Report archive
14 May 2012 Bill Gates at Berkshire Meeting ( Portfolio )
Microsoft founder Bill Gates talks to CNBC's Becky Quick at the annual Berkshire shareholder meeting in Omaha, Nebraska. He addresses Buffett's prostate cancer diagnosis, his feelings about the shareholder meeting, gold, and billionaires agreeing to give away their money.
Microsoft founder Bill Gates talks to CNBC's Becky Quick at the annual Berkshire shareholder meeting in Omaha, Nebraska. He addresses Buffett's prostate cancer diagnosis, his feelings about the shareholder meeting, gold, and billionaires agreeing to give away their money.
13 May 2012 Ecolab CEO Flattered By Gates Firms' Investment Strategy ( Portfolio )
The Minneapolis-based manufacturer of soaps and sanitizing equipment on Monday revealed that it will allow the Microsoft Corp. (MSFT) co-founder's Cascade Investment LLC and the Bill and Melinda Gates Foundation Trust to acquire up to 25% of Ecolab's shares.
The Minneapolis-based manufacturer of soaps and sanitizing equipment on Monday revealed that it will allow the Microsoft Corp. (MSFT) co-founder's Cascade Investment LLC and the Bill and Melinda Gates Foundation Trust to acquire up to 25% of Ecolab's shares.
11 May 2012 Chesapeake up against low-key activist Mason Hawkins ( Portfolio )
Mason Hawkins, whose $34 billion mutual fund firm is Chesapeake Energy Corp's largest shareholder, is best known as a Warren Buffett-style value investor who takes big stakes in companies and holds them, often for years...
Mason Hawkins, whose $34 billion mutual fund firm is Chesapeake Energy Corp's largest shareholder, is best known as a Warren Buffett-style value investor who takes big stakes in companies and holds them, often for years...
11 May 2012 Ariel Investments - April 30 Commentary ( Portfolio )
The broad market’s docile recent returns—a -0.63% fall in April and a +4.76% twelve-month gain for the S&P 500 Index—belie its fits and starts. Within the past year the U.S. market has had streaks of four positive months in a row as well as five straight negative months. Increasingly the market seems to be binary in nature, fluctuating between risk on and risk off or from growing confidence to rising worry. As other investors focus on “the macro,” we feel as if we are doing something entirely different.
If we compare investing to cooking, it feels as if most practitioners and Ariel are both trying to make a dish with eggs, but they are making soufflés and we are fixing hard-boiled eggs. In order for a soufflé to work, everything has to be just so. The oven must be at exactly the right temperature. The egg whites and yolks must be completely separated and beaten in a precise way. They must then be folded—but not mixed!—together. Finally, you have to bake the mixture in the right kind of dish for the correct amount of time. Done perfectly, you have a very tasty treat; if not, you often get a mess. We are trying to do something much more simple. We boil water, drop in an egg, wait the requisite eight or so minutes, and then chill the egg down. True, you can overcook or undercook with this recipe, but it is undeniably easier.
To return to the world of investing, here is what we see. Many are trying to get a very detailed picture of just how the world economy is doing in order to fine-tune their asset mix, sector mix and stock picks. Every day a crucial set of numbers seems to emerge. This April, the market-watchers waited anxiously to discover whether payrolls would increase by the estimated 205,000 or not—and the figure came in much lower. Those tuned in to the big picture were also eager to discover where U.S. growth would come in for the first quarter of 2012, as well as whether China would grow 7%, 8% or 9%. As it happened, U.S. growth disappointed the masses at 2.2%, while China’s 8.1% increase struck the crowd as a poor showing. All told, the news reports painted April as a month of disappointments—fast on the heels of a bundle of encouraging datapoints in March. Even when very bright people dedicate themselves completely to making accurate predictions about these matters, they find it very difficult. It is like chefs who keep trying to make soufflés even though they continually fall.
For our part, we are trying to make our task easier by narrowing the focus to a specific company and isolating the big issues. We are not trying to match up the economic picture with certain stocks, nor are we trying to master reams of details regarding the economy or each firm. Instead, we are trying to find companies that have strong franchises and powerful brands run by smart, experienced managers who will make sound capital allocation decisions. If we are able to do so with some consistency, we think our results will hold up well. That is, if we just try to boil eggs one after another, our clients will end up well-fed.
We will use two examples from the past month—a rising stock and a falling one—to illustrate what we are doing. Brink’s Co. (BCO) reported first quarter earnings of $0.35 per share versus consensus of $0.32, and the stock gained +6.41% in April. The press release was full of positive news including short-term growth rates, improved margins, an advantageous tax rate, and so forth. We homed in on two issues. We wanted to see continued growth in the business, especially in South America, as well as progress with the funding statues on the company’s U.S. pension plan. Brink’s delivered on both counts. One of our weaker stocks in April was Janus Capital Group Inc. (JNS), which declined -14.93%. Asset management stocks tend to amplify the market’s returns, so its decline in April’s drop was predictable. In order to satisfy its investor base, the company sliced and diced its portfolios’ performance, inflows and outflows, and other data in many ways. We do not focus on such minutiae; the company cannot, of course, control short-term performance, so we do not worry about it. If Janus retains its investment edge, long-term performance will be solid, ultimately driving assets under management upward. In the meantime it can make smart and even opportunistic capital allocation decisions. Indeed, during the first quarter, it repurchased $59.4 million in debt, bought back 263,600 shares of stock, and lifted its dividend by 20%. Those three actions were far more important to us than the short-term results which captured most investors’ attention.
