Monday, July 30, 2007

Warren Buffett: Making Money the Buffett Way

When an investor amasses $52 billion over half a century, humble stock pickers take note. When he's Warren Buffett, the homespun "Oracle of Omaha," it not only pays to heed his thinking, but it's fun.

Mohnish Pabrai: Morningstar Interview

Michael Mauboussin: What You See and What You Get

Legg Mason's Chief Strategiest Michael J. Mauboussin discussses why cashflow is more important than earnings: "Cash is a fact, profit is an opinion."

Thursday, July 26, 2007

Why Logic Often Takes A Backseat

The National Hockey League and its players wrangle over a salary cap. The impasse causes the season to be canceled. Everybody loses. What went wrong?

According to the new science of neuroeconomics, the explanation might lie inside the brains of the negotiators. Not in the prefrontal cortex, where people rationally weigh pros and cons, but deep inside, where powerful emotions arise. Brain scans show that when people feel they're being treated unfairly, a small area called the anterior insula lights up, engendering the same disgust that people get from, say, smelling a skunk. That overwhelms the deliberations of the prefrontal cortex. With primitive brain functions so powerful, it's no wonder that economic transactions often go awry. "In some ways, modern economic life for humans is like a monkey driving a car," says Colin F. Camerer, an economist at California Institute of Technology.

Full Article

Source: Mayank Sharma

Bill Ackman: Pershing Square against Ceridian Board

In an unusual step, Pershing Square said it plans to replace all seven Ceridian board members at the annual meeting scheduled for September 12. Activist hedge fund investors typically try to win one or two board seats to gain influence.

Pershing Square, Ceridian's largest stakeholder with 14.9 percent, said management is ready to sell itself too cheaply for $36 a share to buyout company Thomas H. Lee (THL.UL) and Fidelity National Financial Inc. because that deal will reward executives and board members with a $27 million payout.

Full Article

Wednesday, July 25, 2007

Whitney Tilson: Human qualities in managerment matter for long-term success

Assessing management quality is clearly one of the most important aspects of an investment decision. To a large extent, equity investors put their hard-earned capital into the hands of management and count on it being employed skilfully and honestly. When that doesn’t happen, losses typically follow.

“We tend to be more about the jockey than the horse. It’s important to understand how people are going to behave under stress. You don’t have to predict the future if you know the company has the assets and management to do well in difficult times. That’s when the seeds for exceptional performance are planted.” Bruce Berkowitz, Fairholme Capital

“I’m at a stage in my career where I’d say human behaviour is the most important determinant of a business’s long-term success. I don’t care how smart an analyst you are; you can’t really know what’s going on inside a business. We want to invest not only in highly capable managers but also in those with clear records of integrity and acting in shareholders’ best interests. I’ve found that when a manager puts his hands in shareholders’ pockets once, he’s much more likely to do so again.” Charles Akre, Akre Capital

Friday, July 20, 2007

Bill Miller: What's luck got to do with it?

Question: Right. Who's Puggy Pearson, and why should anybody care?

Answer: Well, the late Puggy Pearson was a professional gambler, lived in Las Vegas, had a 5th grade education, but nonetheless became legendary in poker, and really in other gambling circles, because of his undeniable skill at a game that involves a high degree of chance.

And he won the World Series of Poker, I think in 1973. He also told me he actually won it one other time, but they awarded it to somebody else, because they didn't want him to win it twice. (Laughter) Back in the early years.

Question: In the old days.

Answer: I didn't know whether to believe him or not, but that's what he said. But in any case, he summed up the skills required for successful poker in a pithy way. And those skills, in my view, are also the skills necessary for successful investment.

Somebody once asked Bill Ruane [the late manager of the legendary Sequoia Fund], and I happened to be in the audience that day, "How do you learn about investing?"

And Bill said, "Well, if you read Ben Graham's Security Analysis and The Intelligent Investor you'll be well versed in it. And then if you read Warren Buffett's shareholder letters and understand them too, you'll know everything there is to know about investing. And you will become a successful investor."

And I think Bill was right, but it takes a lot of time to do that. Puggy Pearson made it a little pithier when he said, his line was, "There ain't only three things to gambling. Knowing the 60/40 end of a proposition, money management, and knowing yourself."

And if you translate that into investing, knowing the 60/40 end of a proposition means knowing when you have some competitive advantage over somebody else. And you don't bet, you don't gamble, you don't invest, unless you have some competitive advantage. I'll come back to what that means in a second.

