Buffett Wins his 10-Year, Million-Dollar Wager

Warren Buffett is the winner in the bet he made with finance professionals back in 2007 that, over the ten years between January 1, 2008 and December 31, 2017, the S&P 500 would outperform a portfolio of funds of hedge funds (when performance is measured on a basis net of fees, costs, and all expenses). This according to an article in this week’s AEI. Ted Seides, co-manager of Protégé Partners, was the only fund manager to accept Buffett’s challenge. The following results are outlined in Berkshire’s 2016 letter to shareholders: “Buffett’s index investment bet is so far ahead,” the article states, […]

Buffett Converts BofA Warrants

Berkshire Hathaway CEO Warren Buffett secured an $11.5 billion gain by exercising warrants to purchase 700 million shares of Bank of America Corp., according to an article in Bloomberg. The share purchase will result in a $16.5 billion stake in the Charlotte, North Carolina-based bank. In 2011, Buffett invested $5 billion in BofA in exchange for the warrants and preferred stock, assuaging doubts that the bank had insufficient capital reserves. Since that time, the shares have more than tripled. In a June statement, Berkshire telegraphed that it would convert its preferred shares to common once the bank increased its dividend. […]

Investors: Become “Unshakeable” With These Five Investing Commandments

By John P. Reese — Keep Calm and Carry On was a motivational poster produced by the British government in 1939 in preparation for World War II. The poster was intended to raise the morale of the British public as they faced the threat of mass air attacks. Today, the motto can be found on a seemingly endless array of merchandise ranging from coffee mugs to car seat covers. If only the notion was as widely embraced by investors as it is by slogan-loving shoppers. During these days when watching the news can be a disconcerting experience (on a good day), it’s especially paramount to keep calm and […]

Buffett’s Favorite Words

In March, data scientist Michael Toth conducted a sentiment analysis on Warren Buffett’s annual letter to Berkshire Hathaway shareholders (dated from 1977 to 2016) to identify the billionaire’s most commonly used positive and negative words. This according to a CNBC article posted in June. The top six unique words, according to Toth’s findings, are (in this order): Loss Gain Worth Significant Debt Outstanding According to the article, “Although two of those words have negative associations—loss and debt—Toth found a surprising explanation as to why those landed on Buffett’s list of most utilized words.” Toth underscores Buffett’s tendency to focus on […]

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Building an Investment Checklist

By John P. Reese —  In this year’s letter to Berkshire Hathaway shareholders, Warren Buffett refers to the conglomerate’s “gradual shift from a company obtaining most of its gains from investment activities to one that grows in value by owning businesses.” An article in the Wall Street Journal last month titled, “Warren Buffett’s Berkshire Moves Away from Stock Picking,” underscores the shift in the context of the conglomerate’s offer to purchase power-transmission firm Energy Future Holdings for $9 billion in cash. But the two activities are really horns on the same goat, and together represent what Buffett later calls a “two-pronged approach” […]

Timeless Quotes and Lessons for Every Investor from Buffett

An article in Yahoo Finance from earlier this year outlines a list of iconic quotes and lessons from billionaire investing legend Warren Buffett. Here are a few: Investing isn’t too complicated but know what you’re investing in—”You don’t have to be an expert on every company or even many,” he says, adding, “You only have to be able to evaluate companies within your circle of competence.” If you’re buying stocks, you shouldn’t want prices to keep rising—”Prospective purchasers,” says Buffett, “should much prefer sinking prices.” If you can’t afford it, don’t buy it. “I will guarantee you,” Buffett asserts, “if […]

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Investing Like Buffett Means More is Not Always Better

By John P. Reese —  When Warren Buffett was a kid, he liked to read. More than most kids. And we’re not talking comic books and bubble gum wrappers, either. He once recalled receiving the World Almanac as a gift when he was a young boy. “It was like heaven to me,” he says. Is it a coincidence that this voracious reader became one of the most successful investors of all time? Maybe not. When asked about the key to his success, Buffett puts reading at the top of the list. “That’s how knowledge works,” he said, “It builds up, […]

Buffett and Berkshire Focusing More on Running Businesses than Stock-Picking

In his February letter to shareholders, Warren Buffett wrote that Berkshire Hathaway is seeing a “gradual shift from a company obtaining most of its gains from investment activities to one that grows in value by owning businesses.” This according to a Wall Street Journal article from earlier this month. The trend is being underscored by the company’s recent bid to purchase the bankrupt power-transmission company Energy Future Holdings Corp. (including utility company Oncor) for $9 billion. The shift began in 1999, the article says, with Berkshire’s first utility purchase, and gained steam with the conglomerate’s acquisition of Burlington Northern Santa […]

