett:
Yeah, almost identical.
Charlie Rose:
Why GE?
Warren Buffett:
Well, I got a call this morning from a friend of mine at Goldman Sachs saying they might be interested in such an investment. I'm familiar with the company. I've known the management, the current management, Jack Welch before Jeff Immelt. I've known him for decades. And so I understand their businesses. We do lot of business with him, and GE has been -- I think it's the longest running stock in the Dow Jones industrial average. It will be 100 years now it will be around. I hope I'm around then, too. And it was an attractive investment. And we have had a lot of money around, over the last two years, and we're seeing things that are attractive now.
Read the full transcript
Buffett Buys $3B of GE Preferred
General Electric Co (GE) just announced plans to raise $15 billion, with a little help from Warren Buffett. The company is selling $12 billion of common stock to the public and $3 billion of preferred to Berkshire Hathaway.
The old Oracle of Omaha has cut deal strikingly similar to the deal he cut with Goldman Sachs. Here he is getting perpetual preferred stock with a 10% dividend that is callable after three years at a 10% premium. He’s also snatching up warrants to purchase $3 billion of common stock at $22, which is a two dollar discount from where the stock is trading right now.
How closely is this investment in GE tied to Buffett’s faith in the bailout? GE is currently protected from short-selling under the SEC’s emergency ban, and GE may be eligible to sell assets to the Securitized Housing Investment Trust. He cited the bailout as a key to his investment in Goldman Sachs.
Fascinatingly, in an interview with Becky Quick on CNBC, Buffett said he was sold on this deal by investment bankers at Goldman Sachs. So those guys have talked Warren into parting with $8 billion of his cash in less than a week. Impressive.
CNBC describes Buffett’s investment in GE as “a very expensive advertising campaign.” To be sure, Buffett putting money into GE will make it attractive to many investors. But if you look at the great terms Buffett is demanding for his money, you have to wonder if other investors really should be buying into the common shares without the promised dividend and warrants.
Link to the original article
The old Oracle of Omaha has cut deal strikingly similar to the deal he cut with Goldman Sachs. Here he is getting perpetual preferred stock with a 10% dividend that is callable after three years at a 10% premium. He’s also snatching up warrants to purchase $3 billion of common stock at $22, which is a two dollar discount from where the stock is trading right now.
How closely is this investment in GE tied to Buffett’s faith in the bailout? GE is currently protected from short-selling under the SEC’s emergency ban, and GE may be eligible to sell assets to the Securitized Housing Investment Trust. He cited the bailout as a key to his investment in Goldman Sachs.
Fascinatingly, in an interview with Becky Quick on CNBC, Buffett said he was sold on this deal by investment bankers at Goldman Sachs. So those guys have talked Warren into parting with $8 billion of his cash in less than a week. Impressive.
CNBC describes Buffett’s investment in GE as “a very expensive advertising campaign.” To be sure, Buffett putting money into GE will make it attractive to many investors. But if you look at the great terms Buffett is demanding for his money, you have to wonder if other investors really should be buying into the common shares without the promised dividend and warrants.
Link to the original article
Wednesday, October 1, 2008
Managers splurge on bargain stocks
Fund managers have been on a shopping spree, snapping up bargains flowing from Monday's stock market meltdown.
"I just loaded up the boat," quipped hedge fund manager Derek Webb of Webb Asset Management. "When you have a panic-selloff ... you just want to get capital into the market."
During the Monday downturn, he bought Canadian names like Agrium, Potash, Aecon Group, Harvest Energy, Fording Canadian Coal, Daylight Resources, and BCE. He also added exchanged-traded funds (ETFs) tracking broad market indexes if he couldn't get enough stock.
That strategy enabled him to be fully invested and buy time to get together his shopping list of non-economically sensitive stocks. He bought them after selling some of his ETFs into yesterday's market rebound.
On Monday, the S&P 500 plunged nearly 8.8 per cent, while Canada's S&P/TSX tumbled 6.9 per cent after U.S. lawmakers failed to pass a $700-billion (U.S.) bailout package to rescue the financial industry. Yesterday, the S&P 500 bounced back 5 per cent, while the S&P/TSX composite gained 4 per cent.
Yesterday, Mr. Webb, an earnings momentum manager, bought one Canadian stock - ATS Automation Tooling Systems - and loaded up on U.S. names like natural gas pipeline transporter ONEOK Partners; health care products provider Natus Medical and expense reporting software maker Concur Technologies.
"I'd rather take names that are not exposed to the economy if we are headed for a global recession, depression or whatever," said the San Francisco-based manager of the WAM Canadian Performance Fund.
Read the full article
"I just loaded up the boat," quipped hedge fund manager Derek Webb of Webb Asset Management. "When you have a panic-selloff ... you just want to get capital into the market."
During the Monday downturn, he bought Canadian names like Agrium, Potash, Aecon Group, Harvest Energy, Fording Canadian Coal, Daylight Resources, and BCE. He also added exchanged-traded funds (ETFs) tracking broad market indexes if he couldn't get enough stock.
That strategy enabled him to be fully invested and buy time to get together his shopping list of non-economically sensitive stocks. He bought them after selling some of his ETFs into yesterday's market rebound.
On Monday, the S&P 500 plunged nearly 8.8 per cent, while Canada's S&P/TSX tumbled 6.9 per cent after U.S. lawmakers failed to pass a $700-billion (U.S.) bailout package to rescue the financial industry. Yesterday, the S&P 500 bounced back 5 per cent, while the S&P/TSX composite gained 4 per cent.
Yesterday, Mr. Webb, an earnings momentum manager, bought one Canadian stock - ATS Automation Tooling Systems - and loaded up on U.S. names like natural gas pipeline transporter ONEOK Partners; health care products provider Natus Medical and expense reporting software maker Concur Technologies.
"I'd rather take names that are not exposed to the economy if we are headed for a global recession, depression or whatever," said the San Francisco-based manager of the WAM Canadian Performance Fund.
Read the full article
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