Amit Chokshi_

Buffett Misses In Hedge Fund Fees Comment

Buffett ran a partnership before BRK and got paid 25% after clearing the 6% hurdle rate. I admire him but find his annual letters to be much better for those with a passing interest in investing. Does your analysis implicity state that ou think investors are better off paying 2 and 20% for a beta neutral long/short hedge fund to reduce volatility? What if investors are in a 2 and 20% long/short fund where the short and long book are not integrated and both the short and long book go in the wrong direction? And how is a 2 and 20% long-only portfolio a ripoff? Most hedge funds are absolute return vehicles and running a matching short portfolio is not the only risk mitigation tool. How would you rate the long-term returns of Mohnish Pabrai, Tom Brown, Lampert, etc. who do not run short books?

Warren Buffett Knows Something About USG Corp.

While USG is significantly off its recent highs investors should be wary of blindly following anyone into a stock, even if it's Buffett. Buffett's time horizon is a lifetime as opposed to 3-5 or even 10 years so average investors can get shaken out of a position. I believe Buffett also bought USG when it was in the high teens - $20 range and the stock fell to as low as $3. No doubt, Buffet knew what he was doing, but most investors, whether professionals or retail, would have gotten shaken out on the way down because a hit like that is a lot to bear, not only mentally, but an 85% loss even if it represents 3-5% of a portfolio is a real loss. I'm guessing Buffett wants the leader in gypsum wallboard for the long-term and is taking the housing shakeout as a way to get it when it may be oversold.