Buffett - past his time?

[Uncle Festivus]

Just wondering if Warren Buffet is the investment guru everyone makes him out to be, in this current climate. Over the last few years he's made some pretty ordinary calls eg US dollar, and his current investments are starting to look less promising than his usual brilliant returns.
Some of his investments are apparently taking a bit of a hit at the moment -

"Berkshire owns one of the largest networks of real estate agencies in the U.S. and several construction-related businesses, including carpet maker Shaw Industries and building products companies Acme Building Brands, Benjamin Moore, Johns Manville and MiTek.
Shaw revenue fell 11% in the first quarter. Sales and profit are likely to be "significantly" lower for the rest of 2007, Berkshire warned on Friday."

He also has investments in insurance & consumer discretionary, which may come under stress if growth moderates further.
He's been an outstanding investor, but little is said of the ones that do go wrong. He'll take a big hit if it (the economy) continues flatlining or there happens to be a recession after all.

Has he gotten too big (or too old)?

 

[happytown]

Re: Buffet - past his time?

uf,

not to mention some other arguably questionable investments, although not according to the vast majority of berkshire investors,

Berkshire shareholders reject Darfur plan

The investor proposal would have required the company to sell its stake
in PetroChina, whose parent does business in Sudan.

By Charles Piller, Times Staff Writer

2:44 PM PDT, May 5, 2007

OMAHA ”” Shareholders of Berkshire Hathaway Inc. decisively rejected a
proposal today that would have required the company to sell its
$3.3-billion stake in PetroChina, a subsidiary of a Chinese government
firm that is the largest player in Sudan's oil industry.

Berkshire Chairman Warren E. Buffett, who owns about one-third of his
company's shares, advised against the proposal, which received less than
2% of the votes cast at Berkshire's annual meeting here.

The resolution was meant to hasten the end of the Darfur conflict ”” in
which the Sudanese military has engaged in genocide, according to the U.S.
government ”” by pressuring investors to sell holdings in companies whose
activities support Sudan's government.

Berkshire is the largest independent shareholder in PetroChina, whose
parent company, China National Petroleum Corp., drills and exports much of
Sudan's oil, providing funding for Sudan's military. Activists supporting
the shareholder measure placed billboard ads here, Berkshire's home base.

Before the meeting, Buffett called the Darfur violence "deplorable," but
rejected divestment as misguided and ineffective.

...

cheers

 

[professor_frink]

Re: Buffet - past his time?

Has he gotten too big (or too old)?

Short answer- no.

A lot of similar comments were made about him during the tech boom because he wasn't involved in it. History has shown his choice to be the correct one.

Of course he'll take a hit in a recession. Most investors/business owners would.

I think it would be a big mistake to write him off as being too big to make money, and provided the mind still works, he isn't too old

 

[Realist]

Re: Buffet - past his time?

Has he gotten too big (or too old)?

Yes, too big.

Doubling $100 is easy, doubling $100,000,000,000 is alot harder.

Ben Graham notes this in his book in the 1940's.

 

[ROE]

Re: Buffet - past his time?

the man is a genius ... He's very humble and never claims he has a genius brain, but this man can do maths calculation of a calculator and hence calculate on business returns in his head very fast and with dead accuracy.

I think it's getting harder to allocate large capital and get high return.

Like Realist say.. easy to double a $100 or even a few millions but once it get to the billion dollar mark it becomes tricky, Warren even admitted this in his annual letters to share holders.

 

[dhukka]

Re: Buffet - past his time?

To be fair uncle as others have said, the sheer size of Berkshire Hathaway these days makes it very difficult to extract the kinds of returns they have in the past. Still, Berkshire managed 12% earnings growth for 1Q07 while the S&P500 is averaging around 10% this quarter so far. I think the old man is still doing a plum job and it will be a while before he throws in the towel and starts paying dividends.

 

[hongwong]

Re: Buffet - past his time?

The man said “ It is not hard to pick winners on the stock market, the hardest part was to resist the temptation to keep on trading”.

He has said it getting hard to pick bargain stocks in current climate.

Nothing is to big we just need the right investment. !

Has the man lost the art of investing ? That what people in wall street said during the TECHO stock era and yet the man has proven to us over the long run of XXX years he can still mark money. And he does not need all of this magic stuff to do it, just a 5 dollar calculator ….

Kind of makes me wonder, should I be checking the price every day/week or month ?

Ask the question in 5 year time :

http://www.bloomberg.com/apps/news?pid=20601087&sid=a.wpLqtMediw&refer=home

Any things you did not know about him ;
http://english.chosun.com/w21data/html/news/200705/200705070003.html

Buffet eyes four successors at Berkshire
May 7, 2007

Omaha - Warren Buffett might hire up to four people to succeed him as chief investment officer of Berkshire Hathaway, the investment guru said on Saturday, and cautioned that recent strong results from insurance operations were unsustainable.

The 76-year-old billionaire said he had received up to 700 inquiries for the job since lamenting in his February 28 annual shareholder letter that Berkshire had no internal candidates young enough.

http://investing.reuters.co.uk/news...825_RTRIDST_0_SP_PAGE_012-N05291825-OISBN.XML

Anyone want to apply ?

Test of time will tell.

 

[Uncle Festivus]

Re: Buffet - past his time?

