Saturday, June 30, 2007

Warren Buffett: Bloomsbury looks to Buffett for bestseller

Harry Potter publisher Bloomsbury has won the publishing rights to a book on Warren Buffett's investment strategies and philosophy it hopes will become a best-seller in the wake of the boy wizard phenomenon.

"Our expectation is that it could become the No.1 bestseller in the UK and Australia because you get Buffett's condensed wisdom on investing," Newton said.

He added that the book was not a biography but based on extensive conversations with the so-called Sage of Omaha.

The book on the legendary Omaha investor is scheduled to be published in early May, 2008, during the weekend of the annual shareholders' meeting held by Berkshire Hathaway Inc.

Full Article

Richard Pzena: Lear Undervaluation Summary

    1. Lear’s core business of automotive seating is fundamentally sound and has good long term prospects. While Lear’s earnings came under pressure in recent years, there are signs that the business is recovering and delivering strong results. Lear has reported two positive earnings surprises in the last three months.
    2. The Icahn offer of $36 is inadequate and significantly undervalues the company. We believe that Lear’s core auto business of seating, electrical and electronics is worth over $50. Its share of the interiors joint-venture with Wilbur Ross is worth over $4. Lear’s sizable tax loss carry-forward is worth $4 as well. Hence we estimate that Lear is worth $55-$60.
    3. The flawed process of the deal put Carl Icahn in a highly privileged position and made it unlikely that competing offers would surface. The ‘poison put’ that Lear inserted into its November 2006 debt offering and large break-up fee payable to Icahn if another bidder was selected made it much more difficult and costly for other potential bidders. Further, management is conflicted given their significantly enhanced economic interest in the company following the deal. Thus, the lack of a competing offer in no way implies that the buyout offer is fair.
    4. There is no compelling reason to sell the company at the present time when business recovery is just under way. There are challenges and risks involved in executing Lear’s long term business plan, as there are in any business. The strategy of pursuing non-Big-3 customers is working as evidenced by the growing Asian business at Lear. The recent settlement between Delphi and the union is one major step in the direction of lower probability of short term production disruption in North America and longer term restructuring of the Big-3’s North American operations.
    5. Since the Icahn offer in February, the auto suppliers sector has rallied on average by 15%. Lear’s share price has been capped by the offer while earnings guidance has increased by 7%. Should shareholders reject the deal, we do not think that the near term downside risk to Lear’s current price is significant in light of the current valuation of the sector.

Full Article

Source: Lincoln Minor

Mohnish Pabrai: Won Power Lunch with Warren Buffett

Warren Buffett Power Lunch to Benefit Glide Foundation

Winning bid: US $650,100.00

Winning bidder: mpabrai

Ebay Results

Well done, Mr. Pabrai!

May you learn plenty from Mr. Buffett in person.

Kind regards,


Friday, June 29, 2007

David Martin: The Bank Blitz Memo: Get the Picture?

One of the other benefits of encouraging photo taking and documenting of campaigns and promotions is that it can provide a practical “scrapbook” for a branch. I have always been impressed by branches that have actually recorded and cataloged their various promotions, campaigns, contests, as well as team members through the years. In only a few minutes, any new branch employee (or senior manager) can get a real “feel” for that branch. These scrapbooks also serve as a great reminder of things that worked and didn’t work in the past. And these “books” can now be easily stored on disk or even on an internal website.

Of course, something like a branch scrapbook sounds just too quaint to some “serious” bankers. But I’ve never visited a branch that had one that didn’t have a manager and team that felt a personal ownership of their business. Call that quaint. I call it pretty telling.

Full Article

Nassim Taleb: Blowing Up

One day in 1996, a Wall Street trader named Nassim Nicholas Taleb went to see Victor Niederhoffer. Victor Niederhoffer was one of the most successful money managers in the country. He lived and worked out of a thirteen-acre compound in Fairfield County, Connecticut, and when Taleb drove up that day from his home in Larchmont he had to give his name at the gate, and then make his way down a long, curving driveway. Niederhoffer had a squash court and a tennis court and a swimming pool and a colossal, faux-alpine mansion in which virtually every square inch of space was covered with eighteenth- and nineteenth-century American folk art. In those days, he played tennis regularly with the billionaire financier George Soros. He had just written a best-selling book, "The Education of a Speculator," dedicated to his father, Artie Niederhoffer, a police officer from Coney Island. He had a huge and eclectic library and a seemingly insatiable desire for knowledge. When Niederhoffer went to Harvard as an undergraduate, he showed up for the very first squash practice and announced that he would someday be the best in that sport; and, sure enough, he soon beat the legendary Shariff Khan to win the U.S. Open squash championship. That was the kind of man Niederhoffer was. He had heard of Taleb's growing reputation in the esoteric field of options trading, and summoned him to Connecticut. Taleb was in awe.

Arpit Ranka: My Search for Meaning

“Wat are you really living for - is it money, fame, helping others, power .. or wat?”