Full Article

Robert Shiller: Mr. Worst-case scenario

Robert Shiller is worried about your home's value, and that's not good. A finance and economics professor at Yale, Shiller proved he could see a crash coming with his book "Irrational Exuberance," which forecast the end of the 1990s stock bubble and hit bookstores in March 2000 - almost to the day the Nasdaq started to collapse.

Today, Shiller believes homes are roughly as overvalued as stocks were then and, once again, he's worth listening to.

Question: So how rich can you get on real estate?

Answer: From 1890 through 1990, the return on residential real estate was just about zero after inflation.

Question: Excuse me? That's all? Hasn't it been higher lately?

Answer: Since 1987 it's been 6 percent [or about 3 percent a year after inflation].

Full Article

John Rogers: Buy. Hold. Profit. Give Back.

John W. Rogers Jr. is a patient man. The head of Ariel Capital Management in Chicago and manager of the flagship Ariel Fund, Rogers typically holds a stock for four or five years, an eternity compared with the 14-month holding period of the average mutual fund.

In the past decade his fund has earned nearly 14 percent a year, beating the market by more than five percentage points annually and outperforming three-quarters of all similar funds.

Rogers has pulled off this feat while investing much of his own time in two problems that many other leaders have long since given up on: improving inner-city schools and encouraging African Americans to save and invest more.

Rogers donates a hefty share of his firm's profits, helps design teaching curriculums, meets with children and educators, and brings students along to board meetings. Here too, patience is paying off: 80 percent of the eighth-graders who graduate from Ariel Community Academy have been accepted to elite high schools in the Chicago area.

Question: You manage $16 billion without e-mail?

Answer: I don't even have a computer in my office. If I had e-mail, I'd never take the time to read research or absorb information. I want to think about what I'm doing, and that takes time.

Full Article

Jack Bogle: Still scolding after all these years

When Jack Bogle, founder of the Vanguard group of mutual funds, says that he has just reached his 11th birthday, he is only partly kidding.

In 1996, ravaged by at least seven heart attacks and a failed pacemaker, Bogle received a heart transplant; without it he would have died.

Today Bogle has the energy of someone half his 77 years. He has just finished his sixth book, "The Little Book of Common Sense Investing," serves as chairman of the National Constitution Center in Philadelphia, still plays a slashing game of squash and continues to blast mutual funds and corporations for their greed and conflicts of interest.

Meanwhile, the company he founded in 1974 has become a giant; Vanguard manages more than $1.1 trillion for over 22 million people. Money Magazine's Jason Zweig recently chatted with Bogle about what makes him tick - and what he thinks really matters.

Question How did you cope with decades of living on borrowed time?

Answer I didn't think about it. I just got on with what needed to be done. Even as a little boy, I had determination and focus. If there was a job to be done, then that is what I would think about, going through life with blinders on. You can look ahead, but you have no peripheral vision.

That focus is an unbelievable asset when you're confronted with a life-threatening disease, and it was also terrific for a kid who was determined to succeed in business.

Full Article

Charles Schwab: We talked to Chuck

You already know Charles Schwab. But you might not know his story -which is, in large part, the story of the financial revolution that has rolled through American life since 1972.

Yet there's more to Schwab than the tale of a broker who rode a boom. So dyslexic that he passed college English only by reading classics like Moby Dick in comic-book editions, Schwab bounced from one setback to another until his company finally took off in the late 1970s.

Along the way, he acquired some strong views on persistence, luck, money and life. In the first of Money Magazine's 35th-anniversary interviews, the 69-year-old icon sat down with senior writer Jason Zweig.

Q. What advice would you give to someone who wants to start a business that could someday be as big as yours?

A. You know, I would never start there. You've got to start with your gut, with something you are really passionate about, for a good reason.

You won't get there by sitting in a closet and thinking, "Boy, I know the world must want this." You have to get some real-world experience that tells you what people want.

Full Article

Ralph Wanger: Winning the home run hitter's game

Investing is not only about buying the right assets at the right time. It's also about having rules that keep you from doing dumb things at the wrong time.

Of all the great fund managers who have appeared in Money Magazine over the past decades, no one proved that point better (or more entertainingly) than Ralph Wanger, the wisecracking, philosophizing manager of the Acorn Fund.

Wanger set out in 1970 to invest in small companies; through 2003 he did that and only that, with remarkable success. While the S&P 500 index climbed 12.1 percent a year, Acorn racked up an annualized 16.3 percent, one of the best records ever.

Wanger, 72 and retired, recently met with Money's Jason Zweig. As usual, Wanger asked nearly as many questions as he answered - and in the process found time to explain why life is like laundry, why focus matters and what Babe Ruth teaches us about stock picking.

