Browsing Category: "Warren Buffett"

Writing Tips from Warren Buffett

Wednesday, October 4th, 2006 | Warren Buffett with 6 Comments

Last week I attended a workshop on writing for clarity and impact with plain language. It was a pretty good course given it was only an hour and a half. The highlight for me was that the handbook that came with the course cited Warren Buffett!

I was pretty surprised to hear the name Warren Buffett in the middle of a writing course. Apparently, Warren Buffett wrote the preface to a 1998 SEC document on writing in plain English. I really shouldn’t be surprised Mr. Buffett is included in a writing handbook for the SEC since he writes great shareholder letters every year.

This is the first time that I have heard about this document. I’m sure that there are a few hardcore Buffettheads that have read this document, but I think most of you probably haven’t seen it. Here is what Mr. Buffett contributed: 

This handbook, and Chairman Levitt’s whole drive to encourage “plain English” in disclosure documents, are good news for me. For more than forty years, I’ve studied the documents that public companies file. Too often, I’ve been unable to decipher just what is being said or, worse yet, had to conclude that nothing was being said. If corporate lawyers and their clients follow the advice in this handbook, my life is going to become much easier.

There are several possible explanations as to why I and others sometimes stumble over an accounting note or indenture description. Maybe we simply don’t have the technical knowledge to grasp what the writer wishes to convey. Or perhaps the writer doesn’t understand what he or she is talking about. In some cases, moreover, I suspect that a less-than-scrupulous issuer doesn’t want us to understand a subject it feels legally obligated to touch upon.

Perhaps the most common problem, however, is that a well-intentioned and informed writer simply fails to get the message across to an intelligent, interested reader. In that case, stilted jargon and complex constructions are usually the villains.

This handbook tells you how to free yourself of those impediments to effective communication. Write as this handbook instructs you and you will be amazed at how much smarter your readers will think you have become.

One unoriginal but useful tip: Write with a specific person in mind. When writing Berkshire Hathaway’s annual report, I pretend that I’m talking to my sisters. I have no trouble picturing them: Though highly intelligent, they are not experts in accounting or finance. They will understand plain English, but jargon may puzzle them. My goal is simply to give them the information I would wish them to supply me if our positions were reversed. To succeed, I don’t need to be Shakespeare; I must, though, have a sincere desire to inform.

No siblings to write to? Borrow mine: Just begin with “Dear Doris and Bertie.”

Source: A plain English handbook: How to create clear SEC disclosure documents

I’m going to try taking Warren Buffett’s tip to heart here at Fat Pitch Financials. I will start writing my articles as if they were letters to my sister and mother. Hopefully, you’ll notice an improvement and you will better understand what I’m trying to say.

Warren Buffett Celebrates Birthday and Wedding

Thursday, August 31st, 2006 | Warren Buffett with 3 Comments

Happy Birthday Mr. Buffett and Congratulations!

Wednesday was Warren Buffett’s 76th birthday. Mr. Buffett is an amazing person and one of the greatest investors, but he still amazed me today.

At the ripe old age of 76, Warren Buffett got married! Now that is a way to celebrate life. He married his longtime companion Astrid Menks. My notes from the recent Charlie Rose Show discussed some of the details regarding Astrid and Warren’s unique relationship. I am very happy for them and I wish them a long and happy marriage.

Buffett’s first wife died in 2004 and it seemed to have really hit him hard. I’m glad that he has recovered enough now to be able to remarry and once again enjoy life.

All his wedding plans haven’t slowed his game. The recent purchase of USG Corp (USG) by Buffett’s Berkshire Hathaway (BRKa) (BRKb) looks like it has been a great play. With the price of USG hitting $51.00 today, I am very happy that I rode Buffett’s coattails on this one.

Buffett Continues to Buy USG Corp

Friday, August 25th, 2006 | FPF Value, Model Portfolios, Stock Research, Warren Buffett with 2 Comments

Warren Buffett’s Berkshire Hathaway (BRKa) (BRKb) continues to load up on USG Corp (USG) stock this week.  Two SEC filings indicate that Buffett added 567,218 shares on Monday (8/21/06) and 390,200 on Tuesday (8/21/06) as the price of USG dropped below $46. Berkshire Hathaway now holds 15,959,292 shares of USG. I won’t be surprised to find out that Buffett purchased more shares on Wednesday since USG also dipped below $46 that day.