A friend of mine had asked me this important question sometime back. Trying to figure out what was the very purpose of my life has had a huge impact on my approach towards life and might have on you if you try and answer the question. Hence, I have decided to share this correspondence with you…

Mohnish Pabrai: Pabrai Funds shareholder meeting 2001 transcripts

5. Any insights gained after last two years in regard to portfolios that have changed your rules?

Mohnish: One change occurred a little overone year ago. I got a hold of the Buffett Partnership letters and was surprised to see that a huge portion of the portfolios was comprised of Special Situations. I then researched Special Situations in much greater detail. Now we have up to 30% of the portfolio in Special Situations.

6. Even Great Companies have bad things that happen to them. How do you keep portfolios abreast of thesebad things?

Mohnish: If nothing bad happened to any of the stock, wed be at a 70+% annual rate of return. Some bad things will happen. The whole point is to have 10 securities. One or two may have some bad things happen, but the majority will be fine.

Full Article

Wednesday, June 27, 2007

Warren Buffett: Buffett Says All of His Berkshire Shares Will Go to Charity

June 25 (Bloomberg) -- Warren Buffett, chief executive officer of Berkshire Hathaway Inc., talks with Bloomberg's Brian Sullivan in Omaha, Nebraska, about philanthropy, the EBay Inc. auction for lunch with the Oracle of Omaha and plans to donate all of his Berkshire shares to charity. All proceeds of the auction benefit the Glide Foundation in San Francisco. Last year Buffett's lunch auction raised more than $600,000.


Whitney Tilson: Buyout Binge Is Sign of Good Health

The private equity business is simple: using large amounts of debt, buy a company at a low multiple of cash flow, increase the cash flow and then exit at a substantially higher multiple. The combination of cash flow and multiple expansion, juiced by leverage, has produced spectacular returns, leading investors to pour more and more money into the sector, fuelling the record- breaking level of activity. As Warren Buffett pointed out at the recent Berkshire Hathaway annual meeting: “If you have a $20bn fund and get a 2 per cent fee, you’re getting $400m a year. But you can’t raise another fund with a straight face until you’ve invested it, so there’s a great compulsion to invest it quickly so you can raise another fund and get more fees.”

Full Article

Tuesday, June 26, 2007

Bud Labitan and Greg Binning: A.I. interactive open source project on The Warren Buffett

The Warren Buffett investing A.I. interactive open source project by Bud Labitan and Greg Binning.

We welcome comments and volunteers who are motivated to enhance and make this free project even better. Here is more information: The setup1.exe installs all the files including a running version to "c:\archbot"

Mohnish Pabrai: Pabrai’s Perfect Portfolio

Mohnish Pabrai’s portfolio is not perfect because of what is inside, but rather because of how the fund is assembled. Pabrai is the managing partner of the Pabrai Investment Funds, a partnership with $500 million under management. Besides the 29% returned annually to partners, Pabrai has designed brilliant portfolio concepts.

Incalculable amounts of time are spent studying which investments to buy, but very little time is spent thinking about how much. The decision is usually left up to the investor’s confidence in the investment, something that has been shown to be unstable. The truth is, deciding how much to buy can have a large impact on a portfolio, occasionally just as much as what is bought. There are copious amounts of information on what to buy, but very little on how much.

To combat his untrustworthy feelings of self-confidence, Pabrai developed a new “portfolio theory.” I will call it the ten by ten portfolio. Ten investments that each make up ten percent of the portfolio. Pabrai holds between seven and fifteen different investments, but appears to stay close to the ten by ten benchmark. The fund is difficult to proportion perfectly, because a stock can run up before a full lot has been purchased or because a previous position has already advanced.

Full Article

Rick Biggs: Discovering Discover

Discover Financial Services, the credit-card spinout from Morgan Stanley set to be completed at the end of the month, began trading on a when-issued basis last week. Here’s my early, back-of-the-envelope take:

After I read the company’s initial registration filing when it came out in March. I came up with an earnings estimate for 2007 of between $1.70 and $1.75 per share. Assuming a 14 multiple, that implies a stock value of around $25, compared to the $31 it’s trading at now, when-issued. But Morgan Stanley/Discover put out an 8K Thursday that provided more details and history on Discover’s managed-basis earnings.

Full Article

Saturday, June 23, 2007

Glenn Greenberg: Concentrated and Focused Fund

What level of confidence do you need if you have to invest $4 billion dollars in just 6 stocks? Also among these 6 stocks the number one position is 40% of the total portfolio? This is exactly what Guru Glenn Greenberg is doing. It is also a key factor why he could achieve more than 22% a year since 1984.

You may not know Glenn Greenberg, it is not surprising because he does not entertain investment ideas from Wall Street analysts; he does not do marketing, and he does not even speak to his clients. He only communicates with them with two written updates per year.