Q. Why do you think you turned out to be a good investor?

A. At Acorn we had a clear philosophy - to be long-term holders of smaller companies with financial strength, entrepreneurial managers and understandable businesses - and we stuck to it.

Sticking to it is key. Richard J. Daley's one ambition was to become mayor of Chicago. Not President, not ambassador to the U.N., just mayor of Chicago. And since he already was mayor of Chicago, his life was much simpler. I thought that was worth emulating.

Full Article

Thursday, July 19, 2007

Buffett of Belgium: Albert Frere Maneuver in Bertelsmann Deal Gets Henry Kravis Nod

Albert Frere had a good excuse for his limp the day in 1988 he met French executive Jean Peyrelevade for the first time. A wounded boar had attacked him during a weekend hunting expedition in the Ardennes forest of southern Belgium, leaving a gash in Frere's leg that took 25 stitches to close. ``He was on his back kicking it in the muzzle,'' says Peyrelevade, recounting Frere's explanation for the leg wound.

Frere, now 81, is still hunting both boar and European corporations. In more than half a century, he has turned a family business selling nails and chains into an empire with assets valued at more than 24 billion euros ($32 billion). In the past year, he and his partners earned more than 2 billion euros by selling their stake in Bertelsmann AG, Europe's largest media company. Frere's holding companies are now poised to profit from the pending merger of French utility Suez SA, in which Frere and his partners are the largest shareholders, and government-controlled Gaz de France SA.

As the global takeover boom sets records -- volume this year was $2.4 trillion through June 20 -- Frere, one of Europe's original buyout artists, is grabbing his share. Frere last year bought big stakes in French building materials maker Lafarge SA and liquor purveyor Pernod Ricard SA. The Belgian's family fortune is about 3 billion euros, according to data compiled by Bloomberg.

....``He's investing for the long term,'' says Tom Simonts, an analyst at KBC Securities in Brussels who tracks three of Frere's publicly traded holding companies. ``He doesn't really care about short-term fluctuations. He's more or less the Warren Buffett of Belgium.''

Full Article

Source: Whitney Tilson

Monday, July 16, 2007

Investing's Smartest Players

What separates the billionaire investors from the millionaires? What do the world's investing geniuses have that the rest of us don't? Besides good luck and a pile of money, that is.

When we came up with a list of the biggest brains in investing, we noticed how much each of them has influenced the way the world invests. And we noticed one other trait: Each saw opportunity well before the pack. John Templeton pushed international investing way before it was cool. Warren Buffett was buying up undervalued companies long before his brand of value investing became popular. David Shaw used high technology and smart PhDs to make money on countless split-second trades, now a common hedge fund strategy.

Many of the world's top investors got to the top by being first. They didn't follow in the footsteps of others or copy wholesale the investing styles of others. At the beginning of their careers, "they set themselves apart from the crowd," says Walter Gerasimowicz, chairman and CEO of Meditron Asset Management.

Full Article

Bill Ackman: Amassing Stake in Target

Hedge fund Pershing Square Capital confirmed that it has taken a large stake in Target, and it signaled that it may make waves at the discount retailer.

Pershing, run by activist investor Bill Ackman, said in a Securities and Exchange Commission filing Monday that it has acquired about 81.8 million shares of Target, equal to a 9.6% stake.

Full Article

Saturday, July 14, 2007

Robert Rodriguez: Absence of Fear; CFA Society of Chicago Speech, June 28, 2007

Good afternoon and thank you for this privilege to speak with you today. I’m CEO of First Pacific Advisors, an $11-billion investment management company located in Los Angeles. I’ve been in the investment business for 36 years and I’ve managed FPA Capital and FPA New Income funds for 23 years. I’ve deployed a classic absolute value equity investment style along with a contrarian investment philosophy. This methodology also applies to my fixed income management process as well. FPA Capital Fund has a very respectable performance track record for 23 years, with an average portfolio turnover ratio of less than 20%. FPA New Income is a high-quality intermediate investment-grade bond fund that can and does invest in high-yield securities. The fund has not had a down year in 30 years and has had positive total returns in every bond bear market.

My talk today, Absence of Fear, is a follow up and expansion of the Special Commentary section that appeared in my March 31, 2007 shareholder reports. It will focus on the concept of RISK since there appears to be little concern about risk in the financial markets currently. My goal is not to scare or sensationalize, but to get investors to consider various risks and ask the basic question, “Am I being sufficiently compensated for these apparent risks?”