Obviously at this point Warren Buffett thinks USG Corp is a fat pitch at prices below $46. I wonder how long he will continue purchasing USG when it drops below $46. For now, I’m pretty excited to have Warren Buffett backing my purchase of USG stock. 

[Full Disclosure: I own shares of USG.]

USG is a Fat Pitch

Tuesday, August 15th, 2006 | FPF Value, Model Portfolios, Stock Research, Warren Buffett, Wide Moat Companies with 16 Comments

USG Corporation (USG) threw a nice slow, almost perfect pitch right over my plate this week. I have been watching and studying this stock for the past two weeks. With Warren Buffett acting as my virtual coach, I knew it was time to swing when I heard that he added more shares of USG to his Berkshire Hathaway holdings. Apparently, Buffett was buying shares between August 2nd through August 9th at prices ranging from $45.46 to $45.98.  When the stock jump to over $47, I put in an order for $46.51 and it was filled today in both my private account and my public Fat Pitch Financials portfolio. Read the rest of this entry »

Notes on Charlie Rose Show’s Warren Buffett: The Gift

Friday, July 28th, 2006 | Warren Buffett with 1 Comment

Today, I’ll share my notes on the final part of Charlie Rose’s special on Warren Buffett. If you haven’t seen my notes on the other two segments, Warren Buffett: The Man and Warren Buffett: The Business, I encourage you to review them now. This final segment, Warren Buffett: The Gift (click to see the video), focuses on Warren Buffett’s recent announcement to donate $44 billion of his Berkshire Hathaway (BRKa) fortune.  My notes are as follows:

  • Bill Gates was surprised by Warren’s selection of the Bill and Melinda Gates Foundation.
  • Buffett first mentioned his thoughts about the donation to the foundation a year and a half ago to Gates.
  • Warren and Susan always planned to give his money back to society.
  • “How can we do the most good for the most people, and particularly the people that had gotten the short straws in life.”
  • Bill Gates originally met Buffett through his mom. 
    • Gates didn’t really want to meet Buffett. 
    • He didn’t really think they would have anything to talk about.
  • Buffett and Gates now always have a good time together.
  • They play bridge and golf.
  • Buffett thinks Gate’s foundation is the best run in the word.
  • Gates has read the Intelligent Investor by Ben Graham.
  • Buffett can not look out ten years with technology companies with the same confidence as with other companies.
  • Change is not so wonderful for investors.
  • Buffett discussed the Solomon crisis and how he got the Secretary of the Treasury to change an order with his integrity and direct communication on a Sunday.
  • He gave Tom Murphy voting rights without telling him.
  • Bill impressed at how Warren is really having fun.
  • Bill talked with Warren about Microsoft’s legal problems. [I wonder if this exposes Buffett to potentially have to testify against Gates.]
  • Bill Gates bought his wedding ring in Omaha with Melinda and Warren at Borsheim’s.
  • Bill identified the greatest inequity as the lack of medical care for children.
  • Gates has known Buffett since 1991.
  • High compounders should wait to donate according to Buffett. [I should use that line next time someone asks me to donate for a cause at work, hehe.]
  • Warren is working to make his Berkshire Hathaway shares worth more to be able to give more value.
  • Compares his partnership with Charlie with Bill and Melinda Gates partnership.
  • Warren Buffett talked to Charlie Munger about his donation.  Charlie told him, “You finally had a good idea.”
  • The market system does not always solve the problem and that’s when we should intervene.
  • He would give up two years at the end to be an observer in the stands for the next 40 years.

This concludes my notes on the three part Charlie Rose Show special series on Warren Buffett.  I hope you enjoyed it was much as I did.  I always learn something new from each opportunity I get to listen to Warren Buffett.