The most important rule for Mr. Greenberg is that if they lacked the confidence to put five percent of their portfolio in a company's stock, they would not buy any. Therefore he has a very concentrated portfolio. Due to this excess concentration Chieftain typically has less than ten securities in their portfolio. The most number of securities Chieftain has held is twelve and the least, six, while maintaining a 30% cash position.

How does he invest? He said that a person should have an approach that over the long-term will win and will not fail. Investors should not use an approach which can provide both huge returns and huge losses. An investor must figure out an approach that will allow them to be a long-term winner because this is a long-term business. Investors need to win successively because they will be taking profits and reinvesting them continuously over their lifetime.

Full Article

Friday, June 22, 2007

Sahul Sharma: IndyMac, Just Another Subprime Lender?

With 47% of the IndyMac’s float having been sold short and the stock down 30% year-to-date, true believers in the company are thin on the ground. The naysayers seem to be everywhere, while buyers are on strike. Dare I try to make a case that the market has got it wrong?

If you doubt it, look at the stock’s valuation. Indymac lately trades at just 1.13 times book value, compared to a historical valuation range of 1.6 to 2 times. Similarly, it trades at just 10.5 times this year’s trough earnings, even though the company has generated solid, 20-plus-percent earnings per share growth for the better part of a decade.

Full Article

Tom Brown: Citigroup’s Breakup: How About Plan B?

I’ve been harping for so long by now that Citigroup needs to be broken up that regular readers can likely recite my argument, chapter and verse, better than I can. Anyway, it boils down to this:

  1. Citi’s various businesses (its commercial bank, investment bank, wealth management unit, and global consumer finance operation) would almost certainly grow faster on their own than they’re growing now as part of a big clunky conglomerate. Reason: smaller, focused companies, which are what the Citi progeny would be, are more effective competitors than mammoth generalists like Citi. If nothing else, they’d be more successful recruiting top talent and be simpler to manage.
  2. The capital allocation synergies that Citi apologists point to in defending the status quo are largely a myth. The company is so large and unwieldy that even a highly competent CEO/capital allocator would have trouble deploying the company’s capital optimally across all its business. Citi’s management team is no one’s idea of a competent capital allocator, and is hopelessly inadequate to the task.
  3. Citi’s current growth strategy, which involves such bright ideas as opening new retail branches in Boston and Philadelphia and buying a bank in Germany, is doomed to fail. The company has virtually no discernible sustainable competitive advantage in any area that it says it plans to expand.

Why not do partial IPOs of Citi’s various businesses?

Full Article

Bill Miller: A Legend Sizes Up the Market

You'll consider stocks that most value investors won't touch. How do you justify owning a Google? This is what I call the value conundrum. Look at what have been the biggest wealth-creating companies: Microsoft, Wal-Mart, GE, Johnson & Johnson. You could have bought Microsoft in 1991 at 35 times earnings and made 40 times your money over the next ten years. If you had bought Wal-Mart when it went public, you would have paid 20 times earnings and you would have made 10,000%. If a stock goes up 30 or 40 times in ten years, it has to have been grossly underpriced to begin with. So Microsoft was not expensive at 35 times earnings. It was one of the best bargains out there.

But you think its growth potential and its future cash flow make it cheap today? Yes. It trades at 24 times next year's earnings estimates. We can't find any other company in the market with a faster revenue growth rate and higher profit margins, and that dominates its business like Google but has a lower P/E multiple. MasterCard now has a higher 2008 P/E than Google!

It's that unique? Google trades at a lower multiple than Starbucks. Now, Starbucks is a great company, but Starbucks is growing at half Google's rate. On next year's estimated earnings, Google's P/E is six points higher than Coca-Cola's, but Coke long term is only an 8% grower.

Full Article

Jean-Marie Eveillard: A value maestro's encore

The 67-year-old Eveillard had been one of Wall Street's best value investors, leading Bleichroeder's First Eagle Global fund to a 15.8% average annual return - compared with 13.7% for the S&P 500 - over his 26 years at the helm, according to Morningstar.

In addition to Global, with $22.1 billion in assets, Eveillard is back running three other First Eagle funds - $1.1 billion Gold, $11.9 billion Overseas, and $677 million U.S. Value. (Only U.S. Value is open to new investors.) He agreed to stay on full-time for a year, after which associate portfolio manager Charles de Lardemelle will take over.

Eveillard says he came out of retirement to protect funds that "were a little bit my babies."

He can be very protective. Global lost money only twice during his tenure: a trifling 1.3% in 1990 and 0.26% in 1998. And while Eveillard underperformed the market during the late 1990s, fans see that as less a failure than a show of character.

"In the late 1990s - when I think his fund shrank to half its former size because he was not buying the crazy tech stocks that were doing so well - he stuck with his strategy," says Bruce Greenwald, a finance professor at Columbia Business School, where Eveillard has lectured. "That really made his reputation later on."

Indeed, Global was a post-crash standout, returning 10.5% in both 2001 and 2002, 38% in 2003, and 18.7% in 2004.

