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Doug Kass/ Berkshire Hathaway (BRK.B) afternoon Q&A roundup: Kass wonders if the contrast...

Doug Kass/ Berkshire Hathaway (BRK.B) afternoon Q&A roundup: Kass wonders if the contrast between Buffett's bathtub BofA investment and the weeks of due diligence that went into BRK's move into American Express shows The Oracle is now more interested in the game than the score. "I have every bit of the intensity, though it's not manifested in the same way," Buffett responds. Kass asks if, contrary to Buffett's aversion to short-selling, BRK would consider a $100M investment in a managed investment account at Seabreeze if the profits went to charity. Munger: "We don't like trading agony for money." Kass asks what qualifies Buffett's son to be Berkshire's next non executive chairman. "[My son] won't be running Berkshire, [just] safeguarding its culture," Buffett politely says. (WSJ, NY Times)
Comments (39)
  • davidbdc
    , contributor
    Comments (3158) | Send Message
     
    I liked the question about his son.

     

    I get tired of folks in his type of position putting their children in positions of power - when its a publicly traded company. He makes a big deal about only leaving his kids a couple of million and giving his billions away - but he's having shareholders pay his son millions.

     

    Want to turn a business over to your son or daughter - great - just don't go public.
    4 May 2013, 07:31 PM Reply Like
  • lildimsum7
    , contributor
    Comments (541) | Send Message
     
    What's wrong with that? It's his son, after all! His son could be well-qualified for the job, who knows.
    4 May 2013, 07:40 PM Reply Like
  • davidbdc
    , contributor
    Comments (3158) | Send Message
     
    Its his son, after all!
    ----------------------...
    Exactly. And we all know thats the reason he was given every opportunity at the firm.

     

    There is no issue with that if its your business. Hang out the sign and call it Buffet & Son. But once you raise money in the public market its not at all ok. You should lose the ability to do that type of thing as you are now there to serve shareholders interests - not your family's interests.

     

    If Warren wants to give his son a cushy lifestyle thats his choice - just don't do it with shareholder money - use his own.
    4 May 2013, 08:06 PM Reply Like
  • Sava
    , contributor
    Comments (97) | Send Message
     
    It still is his business as he is the majority shareholder. Buy the majority stake if you disagree =P
    5 May 2013, 01:24 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    Nepotism is what gives companies bad ratings for oversight, etc.

     

    What do other companies do for culture? I guess they are all failures because they don't have someone in the family taking on a position.

     

    Rules are for everyone else.
    5 May 2013, 11:37 PM Reply Like
  • AgAuMoney
    , contributor
    Comments (4432) | Send Message
     
    His son has been playing gentleman farmer with daddy's money on the farm daddy bought for him.
    5 May 2013, 11:51 PM Reply Like
  • lildimsum7
    , contributor
    Comments (541) | Send Message
     
    what facts do you have to back up your assumption that Buffett's son isn't capable of the job and is not in the shareholders' best interest? Walter Schloss partnered with his son and their business was successful!
    12 May 2013, 01:51 PM Reply Like
  • lildimsum7
    , contributor
    Comments (541) | Send Message
     
    why should you start doubting Warren's judgement now? look at his decision to hire the 2 young bloods- their investment returns blow away Buffett's!
    12 May 2013, 01:55 PM Reply Like
  • AgAuMoney
    , contributor
    Comments (4432) | Send Message
     
    '''what facts do you have to back up your assumption that Buffett's son isn't capable of the job'''

     

    What facts do you have to back up your assumption that Buffett's son is capable of the job?

     

    Relevant experience is usually nice.
    12 May 2013, 06:03 PM Reply Like
  • AgAuMoney
    , contributor
    Comments (4432) | Send Message
     
    '''why should you start doubting Warren's judgement now? '''

     

    Because his judgment has been questionable for much of the past 13 years and he is even older now.
    12 May 2013, 06:04 PM Reply Like
  • lildimsum7
    , contributor
    Comments (541) | Send Message
     
    it seems you're just jealous. what has been questionable? there's nothing wrong with his business decisions! he hired 2 great investors, bought companies that provide Berkshire with stable capital to reinvest, sold SPY puts and made billions, bought BAC warrants, made billions, and bought GS options, and made billions. so what's the problem?
    12 May 2013, 11:41 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    Seems like WB's risk adjusted return should be questioned. If he was investing in BAC and GS to make money that was deemed by most experts to be risky.

     

    But putting that aside he has beat the 500 most of the time although it appears the NASDAQ has beat him for a while.
    13 May 2013, 08:46 PM Reply Like
  • AgAuMoney
    , contributor
    Comments (4432) | Send Message
     
    '''with stable capital to reinvest, sold SPY puts and made billions, bought BAC warrants, made billions, and bought GS options, and made billions.'''

     

    He started with billions and he still has billions.

     

    Have you never heard the saying: What's the best way to make a million dollars in the stock market? Start with two million.