Notes on Charlie Rose Show’s Warren Buffett: The Business

Wednesday, July 26th, 2006 | Investment Philosophy, Superinvestors, Warren Buffett with 4 Comments

I hope you have gotten a chance to either read my notes or watch part one of the Charlie Rose Show’s Warren Buffett: The Man. I found it pretty fascinating. Today, I want to share my notes on part two of this series called, Warren Buffett: The Business (click on the link to see the video):

  • The show started with scenes from the Berkshire Hathaway (BRK.A) (BRK.B) annual meeting and some discussion of how this annual meeting has grown into something unique, a celebration.
    • There is a scene of Warren Buffett singing and playing his eukalalie.
  • Buffett complains about corporate governance checklists.  Buffett wonders how can board members that make up half their income being board members be truly independent. 
  • Charlie Munger: Board member should be perfectly willing to leave at any time and willing to make the tough calls.
  • Buffett notes that Charlie Munger is the best partner that anyone can have.  He has plenty of things to think of but Buffett can call him at any time and Charlie knows him and the company.
  • Warren Buffett’s investment partnership formed with seven members of his family that wanted him to manage their money.  Then others stumbled into the partnership.
  • The partnership worked on buying cheap stocks but Berkshire was a terrible company. 
  • He then bought Jack Ringwald’s (sp?) insurance companies.
    • Insurance companies give off a lot of money that can be invested if the insurance part is managed decently.
  • Buffett notes that it would have been better not buying these investments and putting them into Berkshire.  He just stuck with it.  He notes it would have been better selling Berkshire Hathaway.
  • Buffett closed out the investment partnership at the end of the sixties because the market was leaving him behind and he didn’t understand the market at that point. [Stock prices were high.  Think the nifty 60.]
  • Berkshire Hathaway only got out of textiles in 1985.  Buffett even added a textile company to add to Berkshire Hathaway during that time period.
  • Buffett discussed his purchase of Washington Post (WPO).  
    • Washington Post was selling for $100 million at the time but he thought it was worth $500 million.  His $10 million investment turned into a $1.5 billion investment.
  • Buffett advised Mrs. Graham, CEO of the Washington Post, to buy the stock that Warren wanted to buy but agreed not to buy of Washington Post.
  • Mrs. B couldn’t read or write but built Nebraska Furniture Mart that Buffett bought for $60 million.
  • Buffett bought The Coca-Cola Company (KO) probably after reading the ‘87 annual report.  The company was heavily repurchasing shares and had good management.
  • Buffett notes that it is hard to get a big position in a wonderful company.
  • GEICO was a great investment three separate times for Buffett.  He put three quarters of his net worth when he was in his 20s into the company, a $10,000 investment. 
  • He has no regrets of any companies that he didn’t buy into recently. [I've heard him say he wished he had bought Wal-Mart, but that was several years ago.]
  • GM is too tough to figure. [Controlled Greed must be a bit worried about this statement].
    • GM’s got terrible obligations.
    • Entered into contracts with UAW with market dominance .  Pay for 2.5 people who don’t work for each person who actually works. 
    • GM is a huge annuity and health insurance company attached to the auto company.
    • Buffett can’t come to a conclusion.  Can they exist with 25 percent of the market, huge tough competitor and so many obligations?
  • Charlie Rose asked him what is the test.  Buffett responded:
    1. I have to understand the business.
    2. It has to have a company that has some enduring competitive advantage.
    3. Management that I like and trust.
    4. Reasonably attractive price.  Price is the least important.
  • No candidates right now for Buffett.
  • Buffett doesn’t get paid to hold money, fees for exit unlike hedge fund managers.  They have a different calculus.
  • Buffett discussed Iscar now versus in 2004.  Buffett didn’t buy in 2004 because he didn’t know about it.  Iscar’s CEO emailed Buffett in October of 2005 and that’s what lead to the purchase.
  • He waits until companies are ready for him to buy into them.  They come to him.
  • Charlie Rose asks: How does he review management so quickly?  Experience?
    • Seller must know the price of their business.
    • [He never really answers this question directly.]
  • Buffett acknowledges he made a mistake in not selling Coca Cola.
  • Buffett doesn’t sell businesses he owns outright.
    • [I think this gives him a competitive advantage when buying family companies.]
  • There are three successors that are potentially available for Berkshire Hathaway.
    • The board knows exactly who to assign immediately.
  • Even if he found a big investment he would keep $10 billion as a minimum in cash for the insurance part of the business.
  • Buffett is good at calculating odds.  You always need the right premium.
  • Buffett is looking up international companies. 
    • People internationally don’t look to Berkshire for selling their businesses.
  • The economy today looks pretty good.
    • Buffett worries some about inflation.  It is never gone, just in remission.  When governments are involved that is always a concern.
    • The dollar over time will go down in up to a 10 year time frame. This is a result of the trade deficit. The U.S. is trading away a bit of the farm slowly and this has consequences.
    • Fiscal deficit is not as much of a worry.  Buffett recommends to look at it as a percent of GDP.  Buffett thinks the trade deficit is more important.
    • China can’t easily get rid of American assets.
    • Social security - the problem revolves around policies.  We won’t get rid of social security.