Full Article

Thursday, June 21, 2007

Mohnish Pabrai: Bloomberg Interview June 19, 2007

Bloomberg Clip Jun 19, 2007

Analysis and Discussion with Featured Guest Mohnish Pabrai of Pabrai Investment Funds: Stocks More Affected By Micro Factors than Macro Economy; Entrepeneurs Are Good at Handling Uncertainty - High Uncertainty, Low Risk

Bloomberg Clip Part 1

Analysis and Discussion on in Investing with Buffett, with Featured Guest Mohnish Pabrai: Berkshire's Businesses, Investments Worth $5K/share; Delta Financial - Provides Fixed Rate Loans, Not Exposed to Resets, Would Be Little Impacted by Housing Correction

Bloomberg Clip Part 2

Source: Thank you Lincoln Minor

Oak Value Interview: Meet the Managers

Learning to Invest

David Meier: Tell us a little bit about yourselves, how you got interested in investing, and when you realized that value investing was the right thing for you?

David Carr: I was fortunate to meet one of my former partners in high school. His uncle had been a classmate of Warren Buffett's at Columbia and studied under Benjamin Graham. So early on, he took us under his tutelage and began to teach us a bit about value investing. Fortunately, our first exposure was to Buffett and to thinking about investing in that format.

Larry Coats: I came at investing from a completely different angle. I grew up the son of a small-town banker and developed an interest in finance. After graduate school, I worked for Andersen Consulting, now Accenture, and learned about detailed business analysis working there.

Part 1 Interview


Oracle and eBay are ones that at the right time and the right price met our parameters. In both cases, they have reoccurring revenue streams, very strong cash flows, very high returns on equity, and extremely strong moats and franchises. They also leverage network effects, where as you layer on additional business, you get extremely high and extremely beneficial margins as well as the ability to layer a business on around the world. We have done all the work. You see a lot more value-net people in a number of the names in those arenas nowadays.

If you look at the predictability of the business today looking out five years compared to the predictability five years ago looking till today, the biggest difference is the component of the revenue stream represented by ongoing revenues, the ability to drive annual maintenance and service fees as opposed to the dependency on upfront licenses, and that transition over the last five years while they have continued to grow the install base on the core database side. These are what gave us the ability to understand and value the business and what has given us the opportunity to say we have a higher degree of confidence in our valuation equation.

When you combine that with, as David indicated, the fact that we bought the stock around $13, it was trading at basically somewhere between 13 and 14 times forward earnings on a cash basis, and we believe that was a pretty attractive valuation. The stock has been certainly a good solid performer for us in here, as it has demonstrated the merits of the business model as reflected in the transition of the revenue stream that it gets from the service that it provides to customers.

Part 2 Interview


David Meier: How does eBay (Nasdaq: EBAY) stack up?

LC: For eBay, we have studied the business models for years. The most surprising part about eBay and the part that in a lot of ways most intrigued us and convinced us that the visibility of management and the driving force of management, that the power of these integrated business models was clear, was PayPal. PayPal was an acquisition that people were not fully sure why or what it was doing, and PayPal is turning out to be a tremendously brilliant acquisition. We understand the business model of payment processing very well through American Express (NYSE: AXP), as well as through Fidelity Information Services and other companies that have had global payment processing networks.

DC: But I will tell you, one of the things we have wrestled with often is when you find a good company, if you find a great company -- and in many ways you have talked about your interest in eBay, and I think we would all probably agree, it really has many of the characteristics of a great company.

Valuation is the hard part. We run a worst case, a best case, and a base case. We do our work using a base case of what we think is a very reasonable, rational, and what we usually find to be a very conservative thought process of what will unfold. The risk to us is that if we find a really great one, and there are not that many really great ones, we have to spend lots of time on the maintenance part of our research to understand and make sure we are properly valuing it. We want a good understanding what it really is worth, because we don't want to sell too early. But when it does get to our intrinsic value, we do move on even if it is a great company.

Part 3 Interview


Larry Coats: In his article "The Superinvestors of Graham-and-Doddsville," Buffett said there are a lot of people out there who have taken a common set of principles and applied them through varying processes to all yield above-average or very attractive results, and he cites some examples there. So as David talks about some of these people, they are people who share a common set of principles, but the processes that all of us use are slightly different. We may come to the same conclusions or slightly different conclusions, and there are a lot of our "brethren," as he puts it, in this business whom we have a lot of respect for, we just disagree with the conclusions that they draw on individual companies and individual prices relative to our charge to the shareholders that we manage money for. So it is a large universe in many respects, but it is also a relatively small family that is focused on these principles.

Part 4 Interview


David Carr: One of the reasons we always demand the margin of safety is we have been through severe alligator-biting times, and we have seen our rear ends hanging out there, and we have the bite marks to prove it. That experience is valuable, and I am not sure it can ever be passed on without having been experienced.

Part 5 Interview


Final thoughts

DM: You get one final parting shot here. If people want to become better investors, what do you think is the first thing they should focus on?

