Reading Buffett’s Letters

Taking the time to read the time to read Buffett’s letters to shareholders is, in my opinion, the best investment of a few hours a young investor could possibly make. It provides the unusual opportunity get behind the scenes and get a look at the some of the thinking that goes into some of Berkshire Hathaway’s largest buys and sells. It also provides the opportunity to learn from the mistakes made by one investor in the hopes that you won’t repeat them in your own investing experiences.
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Buffett Gets a Bullseye

I have written about the benefits of boring businesses in previous posts. I thought Buffett summarized some of the arguments quite well in his latest letter to shareholders:

“Charlie and I avoid businesses whose futures we can’t evaluate, no matter how exciting their products may be. In the past, it required no brilliance for people to foresee the fabulous growth that awaited such industries as autos (in 1910), aircraft (in 1930) and television sets (in 1950). But the future then also included competitive dynamics that would decimate almost all of the companies entering those industries.Even the survivors tended to come away bleeding.
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5 Facts about Benjamin Graham

Benjamin Graham is known as the father of value investing and is probably one of the most well read and studied investor of the 20th century.  While his most famous work The Intelligent Investor is read in business schools around the word,  not much is known about the man behind the writing. Much of this is due to the quite reserved life that Graham lead and some also to the fact that he existed before the era of the celebrity investor to understand any author’s great works requires some back ground so I present to you these 5 facts about Benjamin Graham:
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Executive Compensation

Executive Compensation is a touchy subject. Some believe executives should be compensated in relation to share price. Others feel that an executive should derive their satisfaction from the growth of their business and not from pulling down a massive salary. Buffett for one is a huge proponent of this approach. He pays himself a comparably paltry $100K salary per year and several of the businesses owned by Berkshire have CEOs who share this same compensation package.
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A Star on the Hollywood Walk of Fame For Buffett

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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Warren Buffett Investment Tips

I’m not fond of the packaging that Good Morning America does with this clip but there is certainly some useful information to be had.

Fannie Mae?

Benjamin Graham often wrote of distinguishing the difference between investing and speculating. Fannie Mae, in its current state, sits in the speculating bucket. Investing has to fun though, sometimes it is interesting to window shop, so lets look.

Evaluation based on Buffet’s Criteria

When looking at a business I often ask myself what other investors would think? So lets apply Buffett’s criteria and see if we can’t look at it through his eyes.
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Buffett on Able and Trustworthy Managers

For part 3 of our series on Buffett’s investment filters it is time to look at “able and trustworthy managers”.  There are two components to able and trustworthy managers, lets examine each individually.

Trustworthy Managers

Managers of public companies come in all sorts, unfortunately they also come with an equally diverse set of ideas as to their job’s purpose.  Some understand that they work for the shareholders, others though think that investors are nothing but an inconvenience.
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Buffett and Sustainable Competitive Advantage

Continuing our series on the four filters of Warren Buffett today’s topic is Sustainable Competitive Advantage.

Buffet often talks about finding sustainable competitive advantage (S.C.A.) in businesses. What is it, and why is it so important?

A competitive advantage  is a trait or feature of a business that gives it an advantage in dealing with its competition.  If it is sustainable then that advantage is likely to continue into the future.
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Buffett and Understandable Businesses

In a previous post we discussed the Four filters of Invention of Warren Buffet and Charlie Munger by Bud Labitan. I felt that some of the material needed a more thorough description than I could provide in my overview so I would like to look exclusively at the first of the four filters, namely finding understandable companies and contribute some of my own thoughts.
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The Four Filters of Warren Buffett and Charlie Munger (Review)

As investors we are well advised to study the styles of those that are successful at our craft in the hopes that we may emulate them.  Two of the most studied characters of recent memory are Warren Buffett and Charlie Munger.  With their unparalleled returns the two have achieved almost pop culture celebrity status.
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Warren Buffett’s Biggest Mistake

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 US Airways 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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Buffet on the Economy

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%:

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