Full Article

Source: Lincoln Minor

Friday, July 13, 2007

Mohnish Pabrai: 10 Questions & The Answers

How does your investment philosophy differ from Warren Buffett’s and Charlie Munger’s and why? As a follower of Warren Buffett you insist in buying into companies with a "moat"; nevertheless the kind of companies you tend to invest in do not appear to have wide moats as generally described by Warren Buffett and reflected in his holdings like Coca Cola, Gillette or American Express. Could you please expand on your definition of a moat and contrast it with Warren's definition? Warren Buffett stated that his ideal holding period is 'forever,' and that 20 investments in a lifetime are more than enough for any individual investor. Do you agree with these statements, or should one be more flexible in their investing strategy?

There are many different approaches that Buffett has applied over his long career. Even today, Buffett’s investing approach when investing for his own account differs significantly from his approach when allocating capital for Berkshire . Berkshire is a very inefficient vehicle for investing in stocks. Gains are taxed at 35%. In addition, shareholders are taxed when they sell Berkshire stock. Plus Berkshire is drowning in cash. With these realities, the best approach for Berkshire is to buy and hold stocks for a long long time.

If you’re a buy and hold forever investor, then having a very durable moat becomes extremely critical. Berkshire needs to invest in businesses that have very high returns on equity (Coke, Moody’s American Express), the ability to redeploy earnings at high rates of return and it needs to buy into these businesses below intrinsic value so that the annualized return is atleast the returns the businesses generate on their equity. Very very few businesses generate ROE exceeding 15-20% annually and have the ability to redeploy earnings at greater than 15-20% ROE. Thus it is unlikely Berkshire ’s stock portfolio can generate long term returns exceeding 15%. Their float helps then get higher effective returns. Buffett once said that float added about 7% to Berkshire annualized returns.

Full Article

Black Swan: Nintendo Wii could top record-holding PS2

The success of Nintendo Wii is a "Black Swan" from my own perspective. I didn't expect that Wii could be so successful, out-selling both PS3 and XBox 360. Maybe some of you have expected that, but humbly, I have to admit that I didn't.


Learning point:

Technology companies are subjected to extreme and fast changes and "Black Swan" events are happening all the time. However, they are very difficult to predict and the extent of the impact would be massive.

Therefore, it would be extremely but not impossible to value a fast-changing technology companies i.e. Nintendo, Sony, etc.

Warren Buffett likes stable and easily predictable companies i.e. Coca Cola as he could project 10 to 20 years out. Other great investors like Glenn Greenberg, Tom Russo, Li Lu, Bill Nygren, Whitney Tilson, Marty Whitman and others are among members of this camp.

For ordinary investors, it is better to stick to "one-foot hurdle" than "10-foot-hurdle". Great investors like Bill Miller and Eddie Lampert, who are successful in dealing with "10-foot-hurdle" problems, are rare.


Sales of Nintendo's quirky Wii video game machine could top the legendary PlayStation 2, making it the biggest hit in the industry's history, Nintendo President Satoru Iwata said on Thursday.

Nintendo Co. Ltd. sped past Sony Corp. in market capitalization last month to become one of the 10 most valuable companies in Japan.

Full Article

Synergy: Victoria & David Beckham's Success

Victoria and David Beckham are extremely successful (fame, fortune and likeability) even when compared to other superstars.


The important learning point for us is to appreciate the power of synergy. Victoria and David are successful by their own right, but their effects are amplified when combined, especially with their strong passion for success.


Congratulations to you both! And, thank you for being a great example of the power of synergy.

All the best,



Article about Beckhams arriving in LA: Full Article

Thursday, July 12, 2007

Black Swan: Attack of the mutant rice

Black Swan is a large-impact, hard-to-predict, and rare event beyond the realm of normal expectations. Understanding Black Swan event e.g. the attack of mutant rice is crucial for the becoming a better investor.

America's rice farmers didn't want to grow a genetically engineered crop. Their customers in Europe did not want to buy it. So how did it end up in our food?.......

The LSU rice-breeding station is run by a man named Steve Linscombe, one of the most admired men in the U.S. rice industry. Linscombe, who is 52, has devoted his entire career to developing rice-seed varieties that improve yields and resist pests or herbicides. "He has put millions of dollars into the pockets of rice farmers," says Darryl Little, the Arkansas regulator. "He's a premier breeder."