DC: I think the service that you all provide and the effort that you make is important in trying to educate people, because there are so many people saying you must do something now and time is going away quickly, and I think the ability to be able to think long term and to understand is a nice perspective. So I would say, maintain perspective.

LC: There is a quote by Ben Graham where he says, "Investing is most intelligent when it is businesslike." And so, have the same perspective when you look at investing in businesses, even though you are only buying a hundred shares or a thousand shares or a million shares, or whatever you are buying. Recognize that you are buying a piece of a business, and pursue it with the same diligence and thought process and analysis that you would if you were going to buy the entire business.

Part 6 Interview

Source: Thank you Lincoln Minor

Monday, June 18, 2007

Mohnish Pabrai: Low Risk and High Uncertainty Method of Scoring Big with Harvest Natural Resources

Venezuela's National Assembly approved the corporate structure for Petrodelta, an oil company that Harvest Natural Resources Inc. has a 40% stake in, according to Venezuela's Official Gazette released Monday.

Harvest Natural Resources' stock jumped over 37% today!

Well done, Mr. Pabrai.

Full Article

Source: Thank you Lincoln Minor

Evolution at Work: Watching Bacteria Grow Drug Resistant

Every time the patient took his medicine, the antibiotics killed the weakest bacteria in his bloodstream. Any cell that had developed a protective mutation to defend itself against the drug survived, passing on its special trait to descendants. With every round of treatment, the cells refined their defenses through the trial and error of survival. "It means that during a normal course of treatment there is an evolutionary revolution going on in your body," said Stanford University biologist Stephen Plaumbi, author of "The Evolution Explosion: How Humans Cause Rapid Evolutionary Change."

"When you talk about the evolution of an arm or an eye or a species, you might be talking about millions of years. You can get bacteria resistant in a week," Dr. Mwangi said.

Full Article


To be a successful investor, one must "evolve" like the bacteria.

Charlie Munger said during BRK 2007 AGM, "I would argue that it started with a young man reading everything when he was 10 years old, becoming a learning machine. He started this long run early. Had he not been learning all this time, our record would be a mere shadow of what it is. And he’s actually improved since he passed the age at which most other people retire."

BRK 2007 AGM Notes



This year's auction opens Sunday, June 24th at 7:00 p.m. PDT and closes Friday, June 29 at 7:00 p.m. PDT.

Each year, Mr. Buffett generously offers one "power lunch" - and only one - as a charity item, and for the last eight years, the beneficiary has been the Glide Foundation, of which Buffett has remarked "is a remarkable organization that gives help and hope to those society has forgotten."

Located in the Tenderloin, one of San Francisco's harshest urban environments, Glide Foundation is an oasis that has served the poor and disenfranchised for over 40 years. From serving one million meals a year, to operating a medical clinic, to youth job training, to offering weekly spiritual celebrations at Glide Church, and more - Glide is many things to many people.

For information about the Buffett Lunch, call 415.674.6072 or email For information about Glide visit

Full information

Sunday, June 17, 2007

Mark Holowesko: 2005 Presentation at Richard Ivey School Of Business, The University of Western Ontario

In his native Bahamas, Mr. Holowesko is head of investments for Templeton Global, operating in offices where Sir John, now 87, greeted his junior partner on his first day in 1985 with a copy of the book “Extraordinary Popular Delusions and the Madness of Crowds”.

Audio Presentation

Source: MSN BRK Board

Bill Gates: Harvard Commencement

"Humanity's greatest advances are not in its discoveries -- but in how those discoveries are applied to reduce inequity," Mr. Gates declared. "Whether through democracy, strong public education, quality health care or broad economic opportunity -- reducing inequity is the highest human achievement."

"I left Harvard with no real awareness of the awful inequalities in the world -- the appalling disparities of health and wealth and opportunity that condemn millions of people to lives of poverty, disease and despair," he said.

In the analytical style for which he became famous in high-tech circles, Mr. Gates recommended a four-point plan for attacking a complex problem: determine a goal, find the "highest-leverage approach," discover the ideal technology for that approach, "and in the meantime, make the smartest application of the technology that you already have."

He continued: "The AIDS epidemic offers an example. The broad goal, of course, is to end the disease. The highest-leverage approach is prevention. The ideal technology would be a vaccine that gives lifetime immunity with a single dose. So governments, drug companies, and foundations fund vaccine research. But their work is likely to take more than a decade, so in the meantime, we have to work with what we have in hand -- and the best prevention approach we have now is getting people to avoid risky behavior" -- a goal that requires its own four-point plan.

Full Article

Maurice Greenberg: Post-AIG, Greenberg Drives On

Many people start second careers after they retire. Maurice R. "Hank" Greenberg is trying to build a second empire after a bitter departure from American International Group Inc.

In March 2005, at age 79, Mr. Greenberg stepped down as chief executive of AIG during a probe by then-New York Attorney General Eliot Spitzer. He soon dropped his chairman title, too, leaving the insurance powerhouse he built.