Buffett’s Airline Bet and Four Picks

In anticipation of its Prime Day this month, Amazon prepared for an onslaught of orders by “getting its delivery ducks in a row, including a fleet of over 20 dedicated Prime Air Cargo planes,” writes Validea CEO John Reese in a recent article for Nasdaq. Reese segued into Warren Buffett’s bet on major airlines and his general investment approach. Using stock screening models he created based on the methodology of Buffett and other market greats, he identified the following high-scoring airline stocks: Delta Air Lines Inc. (DAL) provides scheduled air transportation for passengers and cargo throughout the United States and […]

Berkshire’s Oncor Deal Feeds Buffett’s Energy Appetites

Berkshire Hathaway arrived at a deal to purchase one of the country’s largest power-transmission companies, making electricity one of the conglomerate’s biggest businesses. This according to a recent article in The Wall Street Journal. The bankrupt Energy Futures Holding Corp. will be acquired by Berkshire Hathaway in a deal valued at $18 billion ($9 billion of which will be cash), the article says, and will include the Texas-based company Oncor. The acquisition will further enhance Buffett’s energy holdings and ambitions, the article says, adding that Berkshire Hathaway Energy (BHE) contributed about 9.5% of Berkshire’s total earnings of $24.07 billion last […]

Buffett, Bank of America, and Five Financials

Warren Buffett’s decision to exercise Berkshire Hathaway’s warrants to purchase 700 million shares of Bank of America common stock will make it the bank’s biggest shareholder, writes Validea CEO John Reese in a recent Forbes article. Reese provides an overview of Berkshire’s history with Bank of America, explaining that this transaction will be the company’s most profitable in the financial sector. He also underscores the fact that financials have become a “cornerstone of Berkshire Hathaway’s holdings.” Using the stock screening models he created based on the investment philosophy of Warren Buffett and other market gurus, Reese identified the following five […]

Buffett’s Patient Approach to Investing

In a recent article for Forbes, Validea CEO John Reese discusses Berkshire Hathaway’s current stockpile of cash and how Buffett, who Reese refers to as a “Patient Investor”, approaches both choosing opportunities and making investments with care. Reese cites a Bloomberg article that describes Buffett’s investing principle: “There’s no need to chase deals,” it says, adding that Buffett likens investing to hitting a baseball. “Don’t swing at one that’s out of your comfort zone.” Using stock screening models he created based on the philosophies of Buffett and other market greats, Reese identifies the following high-scoring stocks: Credit Acceptance Corp. (CACC) […]

Buffett now Largest Shareholder in Bank of America

Now that Bank of America got the Fed’s green light to up its dividend to 48 cents a share (a 60% hike), Berkshire Hathaway has decided to exchange its preferred shares in the bank to roughly $17 billion in common stock, according to last week’s Wall Street Journal. The move will render Berkshire the largest shareholder (7%) of the bank—the country’s second largest in terms of assets—passing Vanguard, which now owns 6.6% (data from FactSet). Bank of America also got approval to buy back $12.9 billion worth of shares, the article says. The move is consistent with Buffett’s assertion in […]

Berkshire’s German “Eyes and Ear” Scouts Acquisition Targets

Berkshire Hathaway is known to rely on outside input to identify potential acquisition targets, and one particular European-based scout has become Buffett’s “eyes and ears” in Germany. This according to a recent article in The Wall Street Journal. Zypora Kupferberg, who has run an independent consulting firm since 1997, gained a reputation as an “astute deal maker, but was largely unknown outside of the country,” the article says. In 2014, one of her clients asked Kupferberg to find buyers for their German motorcycle apparel company, and “she placed one name at the top of her list: Warren Buffett”—her rationale being […]

Warren Buffett Has Been Busy

The Oracle of Omaha has had a full dance card lately, as reported by CNBC and The Wall Street Journal: A CNBC article reports that, as of June 22nd, Buffett’s bets on four major airlines came in for a major landing, gaining $174 million from the market’s close the day before (according to SEC filings). The holdings are in American Airlines, Delta, United and Southwest Airlines. According to The Wall Street Journal, Berkshire Hathaway agreed to lend 2.4 billion Canadian dollars ($1.8 billion) to struggling Canadian mortgage banking company Home Capital Group—which has recently suffered an exodus of investors, the […]