Later this week I’ll post part three, my notes on the final segment of the Charlie Rose interview with Warren Buffett.
 

 

Notes on Charlie Rose Show’s Warren Buffett: The Man

Sunday, July 23rd, 2006 | Superinvestors, Warren Buffett with 14 Comments

Warren Buffett will likely be recorded in history as one of the most important capitalists of this era.  His amazing investing skills led to the creation of the successful Berkshire Hathaway (BRK.a)(BRK.b) conglomerate and the recent massive $44 billion gift back to society that ensued from the wealth that Berkshire Hathaway stock generated. The recent three part Charlie Rose interview of Warren Buffett captures many of the important aspects of this man. I took down some interesting notes while viewing the show. Below you will find my notes on part one of Charlie Rose Show’s Warren Buffett: The Man. Read the rest of this entry »

Ultimate 2006 Berkshire Hathaway Annual Meeting Guide

Tuesday, May 16th, 2006 | Charlie Munger, Site News, Superinvestors, Warren Buffett with 14 Comments

If you couldn’t make the 2006 Berkshire Hathaway (BRK.a) (BRK.b) annual meeting to experience Warren Buffett and Charlie Munger first hand, then I hope that the following guide can offer the next best thing to being their in person. I couldn’t attend the meeting, so I’ve spent the past few evenings reading all about it on the internet. Here is what I have found so far:

Meeting Notes

Omaha.com Coverage
(Hint: Use BugMeNot to login.)

Media Coverage

Photos

I’m sure I’ve missed some other great links to people’s experience at the 2006 Berkshire Hathaway Annual Meeting. Please share your links below in the comments section.

Berkshire Hathaway’s Recent Shopping

Wednesday, February 15th, 2006 | Warren Buffett with 2 Comments

Recent SEC filings give us a peek into what Berkshire Hathaway’s managers have been buying and selling.  I just got a hold of the three recent quarterly institutional managers holdings reports filed by Berkshire Hathaway (BRK.A).

The first thing I noticed was that it appears that Warren Buffett has increased his Wells Fargo (WFC) holdings. I’m a bit surprised by this move given the current lending market. I’ll have to look into this a bit more closely.

The filings also reveals the exact amount of Anheuser Busch (BUD) Berkshire has accumulated.  It was a whopping $1.88 billion worth of shares. 

It also looks like a few more shares of First Data Corporation (FDC) were added.  They also tripled the position in Lexmark (LXK).  It seems Buffett or another manager at Berkshire are very confident in this investment.  I’m not so sure I think that Lexmark has a wide moat, but I guess it the attraction must be in the printer cartridge model that is somewhat similar to the Gillette razor blade model.

As previously noted in the press, Berkshire has purchased a large position in Wal-Mart (WMT) and this filing shows that it is worth about $900 million.  The moat is rather clear with this pick.

It looks like some Gap (GPS) shares were sold off this past quarter. I never thought Gap had a wide moat, so I think the selling was a good move. The Iron Mountain (IRM) position was also reduced.  Shaw Communications (SJR) is gone completely.

It’s always interesting to see what Warren Buffett and his other managers have been doing in their portfolios.  I think I’ll be taking a closer look at Lexmark, First Data, and Wells Fargo for my own stock research.

Why I Study Warren Buffett

Saturday, December 10th, 2005 | Investment Philosophy, Warren Buffett with 6 Comments

You might wonder why I spend so much time discussing and referring to Warren Buffett here at Fat Pitch Financials. I just ran across an academic article that might help support why I think Warren Buffett’s approach to investing is superior to the market average.
Read the rest of this entry »

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