Now 82, Mr. Greenberg heads two firms once affiliated with AIG and named after its founder, Cornelius Vander Starr. The firms hold $20 billion in AIG stock. Under Mr. Greenberg's control, they have been raising cash by selling AIG shares. He wants Starr International Co. to be a player in the world of private money, and he is expanding the reach of the other firm, insurance brokerage C.V. Starr & Co.

The Wall Street Journal: Was there any point at which you thought about just stopping day-to-day business altogether?

Mr. Greenberg: Never crossed my mind.

WSJ: Why do you like working in foreign markets?

Mr. Greenberg: That's where the opportunities are. Russia is a very fast-growing economy. I grew up in the insurance business, which is a risk business. That's what it's all about. If you don't take risks, get out of the business.

Full Interview

Saturday, June 16, 2007

Peter Cundill: 2005 Presentation at Richard Ivey School Of Business, The University of Western Ontario

Mr. Cundill is the Principal of the Cundill Group. In 1977, Peter founded Peter Cundill & Associates Ltd. Throughout his career Peter has earned many distinctions including the Analysts’ Choice Career Achievement Award as the greatest mutual fund manager of all time.

Video Presentation

Source: MSN BRK Board

Francis Chou: 2006 Presentation at Richard Ivey School Of Business, The University of Western Ontario

Mr. Chou is the President of the Toronto-based Chou Associates Management Inc. Mr. Chou, a CFA, ended his formal education at Grade 12. While working as a technician for a phone company in 1981, he started an investment club that would later become the Associates fund. Mr. Chou has operated two of the country’s most successful funds, Chou Associates Fund and Chou RRSP fund, for the last 18 years. In 2005, the Canadian Investment Award named him the fund manager of the decade. His approach is to “find bargains and maintain discipline; if you can not find bargains stay in cash”.

Video Presentation

Source: MSN BRK Board

Mason Hawkins: 2005 Presentation at Richard Ivey School Of Business, The University of Western Ontario

Mr. Mason Hawkins is the Chairman and Chief Executive Officer of Southeast Asset Management. He has a BA from the University of Florida and an MBA from the University of Georgia. Since 1975, when Mason became the Chairman of Southeast Asset Management, he and his associates have made a habit of handily outperforming all relevant indices for pretty much whatever period you may want to choose.


Source: MSN BRK Board

UK Philanthropy: 2007 Sunday Times

Spinoffs: Diamonds in the Rough

The freed-up assets do well. A Lehman Brothers study found that since 1990 shares of the average spinoff division returned 18.2% above the S&P 500 during its first two years as a stand-alone company. But you can make even more money by buying shares of the parent company before it announces its plans for a spinoff. Lehman looked at total returns over a three-year period (the year before a spinoff was completed and the two years that followed) and found that the parents beat the S&P by 25 percentage points.

"Businesses are run better once they are out in the sunshine by themselves," says Joseph Cornell of Spin-Off Advisors. They also attract buyout offers: A spinoff is four times as likely to be bought out as a typical S&P company, according to Spin-Off Advisors.

Full Article

Tony Fernandes: Proletariat Capitalist

All this has helped AirAsia become one of the world's lowest-cost carriers, according to ABN Amro. Its cost per seat-mile is 3 cents, about half what it costs U.S. airline Southwest. Its average ticket price is $37. Its net profit could triple to $100 million on sales of $340 million for the fiscal year ending in June, according to Merrill Lynch

Now Fernandes plans to fund a grander ambition to make other services affordable. He is rolling out three budget businesses, to be owned and operated separately from AirAsia: hotel chain Tune Hotels, financial products Tune Money and a long-haul, low-cost version of AirAsia. "Everyone in Asia is chasing the top end. We are doing the opposite," says Fernandes. "We revolutionized air travel in Asia. Now we plan to revolutionize the hotel and financial service industries for the masses. I'm a 'proletariat capitalist.'"

Born in Malaysia, Fernandes spent most of his childhood in the U.K., where he lived near an airport. After graduating from the London School of Economics he worked for two years as an accountant for Richard Branson's Virgin Records, and it's pretty obvious where he gets some of his ideas. Even AirAsia's colors are the same as Virgin's red and white, though Fernandes doesn't like the comparison. "Branson will start a business, put managers in to run it and go start another one," he says, "I like building and running businesses. But we both like to have fun."