     

    OK, Buffett has obviously done better than that little joke, but since the late 1990's it was almost entirely sweetheart deals in 2007-2012 that kept him respectable.
    14 May 2013, 12:55 AM Reply Like
  • AgAuMoney
    , contributor
    Comments (4432) | Send Message
     
    '''he hired 2 great investors,'''

     

    And he hired one that did a front run on him. OK, 2/3 ain't bad.
    14 May 2013, 12:57 AM Reply Like
  • lildimsum7
    , contributor
    Comments (541) | Send Message
     
    What is risky about investing in undervalued businesses? And what deems BAC and GS risky? When Buffett bought BAC, it was at 5x normalized earnings. Is a 20% yield risky? In case you didn't notice, stocks that become cheaper relative to normalized earnings are less risky. I think you've been reading too much modern portfolio theory.
    22 May 2013, 06:16 PM Reply Like
  • lildimsum7
    , contributor
    Comments (541) | Send Message
     
    Actually Buffett started with a couple thousand and compounded returns over time. And when he's generating billions from good decisions, how could you write off that accomplishment? You're just making dumb excuses. It seems like you're jealous!
    22 May 2013, 06:18 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    Circuit City was undervalued too. So was Bear Stearns in the view of a lot of people.

     

    Buffet likely bought knowing that the USG would never let BAC go out of business. A USG Put.
    5 Jun 2013, 10:17 PM Reply Like
  • lildimsum7
    , contributor
    Comments (541) | Send Message
     
    Circuit City and Bear Stearns weren't undervalued to value investors and is not like BAC. i have not heard of any value investor putting money in highly leveraged, dying companies.

     

    as for BAC, how would USG have any impact? you don't know anything about the business. BAC is one of the largest banks with plenty of assets. with New BAC and LAS, BAC's capital structure has been improving. they already meet Basel 3 reqs! at 5x normalized earnings, BAC was a steal! BAC is still undervalued.
    15 Jun 2013, 01:15 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    So you are a college dropout and I have been in the banking business for over 25 years and I know nothing? Get a grip.

     

    Bear was still being recommended right up until they weekend they went down. Mutual Funds held it as a core value holding and went down in flames.

     

    Putting that aside if you have never heard of a value investor getting burned by "catching a falling knife" then you have not been around very long. And you don't have a full grasp of Buffet's opportunistic investing approach.
    16 Jun 2013, 12:00 AM Reply Like
  • lildimsum7
    , contributor
    Comments (541) | Send Message
     
    Are mutual funds about value? Nope. The way I see it, Bear Stearns and Circuit City have significant cat risk, vs. BAC, which has no cat risk, and a 20% normalized earnings yield. Pretty simple proposition - this is how Buffett looks at investments. You may know banking, but I know banking, investing, and business. I could go on for a while about the industry and valuing BAC.

     

    I'm a college dropout, so what? Francis Chou and Walter Schloss never went to college either. It's not like I failed the program, I just felt that as an average student, I had no edge in employment in my desired career, so I went another route that paid well and wouldn't drive me crazy. I'm content just to be able to have studied in a top uni and take classes at Haas.
    17 Jun 2013, 03:37 AM Reply Like
  • lildimsum7
    , contributor
    Comments (541) | Send Message
     
    I should mention my conclusion comes from the combined due diligence of other UC Berkeley students, including 2 Haas students and myself, who examined 5 years of annual filings and read hundreds of pages of industry reports and news articles (for our decal). And our conclusions have been independently reached by other great value investors who have done even more research than we.

     

    If you saw cat risk from your due diligence, let me know.
    17 Jun 2013, 04:08 AM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    I wont argue if mutual funds are about value as that is an endless debate and I really don't want to defend them anyways as I am not a big fan of them. My only point was that they as fiduciaries held Bear right to the end and their "supposed" expertise was a reflection of the securities industry.

     

    The time to have bought the banks as a value play was in 2009 and since then it has been mostly sideways.

     

    Cat risk is that nobody wants banks to make money including Congress so there are less risky industries to invest in. You are also dealing with very large banks that will have a hard time moving their numbers.

     

    All I do is make money. Not sure what that is called in your world.
    17 Jun 2013, 01:34 PM Reply Like
  • byslkwd
    , contributor
    Comments (114) | Send Message
     
    how much is Howard getting payed? Millions? Not if Warren can help it.
    4 May 2013, 10:29 PM Reply Like
  • hanakookie
    , contributor
    Comments (85) | Send Message
     
    I think Buffet adding his own to the board as a safeguard as in the best interest of shareholders. With the amounts of capital in the business many vultures are bred in the hills waiting for prey to feed on. When Warren and Charlie leave the legacy will remain in his child. Even though this sounds great though he could have brought in a poor inner city kid that managed to get a degree from a local college and instruct him what to do. I know this person wouldn't mind because he would be making more than his whole neighborhood would make combined. And that would be just one year of pay. It's all charity.
    4 May 2013, 11:07 PM Reply Like
  • JohnPhi
    , contributor
    Comments (5) | Send Message
     
