 Don’t get me wrong I am a huge fan of Warren Buffett and both his personal and Berkshire Hathaway investing track records speak for themselves as one of the most solid and consistent in recent investing history. I can’t help but wonder though if Buffett’s rising celebrity status doesn’t have a negative effect for true long term Berkshire Hathaway investors. Hardly a day goes by without some sighting, comment, or mention of Buffett in the news. Over the past year I have seen:
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- Numerous TV interviews with Buffett.
- A Warren Buffett cartoon featuring his voice work.
- The memorable op-ed piece to the New York Times.
- A book on Buffett’s life and works.
- Numerous public appearances.
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 This article originally appeared on The DIV-Net May 9 2009.
Charlie Munger though a pioneer in value investing and the four filters is a fairly raw character and has a way of getting to the point in a sometimes abrupt manner. Charlie did just this when he referred to EBITDA as “bullsh*t earnings” at the Berkshire Hathaway meetings in 2003.
EBITDA = Earnings before interest taxes depreciation, and amortisation.
What is the Problem with EBITDA?
Well let me give an example:
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- Company A earns $1M and pays $.75M in interest, taxes, & depreciation.
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 This article originally appeared on The Div-Net Feb8 2009
Much has been written about the success of Warren Buffett and Berkshire Hathaway, but little on his failures. I think a great deal can be learned by analyzing the failures of successful people. By studying these failures hopefully we can avoid them ourselves.
The Deal
Buffett purchased preferred shares in in the early 1990′s, and later remarked that this was one of his biggest mistakes. Now before getting to far into this it is worthwhile to comment that Buffett did in fact end up making a profit on his holdings of US Airways but Buffett certainly cannot claim credit for this. In his own words:
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I enjoyed this so much I thought I would share it. Clipped from a Fortune Magazine Blog earlier:
Warren Buffett emailed this note to the directors of his company, Berkshire Hathaway (BRK.B), Tuesday after he heard that the U.S. Treasury sold $32 billion in 4-week bills at a yield of 0%:
This should be bullish for Berkshire. With great foresight, I long ago entered the mattress business in a big way through our furniture operation. Now mattresses have become fully competitive as a place to put your money, and sales will soon take off.
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