Full Article

Friday, June 15, 2007

Charles Brandes: March 28, 2006 Presentation at Richard Ivey School Of Business, The University of Western Ontario

Mr. Brandes is the founder and managing partner of Brandes Investment Partners LP, an investment advisory firm serving institutional and private clients, which he founded in 1974. Mr. Brandes is Chairman of the firm’s five-member Executive Committee where he shares responsibility for driving strategic decisions and monitoring implementation of the firm’s vision and objectives. He is also a member of the Investment Oversight Committee and a voting member of the Mid-Cap Investment Committee. He has a BA in economics from Bucknell University. A CFA charterholder for more than 25 years, Mr. Brandes had the tremendous fortune early in his career to meet and learn from Benjamin Graham, the farther of value investing. He was able to learn firsthand the techniques Ben Graham used to uncover bargain securities, and he has used these principles as the foundation to achieve consistently superior results for his clients. Mr. Brandes has had over 37 years of investment experience and has published three books on value investing.
Source: MSN BRK Board

The Children's Investment Fund: Reuters' investment

LONDON-BASED hedge fund The Children’s Investment Trust (TCI) has quietly bought a 1.4% stake in Reuters, the financial-information giant that is in the middle of an £8.7 billion takeover by Canadian rival Thomson.

The activist manager bought 3.4m shares in Reuters last week through contracts for difference (CFDs), taking its total stake to 17m shares, according to a regulatory filing. CFDs are financial instruments that give a buyer a stake in a company, but no voting rights.

Full Article

Thursday, June 14, 2007

IPO for Pzena Investment Management

Joel Greenblatt said that Richard Pzena is the smartest guy he has known!

Founded in late 1995, Pzena Investment Management, LLC is a premier value-oriented investment management firm with a record of investment excellence and exceptional client service. We have established a positive, team-oriented culture that enables us to attract and retain the best people. Over the past eleven years, we have built a diverse, global client base of respected and sophisticated investors. As of March 31, 2007, we managed approximately $28.5 billion across a range of value investing strategies on behalf of institutions, high net worth individuals, and select third-party distributed mutual funds.

Source: Lincoln Minor

Bill Miller: 25 Years of Legg Mason Value Trust

Legg Mason Value Trust is celebrating its 25th annaversary. Read commentaries from legendary fund manager Bill Miller, 89-year old co-manager Ernie Kiehne. Also the commentaries from strategiest Michael Mauboussin.


Tom Brown: First Marblehead, Not the Disaster Everyone Seems to Assume

Oh, and the company’s stock is lately trading at 9.7 times earnings for the year that ends in three weeks. That’s a 9.7 earnings multiple for a company that is expected to be growing at 31% annually for the next five years--without BofA and Chase. Also, don’t forget all the excess cash the company will be generating (both from earnings and as its residuals start to throw off cash) that can be used to pay dividends and buy back stock between now and 2012.

What was the problem, again?

Bill Ackman: Pershing Square to Oppose Ceridian Deal

Pershing Square, which bought its initial stake in Ceridian in December, has been pressuring Ceridian to spin off its Comdata credit card unit rather than seek a purchaser. Pershing Square is known for its shareholder activism—a tactic based on using shareholder power to influence or direct a company in a fashion conducive to shareholder value. Shareholder activism can involve trying to replace company management or pushing for a sale of part or all of the company.

In addition to Ceridian, New York-headquartered Pershing Square has of late battled McDonald’s and Wendy’s. Pershing Square succeeded in getting McDonald’s to buy back more than $1 billion in stock and pushing Wendy’s to spin off its Tim Horton’s doughnut chain. Pershing Square is now said to be raising $2 billion in order to buy a controlling stake in a big-name company.

Wednesday, June 13, 2007

Whitney Tilson: 21 Stocks to Make you Rich

Bruce Berkowitz Video

No matter whether the market is up or down, a mutual fund that always seems to have a leg up, with Bruce Berkowitz, Fairholme Fund portfolio manager and CNBC's Maria Bartiromo

Source: Shai Dardashti

Monday, June 11, 2007

My photos: Berkshire Hathaway AGM 2007

This was my first Berkshire Hathaway AGM and I have the privilege of meeting so many like-minded investors.

Thank you so much to Whitney Tilson so his generous sharings and teachings.

Also, I couldn't thank Fu Lu enough for his generous sharings and most importantly, without him, I couldn't have seen Warren Buffett's house. Unfortunately, it was so dark that I could hardly see his house in the photo. I must go back next year to get more pictures of his house!


Joel Greenblatt: Magic Formula Investing

Dear readers,

I hope most of you have read the Little Book That Beats the Market by Joel Greenblatt. If you haven't, please get a copy asap and read it a couple of times.

I have personally read it many times, and have come to conclusion that for most investors, Magic Formula Investing, which is only based on simple combination of earning yield and return on invested capital, is the best way to beat the market over the long run.

Thank you Joel Greenblatt for your generous sharing on MFI.

I truly agreed with Mike Price, who said that this book is one of the most important books ever written in the last 50 years.

Therefore, I would discontinue Lau Model Portfolio to track companies as investors are much much better off following the advice by Joel Greenblatt.


Sunday, June 10, 2007

Mark Sellers: Wide-moat companies with hidden assets

My investment firm focuses its research on two types of companies: those with wide economic moats, and those with hidden assets that are worth nearly as much as the value of the entire company.