    This isn't north korea where we leave a "puppet" son in charge of preserving "culture" and let the seasoned generals run the country, or is it? "Farmers shall inherit the earth..." lol
    4 May 2013, 11:17 PM Reply Like
  • WallStreetDebunker
    , contributor
    Comments (2456) | Send Message
     
    Buffett's son doesn't need Warren's money. He's a farmer with a big farm. His farm land has gone up in value more than Berkshire Hathaway stock in the last few years.
    5 May 2013, 05:46 AM Reply Like
  • Vinceyoung
    , contributor
    Comment (1) | Send Message
     
    There's no ther way to spin it - that was a pitiful performance by Doug Kass out there today.
    5 May 2013, 09:17 AM Reply Like
  • irishboy
    , contributor
    Comments (2) | Send Message
     
    Well Done Buffett & Munger...........not bad for 2 youngsters 20%+ year to date.
    5 May 2013, 09:17 AM Reply Like
  • The Geoffster
    , contributor
    Comments (4013) | Send Message
     
    What the deal with those dudes anyway?
    5 May 2013, 02:13 PM Reply Like
  • rungrandpa
    , contributor
    Comments (217) | Send Message
     
    When you get old you make silly decisions concerning your adult kids. This is an example.
    5 May 2013, 10:03 AM Reply Like
  • New Low Observer
    , contributor
    Comments (2112) | Send Message
     
    Kass was underwhelming and didn't ask questions that warranted his presence. Yeah, it was nice to have a short seller on the panel but he [Kass] didn't bring anything to the table even tried to weasel in a wager of short selling versus against Buffett/Munger to which Munger said "NO!"

     

    Also, Buffett said the bathtub wasn't instrumental in the decision to make an investment in BoA. Instead, it was reading the book, "Biography of a Bank: The Story of Bank of America"

     

    Regards.
    5 May 2013, 10:38 AM Reply Like
  • KJP712
    , contributor
    Comments (449) | Send Message
     
    Kass could always short BRK.B if he does not like the future direction of the company....
    5 May 2013, 03:05 PM Reply Like
  • sgt.red.blue.red
    , contributor
    Comments (141) | Send Message
     
    Did Doug say when he was covering his short?
    5 May 2013, 03:39 PM Reply Like
  • herb.meiberger
    , contributor
    Comment (1) | Send Message
     
    Doug Kass's best question was comparing Brk to Teledye and Warren Buffett to Henry Singleton. Here it is:

     

    26. Doug ... Brk will move to be more centralized. Henry Singleton .. Teledyne was getting hard to manage for one CEO.
    WB: Charlie knew Henry Singleton ... Breaking Brk into several companies would reduce value.
    CM: Singleton could play chess blindfolded at masters level. Managed companies on centralized bases. At the end, he wanted to sell to us, and trade for Brk stock. He understood these complicated markets.
    WB: He played the stock game ... We don't. Game worked wonderfully if you didn't care how it ended up. Issued overpriced shares, bought underpriced. We're more avuncular.
    5 May 2013, 09:18 PM Reply Like
  • healthygal
    , contributor
    Comments (3) | Send Message
     
    Is there a video available online of the Kass, Buffett, et.al. session?
    5 May 2013, 09:23 PM Reply Like
  • duster
    , contributor
    Comments (104) | Send Message
     
    Kass asked some good questions, got some good replies, and was an interesting twist to the meeting, IMO, Howard isn't Warren, and they know it, as he's not running the show, nor proposed to run the business.
    I thought it admirable that Charlie didn't like destruction of business as a source of income.
    Certainly, BRK is a large conglomerate, with limited profits in the future as they freely admit, and if you want large stock appreciation and outsized growth don't buy BRK.
    5 May 2013, 09:49 PM Reply Like
  • Herb Smith
    , contributor
    Comments (298) | Send Message
     
    I vaguely recall half a dozen years ago BRK had to let go some executive who had misbehaved or violated the trust they put in him. If WB wants someone to carry on some general principles, it could be that he trusts his son to do it and there's no one else WB feels he knows that well and can be that sure about. It's too bad there's an element of nepotism in there rather than merit alone, but the world is not always fair.
    6 May 2013, 08:08 AM Reply Like
  • perk
    , contributor
    Comments (44) | Send Message
     
    The son will be guarding the culture - will not be paid anything significant if anything at all; He will not be running any aspect of BRK nor will he be making any investment decisions;  BAC is an example of cumulative due diligence - the bathtub has nothing to do with it - Kass does not understand Buffett, Munger, or BRK;
    6 May 2013, 06:58 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    "son guarding the culture"

     

    What a joke and how anti capitalist and arrogant of WB. He does not believe that this country and economy can produce leaders to replace him obviously. The country grew before WB was born and it will go forward after he dies.

     

    This is just a position to keep WB's legacy shined up after he is gone. Same reason Presidents build libraries.
    7 May 2013, 12:40 AM Reply Like
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