Because Linscombe understood the risks of mixing transgenic rice seed with conventional varieties, he took extra precautions when working with Liberty Link. To prevent pollen or stray kernels of rice from migrating, USDA rules recommend at least a ten-foot buffer zone around transgenic field tests. LSU's contract with Bayer called for a 30-foot isolation zone. Linscombe created buffer zones of at least 120 feet. Until now, no one thought rice pollen could travel that far.

"I did as much isolation as I possibly could," Linscombe said. So what happened? "I have been dealing with this for nine months, and I still can't give you a definitive answer," he said. Wilson, the University of Arkansas rice specialist, says, "I think we've learned some things about rice, biologically, that we didn't know before."

Full Article

Fortune Global 500: The world's largest corporations

Rising oil prices and a global glut of mergers and acquisitions meant another year of record profits for old-economy companies, putting them at the top of Fortune's annual list.

Just seven years ago Fortune was predicting that high-flying tech companies would soon displace the oil and auto giants that had been hogging the limelight at the top of the Global 500.

Well, look who's still riding high: Six of the top ten companies on this year's list are pumping petroleum, and three more are making vehicles that burn it. True, Wal-Mart regained its title as the world's largest company, with $351.1 billion in revenue.

Full Article

Wednesday, July 11, 2007

Tom Murcko: Interview with Value Investor Mohnish Pabrai

InvestorGuide: You have compared Pabrai Funds to the original Buffett parternships, and there are obvious similarities: investing only in companies within your circle of competence that have solid management and a competitive moat; knowing the intrinsic value now and having a confident estimate of it over the next few years, and being confident that both of these numbers are at least double the current price; and placing a very small number of very large bets where there is minimal downside risk. Are there any ways in which your approach differs from that of the early Buffett partnerships (or Benjamin Graham's approach), either because you have found ways to improve upon that strategy or because the investing world has changed since then?

Mohnish Pabrai: The similarity between Pabrai Funds and the Buffett Partnerships that I refer to is related to the structure of the partnerships. I copied Mr. Buffett's structure as much as I could since it made so much sense. The fact that it created a very enduring and deep moat wasn't bad either. These structural similarities are the fees (no management fees and 1/4 of the returns over 6% annually with high water marks), the investor base (initially mostly close friends and virtually no institutional participation), minimal discussion of portfolio holdings, annual redemptions and the promotion of looking at long term results etc. Of course, there is similarity in investment style, but as Charlie Munger says, "All intelligent investing is value investing."

InvestorGuide: Another possible difference between your style and Buffett's relates to the importance of moats. Your book does emphasize investing in companies that have strategic advantages which will enable them to achieve long-term profitability in the face of competition. But are moats less important if you're only expecting to hold a position for a couple years? Can you see the future clearly enough that you can identify a company whose moat may be under attack in 5 or 10 years, but be confident that that "Mr. Market" will not perceive that threat within the next few years? And how much do moats matter when you're investing in special situations? Would you pass on a special situation if it met all the other criteria on your checklist but didn't have a moat?

Pabrai: Moats are critically important. They are usually critical to the ability to generate future cash flows. Even if one invests with a time horizon of 2-3 years, the moat is quite important. The value of the business after 2-3 years is a function of the future cash it is expected to generate beyond that point. All I'm trying to do is buy a business for 1/2 (or less) than its intrinsic value 2-3 years out. In some cases intrinsic value grows dramatically over time. That's ideal. But even if intrinsic value does not change much over time, if you buy at 50 cents and sell at 90 cents in 2-3 years, the return on invested capital is very acceptable.

Full Article

Source: Tom Murcko. Thank you for sharing.

Charlie Munger: USC Business School 1994 Speech: A Lesson on Elementary, Worldly Wisdom As It Relates To Investment Management & Business

I'm going to play a minor trick on you today - because the subject of my talk is the art of stock picking as a subdivision of the art of worldly wisdom. That enables me to start talking about worldly wisdom - a much broader topic that interests me because I think all too little of it is delivered by modern educational systems, at least in an effective way.

And therefore, the talk is sort of along the lines that some behaviorist psychologists call Grandma's rule after the wisdom of Grandma when she said that you have to eat the carrots before you get the dessert.

The carrot part of this talk is about the general subject of worldly wisdom which is a pretty good way to start. After all, the theory of modern education is that you need a general education before you specialize. And I think to some extent, before you're going to be a great stock picker, you need some general education.

So, emphasizing what I sometimes waggishly call remedial worldly wisdom, I'm going to start by waltzing you through a few basic notions.

What is elementary, worldly wisdom? Well, the first rule is that you can't really know anything if you just remember isolated facts and try and bang 'em back. If the facts don't hang together on a latticework of theory, you don't have them in a usable form.