Feb. 29 (Bloomberg) -- Billionaire investor Warren Buffett's Berkshire Hathaway Inc. said fourth-quarter profit fell 18 percent on declining insurance rates.
Net income decreased to $2.95 billion, or $1,904 a share, from $3.58 billion, or $2,323, a year earlier, the Omaha, Nebraska-based company said today in a statement. Berkshire gets about half its profit from its insurance units.
Berkshire has been scaling back coverage of coastal property as rates drop from their highs following Hurricane Katrina in 2005. Operating earnings, which exclude a gain from selling PetroChina Co. shares and other one-time items, declined 18 percent to $1,518 a share, lagging the $1,613 average estimate of three analysts compiled by Bloomberg.
"The party is over,'' Buffett said in his annual letter to shareholders. "It is a certainty that insurance industry profit margins, including ours, will fall significantly in 2008. Prices are down.''

http://www.bloomberg.com/apps/news?pid=20601103&refer=us&sid=apPd6en67zgQ

 

[ROE]

Actually, he cant do better than his history because the bigger you get the harder it is to get the same return

much easier to get 12% return on 100 Mil, than 12% on 10 Billion as there isn't
many stocks around that you can invest large part of the money without
affecting the price of the stocks.

 

[Trembling Hand]

11 reasons to Short Buffett. :

http://www.thestreet.com/story/10406915/1/kass-katch-11-reasons-to-short-berkshire.html

 

[julius]

Buffet Is The Top Dog

numero uno

http://www.reuters.com/article/businessNews/idUSN0564885820080305

 

[Rainmaker2000]

I think its a reasonable question to ask and agree with the sentiments about how difficult it is to be big and to grow fast.....

If Buffett is past his time, it's far too early to say.......just cause people have had exposure to a few underperforming sectors and has made some losses does not mean much

I think we would all be surprised to know all the sectors he has exposure too....I know that I was shocked when I read books which were printed about 5 years ago his incredible diversity of assets.....more than that, Birkshire's performance has less to do with new acquisitions but more to do with past acquitions.....again, some of the businesses in the Buffett stable are incredible stories........

It's really no longer got much to do with Buffett but its an incredible range of businesses headed by very smart and ethical individuals who built them in the first place.....Arguably Buffett is a better manager than investor

 

[julius]

no idea how you could argue he is a better manager than investor...

 

[Renhoek]

.....Arguably Buffett is a better manager than investor

That's probably true, alot of Berkshire's fortune came from taking over struggling companies for a pittance of their book value and building them into high performing companies. This has been Buffett's real strength but the media seems to like building him up as an "investment guru" and usually refer to him as "the man who made billions investing in the stockmarket". So now everyone sees Buffett as an investor first and a takeover shark second (if at all).

 

[Uncle Festivus]

The other thing too is that he happened to be around at the start of a huge expansionary stage and basically bought & held, while everybody else was trading short term. Mind you, his knack was finding value in undervalued companies.
His present danger is his overexposure to consumer stocks, not good in a recession, as he himself has proclaimed to have already started.

 

[Rainmaker2000]

If you read a book like 'The Buffett CEO', Buffett comes across an investor who comes across a business and only purchases it if outstanding management is already in place......he does not shake things up.......just comes in as a patient shareholder and supports management with resources.........

In this way, Buffett's record of management is quite extraordinary as his managers, many of them founders, stay in employment for a massive period of time without interferance.

Buffett is primarily not a buyer/seller, he is just a buyer who pretty much takes companies private into Birkshire (..for ever).....as a result, some of Buffett's companies are incredible growth stories which are not widely known even in Wall Street circles....it is not Buffet who manages these companies but their original managers.

 

[refined silver]

Past his time? Never. A true value investor, with good business sense and common sense will never be past their time, until time makes everything start to fade...

He has nailed the current credit crisis, called it back in 2002/3 - OTC derivatives being WMD which is at the heart of it and although the bomb has detonated, very few can see the effects yet.

Too big? Probably.

 

[2020hindsight]

....
Well at least he was generous.
I mean .. there's more to life than greed .

 

[Uncle Festivus]

Please explain Warren.....have you been swimming naked too? Got a spare $20B to loan him?

NEW YORK (CNNMoney.com) -- Berkshire Hathaway Inc., the holding company run by legendary investor Warren Buffett, saw its overall investment portfolio shrink by 25% in the fourth quarter, according to regulatory forms filed Tuesday with the Securities and Exchange Commission.
In the the three months ended Dec. 31, the Omaha, Neb.-based company's overall holdings decreased to $51.87 billion from $69.89 billion at the end of September.
The bulk of the paper losses were tied to Berkshire's investments in financial services sector, which has been battered by the credit crisis and volatile markets.

http://money.cnn.com/2009/02/17/news/Berkshire_Hathaway/index.htm?source=yahoo_quote

 

[Uncle Festivus]

Never ask a barber if you need a haircut.

Someone must have put a no 1 through Berkshire's hair

It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.

Apparently not following his own advise?

April 28 (Bloomberg) -- Berkshire Hathaway Inc. shareholders have a chance this year to do something that’s rare among the Sage of Omaha’s followers: count their losses.
Despite Berkshire’s reputation as a bear market bulwark, its stock has been walloped. The Class A shares are down 31 percent since September, to $90,000 as of yesterday, exceeding the 26 percent drop in the Standard & Poor’s 500 Index.
One reason: Chief Executive Officer Warren Buffett’s increasing use of derivatives -- contracts whose value is based on the performance of stocks or bonds or the outcome of a specific event. That Buffett once called derivatives “time bombs” doesn’t calm investors.
Berkshire held contracts with a combined notional value of $67.3 billion at year-end. While this figure is used mostly for reporting purposes and isn’t indicative of potential losses, it dwarfs the company’s $25.5 billion in cash.
Buffett himself has warned of an increasing possibility he might have a loss from one type of contract on Berkshire’s books. Fitch Ratings and Moody’s Investors Service have lowered their credit ratings on Berkshire, partly because of the derivatives.
“People have become uncomfortable with financial investments that they don’t understand, especially anything related to derivatives,” says Charles Bobrinskoy, a manager at Ariel Investments LLC in Chicago.