Wednesday, May 30, 2007

NYSSA Honors Walter Schloss

During its 47-year lifetime, Walter J. Schloss Associates generated in excess of 20% gross annualized returns and netted to its partners more than 15% per year, while the S&P 500 gained slightly more than 10%. An investor with $100,000 in the S&P 500 from January 1, 1956, to December 31, 2002, would have made $9.3 million. That same $100,000 invested in the Schloss partnership would have generated over $78 million.

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Michael Mauboussin: Turtles in Omaha

Most people like to be successful in their jobs. But few organizations are able to articulate the tangible and intangible attributes an employee needs to add value. This makes even more remarkable Warren Buffett’s plan to hire one or more chief investment officers to replace him at Berkshire Hathaway. As part of a succession strategy, Buffett clearly articulates the behavioral traits he believes are vital to long-term investment success.

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Carl Icahn: The hottest investor in America

While Icahn's name is now synonymous with titanic corporate battles, the Queens, N.Y., native seemed at first to be heading for a peaceful career as a teacher or doctor, earning a degree in philosophy at Princeton and attending medical school before dropping out to pursue arbitrage on Wall Street. During the 1980s he made a fortune for himself in his forays against companies ranging from American Can to Uniroyal (and profits for shareholders too in the case of Texaco and, later, RJR Nabisco), despite a few high-profile misses. But it wasn't until recent years that Icahn began assembling the infrastructure he has now, with three main investment vehicles.

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Lou Simpson: A Visit with an Investing Legend

For almost three decades Lou Simpson has managed insurer Geico's $4 billion-plus equity portfolio largely out of the limelight, amassing a nearly unrivaled record in the process. The Geico portfolio has topped the S&P 500 Index by an estimated 7% per annum during his tenure. It's not much of a stretch to call the 70-year-old Simpson one of the greatest investors of all time.

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Source: Michael Candan

The Expert Mind

The one thing that all expertise theorists agree on is that it takes enormous effort to build these structures in the mind. Simon coined a psychological law of his own, the 10-year rule, which states that it takes approximately a decade of heavy labor to master any field. Even child prodigies, such as Gauss in mathematics, Mozart in music and Bobby Fischer in chess, must have made an equivalent effort, perhaps by starting earlier and working harder than others.

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N. R. Narayana Murthy : NYU Stern 2007 Precommencement Speaker

I would like first to share some of these key life events with you, in the hope that these may help you understand my struggles and how chance events and unplanned encounters with influential persons shaped my life and career. Later, I will share the deeper life lessons that I have learned. My sincere hope is that this sharing will help you see your own trials and tribulations for the hidden blessings they can be.

The first event occurred when I was a graduate student in Control Theory at IIT, Kanpur in India. At breakfast on a bright Sunday morning in 1968, I had a chance encounter with a famous computer scientist on sabbatical from a well-known US university. He was discussing exciting new developments in the field of computer science with a large group of students and how such developments would alter our future. He was articulate, passionate and quite convincing. I was hooked. I went straight from breakfast to the library, read four or five papers he had suggested, and left the library determined to study computer science. Friends, when I look back today at that pivotal meeting, I marvel at how one role model can alter, for the better, the future of a young student. This experience taught me that valuable advice can sometimes come from an unexpected source, and chance events can sometimes open new doors.

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Thursday, May 24, 2007

Joe Koster: Cryptologic Update

Charlie Munger said at Berkshire Hathaway's annual meeting that "when trying to determine intrinsic value, margin of safety, etc. there is no one easy method. By definition, you will need multiple models." Although the value of any business is the discounted value of the cash that can be taken out of it over its life, it is certainly prudent and necessary not to get anchored on one value. I will admit, that I did not properly handicap the odds in my initial valuation for the years 2007 and 2008. I knew they would be very uncertain but made them normal anyway because it made the model look nice and neat. However, my thoughts about CRYP being a great investment haven't changed. As I type, a share in this business is trading for $23.25 and although it is now even more clear that the next 12-18 will be a little uncertain, CRYP has signed 2 very important new clients since my last post (Holland Casino and World Poker Tour) and I'm as bullish as ever.