You've got to have models in your head. And you've got to array your experience - both vicarious and direct - on this latticework of models. You may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and in life. You've got to hang experience on a latticework of models in your head.

Full Article

Tuesday, July 10, 2007

Weitz Funds: Highlights from the 2007 Shareholder Information Meeting

Lonnie Rush: Benjamin Graham’s Lost Magic Formula in 1976?

While reading these interviews he did between age 79 and 82, I got the feeling that Graham was enthusiastic as he described a new mechanical formula he had nearly finished testing. He believed his formula was the simplest way for both seasoned analysts and layman investors to find undervalued stocks and outperform the Dow (the performance metric used during his time). After 60 years of analyzing financial statements and managements, Graham said this about projecting earnings, evaluating market share, and analyzing individual companies:

“Those factors are significant in theory, but they turn out to be of little practical use in deciding what price to pay for particular stocks or when to sell them. My investigations have convinced me you can predetermine these logical “buy” and “sell” levels for a widely diversified portfolio without getting involved in weighing the fundamental factors affecting the prospects of specific companies or industries.”

Graham further recommended building a portfolio of 30 diversified stocks meeting such criteria. His study employed strict sale rules that required selling the stocks after a 50% gain or after a two year holding period, whichever came first. Graham noted that in the market downturn of 1973-1974 investors using the formula would have shown paper losses but would have been rewarded soon thereafter for sticking with the formula. Thus, to allow time for the program to work he recommended a minimum of five years. In other words, patience was a requirement for success.

Graham back tested the period from 1926-1976 with his refined formula and concluded that such a program would have earned 15% or more, not including dividends, and would have beaten the Dow by twice as much. He was so excited by the study results that he contemplated including them in the 5 th edition of Security Analysis.

Full Article

Monday, July 09, 2007

Mohnish Pabrai: Rs 2.6cr for lunch is my guru dakshina

Q: I'm thinking you might have paid about $10,000 per minute for this lunch if it lasts an hour...

A: The lunch typically lasts three hours. It is really a bargain basement price for the honour. I have gained so much from Mr Buffett that I consider this a small guru dakshina. I owe him a debt. I have learnt much from him, but I have never given back to him.

Q: Have you ever met Mr Buffett before? You must have attended the annual Berkshire fete in Omaha?

A: I think I've been there every year for the past ten years. I've met him briefly at investor meets, but I have never been introduced to him.

Q: As a self-confessed Buffett buff, you have studied him so closely. What remains to be asked?

A: Just to be with him, to talk about life, about his perspectives, should be good enough. I also want to learn from him about philanthropy and apply some of his principles to my own Dakshana Foundation. I consider this as the first grant my foundation is making (the Buffett lunch bid money goes to the Glide Foundation which helps the poor and homeless in San Francisco)

Full Article

Source: Lincoln Minor

Hard work is ticket to the rich list of self-made Britons

Many on the list rose from being engineers, mechanics and builders to become successful entrepreneurs. Of those who acquired wealth from relatively humble backgrounds, the majority took vocational training, such as workplace apprenticeships, rather than university degrees.

The study also shows that self-made millionaires from the North tend to come from industrial backgrounds while those in the South made their money from the City or property.

Full Article

Roger Federer: Five in a row for Federer

Many congrats to Roger Federer for winning the 5th Wimbledon Championship.

"Each one is special. To play a champion like Rafa in the final it means even more and equalling Bjorn as well," the Swiss said.

"He (Nadal) is a fantastic player and is going to be around for so much longer so I am happy with every one I get now before he takes them all."

"It was such a close match, I told Rafa at the net 'you deserved it as well' but I was the lucky one today," added Federer, who had slipped back into his suit for the presentation ceremony.

Full Article

Saturday, July 07, 2007

Susan Decker: Can She Turn Yahoo Into, Well, Google?

She was in town to join the board of Mr. Buffett’s holding company, Berkshire Hathaway, and had come to the legendary investor’s attention through recommendations from Charles Munger, his longtime associate; Donald E. Graham, the chairman of the Washington Post Company; and David S. Gottesman, a fellow Berkshire board member.

“She passed some pretty tough tests when she got A-pluses from all three,” Mr. Buffett recalls. He describes Ms. Decker as a “home run” for a Berkshire board seat, because of her independence, interest in the company, dedication to shareholders and business savvy. “Sue is 100 percent on all four of those,” Mr. Buffett says, making him just one of Ms. Decker’s many fans in corporate boardrooms.

