BRKA
Dave Sokol, CEO of MidAmerican and Netjets (both Berkshire Hathaway businesses) and heir apparent to Buffett’s CEO role, has left Berkshire and one of the reasons doesn’t smell too good. Reading the letter from Buffett discussing the resignation, it’s clear that he had to go: the mere appearance of a Berkshire “luminary” practically “front-running” Buffett and Berkshire would be unacceptable (we don’t like it but can’t call it, and we’d discount any strong opinion emanating from anyone other than Buffett or Sokol).
The WSJ published a story about the possible tactics that Buffett used in the Lubrizol acquisition. This part sounded like music to our ears: “(…) Buffett undoubtedly told Lubrizol that he would refuse to participate in an auction. And here is where you see Buffett’s cleverness at work. He puts his targets in a dilemma that really only has one answer: take the price that looks very good or let Buffett walk away. Buffett’s real genius is a mix of these tactics and his ability to identify undervalued companies combined with the courage to act quickly on his analysis. That mix has been a recipe for big profits for Berkshire.”
Berkshire’s new acquisition looks like a logical extension of his Burlington Northern acquisition, in the “picks-and-shovels” realm of the Logistics sector. Bonus: our most loyal reader sent us the transcript of Buffett’s June 2010 testimony at a hearing of the Financial Crisis Inquiry Commission. You can always send us suggestions, links and texts at editor@buysiders.com.
Warren Buffett recently participated in CNBC’s annual “Ask Warren” 3-hour interview, and it’s never a waste of time despite the CNBC’s focus on shorter-term issues. In fact, this year brought a very funny exchange about gold, highlighted in this post. The whole 60-page transcript is embedded inside.
We set time aside one Saturday per year to read Warren Buffett’s letter, and the one for 2010, due out tomorrow, is bound to be very interesting. The Wall Street Journal and the Financial Times both published stories about what to “expect” from the letter. While the WSJ story focuses on numbers and the power of “float” in Berkshire’s business model, the FT’s piece focuses on succession.
In a very important sucession move, Buffett has announced that Todd Combs, a 39-yr old manager formerly with Castle Point Capital, will run a “significant portion” of Berkshire’s portfolio. It’s too soon to say much about the guy, and we’ve got a few research projects to execute. But before everyone gets lost in the inevitable deluge of stories “dissecting” Mr. Combs, it’s important to note that Buffett has taken his time looking for candidates, in an orderly and extremely discrete way for a company this big and a job this iconic.
Warren Buffett’s article at Fortune, but most importantly his, Bill & Melinda Gates’ challenge to billionaires to give away 50% of their wealth have people all over the world discussing philanthropy. We already liked his approach to giving – since he didn’t know how to do it, he trusted his buddy Bill Gates’s foundation with the money – but now it’s WOW all over again.
A Moody’s study shows that bank Boards have seen some shuffling and that more “financial expertise” was added. The FT argues that some banks with the “worst” boards in terms of financial experience actually did pretty well, and notes other apparently strange occurrences – for instance, Goldman Sachs has a CEO who’s also chairman and yet the bank has done pretty well in the crisis… We’ll never get tired of saying this: dump the checklist approach to CG. Actually, dump the checklist approach to anything.
OK, funny things first: Buffett playing Axl Rose is awesome. Less impressive is him playing a hip-hop artist, but it’s alright (both videos embedded inside). Viral videos can be a smart marketing tool, and these work. Back to seriousness: Business Week had a cover article by Alice “Snowball” Schroeder interviewing CEOs who have had Buffett in their boards. Interesting read.
Buffett was particularly expansive regarding his processes and methods, and this alone makes this video worth the time (some 90 minutes). The fact that it was October 1998, a pivotal time in the dot-com boom and just after the LTCM imbroglio makes it even more interesting.