Source: Lincoln Minor

Whitney Tilson: 2007 Berkshire Hathaway Annual Meeting Notes

Thank you Whitney Tilson for generous sharing

Tuesday, June 05, 2007

Francisco Parames: Pitching Tips to Buffett

Francisco Parames, Spain's best- performing fund manager for the last five years, got a hand- written note from Warren Buffett a few months ago seeking advice on investing in Spain. He was thrilled to be asked, even though he isn't enthusiastic about the country's economy.

Parames wrote Buffett three months ago to offer him a stock tip on a company outside Spain. Parames declined to disclose his reply, saying that Buffett may still act on it. In any event, Buffett, chairman of Berkshire Hathaway Inc., responded to the letter. Buffett confirmed through an assistant that he has corresponded with Parames.

``He actually answered me in a hand-written letter,'' says Parames. ``He thanked me for the idea and also asked me a favor, if I could find very good private companies in Spain big enough for him to buy. So that's what I'm doing now.''

Full Article

Source: Lincoln Minor

Monday, June 04, 2007

Tyco Triple Play

Tyco has a $65 billion market capitalization and long-term debt of $10.5 billion for a debt-to-equity ratio of 0.28. In the 12 months ended March 30, 2007, the company earned $3.7 billion on revenue of $42.4 billion, and generated operating cash flow of $6.3 billion. At about $33, shares of Tyco are up 21% in the past year, and trade for 16.8 times the consensus forecast for 2007 earnings per share of $1.96.

Before the end of June, Tyco will spin off the electronics and health care divisions, which will become independent, publicly traded companies. The spin-off is structured as a tax-free distribution and existing Tyco shareholders will hold 100% of the equity in the three companies.

Full Article

Source: Whitney Tilson

Glenn Greenberg Value Investor

Investors can learn an extraordinary amount from other successful value investors. Glenn Greenberg’s investment approach is not covered enough. His firm, Chieftain Capital, has produced returns of 22.5% from 1984 to 2004. His process is one that resonates with me and that I have tried to emulate in my investment philosophy.

Full Article

Saturday, June 02, 2007

Whitney Tilson: Breaking down Wal-Mart's wall

"What Wal-Mart needs to do is follow the game plan that McDonald's has pursued that's taken McDonald's stock from $30 to $50," Tilson said.

Tilson's playbook for Wal-Mart includes using capital more effectively, improving customers' shopping experience, burnishing its corporate image, unloading its Sam's Club unit and regrouping international operations.

"McDonald's was astonishing in terms of how a company of that size turned out," said Tilson, who also staked a sizeable fund position to the global restaurant chain.

"We know the program to fix Wal-Mart," Tilson added. "We've seen it work and we've made a fortune off it with McDonald's."

Full Article

Richard Pzena: Lear Corporation Presentation

We are writing to express our alarm about the possible sale of Lear Corporation to Carl Icahn’s American Real Estate Partners LP at a price which we believe to be far below the fair value of the company. As you know, we are one of Lear’s largest shareholders and we have long believed in Lear’s business and its plan for recovery. Our view is that the company’s earnings are well below their normal level and that Lear is being valued by the market as if there is little chance of an earnings recovery. Our analysis suggests that earnings are likely to recover to more than $4.00 per share over the next few years from consensus analyst estimates of $2.00 per share for 2007. Consequently, we believe the company’s value to be closer to $60 per share.

Full Article

Source: Lincoln Minor

Moody: James Chanos Betting Against Warren Buffett

James Chanos, president of Kynikos Associates Ltd., is bearish on Moody's Corp., the bond rating company whose biggest shareholder is Warren Buffett.

Kynikos sold Moody's stock short, betting it will fall, Chanos said today. He said Moody's may face lawsuits for keeping its ratings of loans to the riskiest home borrowers too high.

``That's a ticking time-bomb,'' Chanos, who oversees $4 billion at Kynikos, said in an interview in New York.

Buffett's Berkshire Hathaway Inc. owns 48 million Moody's shares, valued at $3.39 billion, giving it a more than 17 percent stake. Berkshire spent $499 million to buy those shares, according to the company's annual reports. Given the potential problems ahead for Moody's, maintaining that stake may be ill- advised, according to Chanos.

``Warren Buffett makes mistakes, too,'' Chanos said.

Full Article

Source: Lincoln Minor

Joel Greenblatt Video: 2006 Columbia Reunion

Joel Greenblatt spoke about magic formula investing and Gotham Capital's method of investing .

Source: Ray Lin

Mark Sellers: Value proposition

Sellers likes big companies with few competitors -- "wide-moat" businesses -- buying when they're out of favor and shares are trading at levels he considers a bargain. He also invests in small companies with hidden assets that other investors haven't factored into the price -- stakes he calls "small-cap asset plays."

The hedge fund is extremely concentrated, holding between five and 15 positions, and typically closer to five. Nowadays, just six stocks make up 90% of the portfolio, he says, with one position accounting for half of the fund's assets.
Source: Lincoln Minor