Disclaimer: I do own Crytologic.

Applying Behavioral Finance to Value Investing

Excellent article by Whitney Tilson. MUST READ for all investors!

Tuesday, May 22, 2007

Video: Charlie Rose - Warren Buffett May 10, 2007

An exclusive conversation with the CEO of Berkshire Hathaway, Warren Buffett.

56 mins 40 secs.

Whitney Tilson: Not-to-be-missed tips for value hunters

My recent column detailing the 10 investment traps I’ve identified prompted several readers to ask if I have a comparable list of the opposite – types of opportunities that are likely to lead to good investment outcomes.

I do, and happily it’s a bit longer than the list of traps. Given that the first step to successful investing is knowing which ponds to fish in, here are the 15 most common types of value opportunities I have been able to capitalise on in my investing career

Saturday, May 19, 2007

Seth Klarman: Manager Frets Over the Market, but Still Outdoes It

EARNING 22 percent on your investments while holding half of your portfolio in cash is no easy trick, but last year Seth A. Klarman pulled it off, and it was not the first time.

Mr. Klarman’s record has generated intense loyalty from investors. Since he began Baupost in 1983, it has posted an average annual total return of 19.55 percent, according to data provided by the hedge fund group. Declines have been posted in only 11 of the total 97 quarters since Baupost’s debut.

Video: Wally Weitz on Berkshire Hathaway and Dell May 2007

Wally Weitz's views on BRK and Dell after Value Investing Congress.

Video: Wally Weitz on Countrywide, subprime, Redwood Trust May 2007

Wally Weitz's views on Countrywide, subprime and Redwood Trust after Value Investing Congress.

Video: Whitney Tilson on Wal Mart

Whitney Tilson's view on why Wal Mart is undervalued.

Charlie Munger USC Law Commencement, May 2007

Good version of Charlie Munger USC Law Commencement notes by Joe Koster from Value Investing World blog.

Video: Charlie Munger USC Law Commencement Address, May 2007

Charlie Munger's speech starts at about 43mins.

Slavery, Snakes, and Switching: The Role of Incentives in Creating Unintended Consequences

In the developed world, we like to think of slavery as a bad memory. But slavery persists to this day, particularly in some parts of Africa, most notably the Sudan. Raiding parties steal children from their home villages and transport them for sale in slave markets many miles away. In the 1990s, when news of this ongoing tragedy came to the developed world, well-intentioned people formed charitable foundations that raised money for slave redemption—that is, buying people out of slavery.

Did these charitable efforts do any good? Certainly, some people are free now who might otherwise of have lived their whole lives in slavery. But there is strong evidence to suggest that slave redemption made the overall situation worse. As journalist Richard Miniter reported in a 1999 article in the Atlantic Monthly, the high prices offered by relatively rich Americans increased the demand for slaves, turned the slave trade into an even more lucrative business, and thereby gave raiders an incentive to conduct even more slave raids. If not for the activities of Western charitable organizations, many of the redeemed slaves might never have been enslaved in the first place!

Thursday, May 17, 2007

Billionaire Bets

Putting your money where the billionaires are investing right now, with David Winters, Wintergreen Advisers CEO; Mohnish Pabrai, Pabrai Funds managing partner and CNBC's Maria Bartiromo

Thank you Shai for the link.

Please visit:

Wednesday, May 16, 2007

Thursday, May 10, 2007

Notes of Sears Holding 2007 AGM

Excellent notes.

Please visit: GuruFocus

Happy reading,

Wednesday, May 09, 2007

French Press: Le

I was quoted in Le, a French press, regarding my belief that the solid culture created by Warren Buffett will continue even after the death of its founder.

Please visit: Le

For translated version:

2007 Berkshire Hathaway Annual Meeting transcript by WBuffettJr

Excellent transcript!

Please visit: Fools board


Monday, May 07, 2007

Berkshire Hathaway Annual Meeting 2007

Excellent notes on Berkshire 2007 AGM by morningstar.

Please read: Morningstar

Happy reading,