In her ascent from financial analyst to head of research at a major Wall Street brokerage firm to chief financial officer and now president of Yahoo, Ms. Decker’s smarts and acumen have drawn praise from other well-known business leaders — including Steven P. Jobs and Craig R. Barrett, who named her to the boards of Pixar Animation Studios and Intel, respectively, and Hamilton E. James, president of the Blackstone Group.

Full Article

Source: Lincoln Minor

Tom Russo: Value Investor Conference Transcript May 2006

Mr. Russo’s investment approach is focused on asmall number of industries in which companieshave historically proven to be able to generatesustainable amounts of net free cash flow. (Theseindustries typically have included food,beverage, tobacco and broadcasting/media.) Thisfairly narrow approach reflects his training anddiscipline at the Sequoia Fund in New York,where he worked from 1984 to 1988. Mr. Russotries to limit risk by not paying too large amultiple of a company’s net free cash flow inlight of prevailing interest rates. He attempts tobroaden this otherwise narrow universe byincluding companies with smaller marketcapitalizations and companies in similarindustries based abroad.

Full Transcript

Robert Miles: Value Investor Conference

Australia/New Zealand (Sydney) - August 4, 2007
Europe (Bonn, Germany) - Sept 5 & 6, 2007
Africa - TBA
Asia - TBA
North America (Los Angeles) - May 5 & 6, 2008*

Full Detail

Friday, July 06, 2007

Prof Sanjay Bakshi: Capital Idea Online Interview May 2007

CIO: Thank you for giving us the time to talk to you.

Prof. Sanjay Bakshi: It's a pleasure to meet you here in my office. We are meeting after more than four years and I remember very fondly what happened on the previous occasion! Indeed I still get fan mails from people about the talk I delivered at your invitation at the Oxford Bookstore in 2002. I don't talk to the media. I talk to my students in the classroom at MDI (six months in a year) and I frequently talk to some value-oriented friends. You are the only one whom I have met from the media in the last four years!

CIO: Many thanks.

Prof. Sanjay Bakshi: So it's a pleasure to have you here and I just want to open up the presentation, which I had given to the invitees at Oxford Bookstore in 2002. This presentation was titled, "Value Investing - a Conservative Way to Invest." I had started by describing what is value investing and why the focus of conservative investor is first one not losing money than on making it (downside risk more important than upside potential) and then I gone on to the better part of the presentation, which essentially dealt with three value investing themes. These were: (1) Cash bargains; (2) Debt-capacity bargains; (3) Debt pay-down.

I only focused on these three themes in that presentation and gave a number of examples. Some were past examples whereas some others were current examples at the time of that talk. With the benefit of hindsight, I can now tell you that things have worked out pretty well for me professionally using those three themes.

But knowledge is incremental, especially in the profession of security analysis, and experience is a good teacher – so I have evolved over the years and there have been many changes in the way I think about investing. In my early years I was very influenced by Mr. Buffett. But over the last few years, I have become more influenced by Mr. Graham. Hopefully, today we will interpret Graham’s bible for this profession, the Security Analysis and of course the Intelligent Investor.

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Prof Sanjay Bakshi: My Recent Investment Operations

Housing Market: "Dream" home out of reach of majority

Just five percent of the population are living in their "dream" home, with most people having to settle for less, a survey shows.

People living in Wales or East Anglia are the most likely to have secured their dream property, with 8 percent scoring their home as a perfect 10.

Conversely, just 3 percent of Londoners are happy to give their home top marks.

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Anthony Bolton: Bloomberg Interview

Interview with Bolton on hedge funds, private equity, and trends in institutional money management.

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Source: MSN BRK Board

Thursday, July 05, 2007

Carlos Slim: Mexican tycoon overtakes Bill Gates as world's richest man

Microsoft founder Bill Gates looks to have lost his title as the world's richest man, toppled from top spot by the Mexican telecoms tycoon Carlos Slim.

Now, however, Mr Garcia says there is no doubt that the little-known Mexican has finally captured the coveted top slot, following a surge in America Movil's shares over the second quarter. This is estimated to have boosted his fortune to an estimated $67.8bn (£33.6bn) - equivalent to 8% of Mexico's gross domestic product - compared with $59.2bn for the Microsoft mogul, putting him in the lead by a decisive $8.6bn.

"When I put Slim ahead three months ago Forbes bumped him up to second place (in world rankings) a few days later," Mr Garcia told Reuters.

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Wednesday, July 04, 2007

Martin Whitman: How Small Investors Avoid Investment Risks

At the age of 82, legendary investor Martin Whitman is still going strong; his mind is still as sharp as ever. Since founded Third Avenue Value Fund (TAVF) at the age of 65, his fund has returned more than 16% a year over the past 17 years.

What attributes does Martin Whitman look in an investment? “Safe and Cheap!” To understand how he invests, we strongly recommend you to read his quarter shareholder letters. Reading his letter may not be as relaxed as reading Warren Buffett letters, but you will learn just as much, if not more.

These are a summary of what he looks in an investment.

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Warren Buffett: How Buffett Bounces Back

Thousands have studied the success of Warren Buffett, the chairman and CEO of Berkshire Hathaway. And for good reason: The value of Berkshire stock increased 361,156% from 1964 to 2006.

But the country's most famous investor has made some infamous mistakes, too. Buffett's blunders offer their own lessons to investors trying to emulate the "Sage of Omaha."

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Tuesday, July 03, 2007

Rick Konrad: The Dangers of Homogeneous Thinking

One of my favorite aphorisms is, “When everybody is thinking the same, nobody is really thinking!”

Sometimes I think value investors fall into this kind of a thinking trap, universally accepting a single-minded approach to a stock, an industry, or a market without fully thinking it through. For example, in the early 1980’s, I fully embraced a low P/E approach to investing after becoming a disciple of David Dreman’s approach described in his original book on Contrarian Investing. I regard low P/E approaches as being generally sound in helping to keep you out of trouble. Unfortunately, when used too rigorously, such approaches also keep you out of a lot of higher growth, high ROIC kinds of businesses as well. I can recall at the time of Buffett’s initial investments in Coca Cola (KO) that many low P/E “value” investors thought that Buffett was losing his discipline in paying what seemed like a riotously expensive 13 times for this at the time considered relatively dull business, especially when so many companies at the time were selling at 8 or 9 times earnings.

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Mohnish Pabrai: Summary of Dhandho Investor Book by Bjorn Kijl

Thank you Bjorn for this wonderful sharing.

Mohnish Pabrai on CNBC

The winner of this year's Buffett charity lunch auction on eBay, with Mohnish Pabrai, Pabrai Funds managing partner and CNBC's

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Source: Lincoln Minor

Monday, July 02, 2007

Chris Hohn: TCI chief donates £230m to his charity

Chris Hohn gave £230m ($460m) to his charitable foundation last year, making the activist hedge fund manager one of Britain’s most generous philanthropists, with even more expected to be given this year.

Mr Hohn, founder of The Children’s Investment Fund, told investors in New York two weeks ago that the foundation – run by his wife Jamie Cooper-Hohn – had passed $1bn, less than five years after it was set up.

The Children’s Investment Fund Foundation is understood to be worth about $1.4bn. CIFF finances projects for children in the developing world, with a focus on HIV.

The size of the donations is a result of the phenomenal returns Mr Hohn has generated for investors in TCI, which has more than $10bn under management. Last year he made more than 40 per cent, while in 2005 TCI returned more than 50
per cent.

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Source: Thanks, Whitney Tilson

Mohnish Pabrai: Lunch With Warren Buffett? $650,100

Two investors put in the winning bid of $650,100 in a charity auction to break bread with billionaire Warren Buffett.

Mohnish Pabrai, who will put up most of the money, said Saturday that he's going to be well-prepared by the time he meets the famed investor at a New York steakhouse.

"I'll probably download the menu and see what we want so we don't waste our time looking at the menu," Pabrai. "My wife's not a big fan of steakhouses — but I told her they serve fish as well."

Pabrai, his wife and two daughters will join his bidding partner, Guy Spier of Aquamarine Capital Management LLC, and Spier's wife at the dinner with Buffett, the chairman and chief executive of Berkshire Hathaway, Inc. The group will dine at the Smith & Wollensky steakhouse in New York City.

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Source: Fu Lu

Geico Goes Cruising for Motorcyclists In Cyberspace

Geico launched MyGreatRides at least partly to learn about its market. Companies increasingly are finding that social networks can provide valuable information on customers they want to reach. Geico would not say what percentage of its policyholders are motorcycle riders.

"If we can learn more about the needs of motorcycle riders and what kind of service they expect, we think it will help us with our current customers and potential ones," Kirk La, director of Geico's motorcycle products, wrote in an e-mail Friday.

Motorcycle riders have long had to pay far more for insurance than automobile drivers. Geico built its business on insuring safe drivers but now insures higher-risk drivers. That includes older motorcycle riders, the fastest-growing group of owners.

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Source: Lincoln Minor