All of this begs the question: are we playing an old-school game in a new-school world? That is, has our investment approach become outdated? We think not. Indeed, as long as shares represent ownership interests in individual companies and as long as we can purchase them at a discount to their intrinsic value, we believe our philosophy remains fully intact. To that point, we would argue that the market’s short-term focus and obsession with abstruse factoids makes our job easier and more relevant, not less so.
The broad market’s docile recent returns—a -0.63% fall in April and a +4.76% twelve-month gain for the S&P 500 Index—belie its fits and starts. Within the past year the U.S. market has had streaks of four positive months in a row as well as five straight negative months. Increasingly the market seems to be binary in nature, fluctuating between risk on and risk off or from growing confidence to rising worry. As other investors focus on “the macro,” we feel as if we are doing something entirely different.
If we compare investing to cooking, it feels as if most practitioners and Ariel are both trying to make a dish with eggs, but they are making soufflés and we are fixing hard-boiled eggs. In order for a soufflé to work, everything has to be just so. The oven must be at exactly the right temperature. The egg whites and yolks must be completely separated and beaten in a precise way. They must then be folded—but not mixed!—together. Finally, you have to bake the mixture in the right kind of dish for the correct amount of time. Done perfectly, you have a very tasty treat; if not, you often get a mess. We are trying to do something much more simple. We boil water, drop in an egg, wait the requisite eight or so minutes, and then chill the egg down. True, you can overcook or undercook with this recipe, but it is undeniably easier.
To return to the world of investing, here is what we see. Many are trying to get a very detailed picture of just how the world economy is doing in order to fine-tune their asset mix, sector mix and stock picks. Every day a crucial set of numbers seems to emerge. This April, the market-watchers waited anxiously to discover whether payrolls would increase by the estimated 205,000 or not—and the figure came in much lower. Those tuned in to the big picture were also eager to discover where U.S. growth would come in for the first quarter of 2012, as well as whether China would grow 7%, 8% or 9%. As it happened, U.S. growth disappointed the masses at 2.2%, while China’s 8.1% increase struck the crowd as a poor showing. All told, the news reports painted April as a month of disappointments—fast on the heels of a bundle of encouraging datapoints in March. Even when very bright people dedicate themselves completely to making accurate predictions about these matters, they find it very difficult. It is like chefs who keep trying to make soufflés even though they continually fall.
For our part, we are trying to make our task easier by narrowing the focus to a specific company and isolating the big issues. We are not trying to match up the economic picture with certain stocks, nor are we trying to master reams of details regarding the economy or each firm. Instead, we are trying to find companies that have strong franchises and powerful brands run by smart, experienced managers who will make sound capital allocation decisions. If we are able to do so with some consistency, we think our results will hold up well. That is, if we just try to boil eggs one after another, our clients will end up well-fed.
We will use two examples from the past month—a rising stock and a falling one—to illustrate what we are doing. Brink’s Co. (BCO) reported first quarter earnings of $0.35 per share versus consensus of $0.32, and the stock gained +6.41% in April. The press release was full of positive news including short-term growth rates, improved margins, an advantageous tax rate, and so forth. We homed in on two issues. We wanted to see continued growth in the business, especially in South America, as well as progress with the funding statues on the company’s U.S. pension plan. Brink’s delivered on both counts. One of our weaker stocks in April was Janus Capital Group Inc. (JNS), which declined -14.93%. Asset management stocks tend to amplify the market’s returns, so its decline in April’s drop was predictable. In order to satisfy its investor base, the company sliced and diced its portfolios’ performance, inflows and outflows, and other data in many ways. We do not focus on such minutiae; the company cannot, of course, control short-term performance, so we do not worry about it. If Janus retains its investment edge, long-term performance will be solid, ultimately driving assets under management upward. In the meantime it can make smart and even opportunistic capital allocation decisions. Indeed, during the first quarter, it repurchased $59.4 million in debt, bought back 263,600 shares of stock, and lifted its dividend by 20%. Those three actions were far more important to us than the short-term results which captured most investors’ attention.
All of this begs the question: are we playing an old-school game in a new-school world? That is, has our investment approach become outdated? We think not. Indeed, as long as shares represent ownership interests in individual companies and as long as we can purchase them at a discount to their intrinsic value, we believe our philosophy remains fully intact. To that point, we would argue that the market’s short-term focus and obsession with abstruse factoids makes our job easier and more relevant, not less so.
10 May 2012 Robert Olstein: Strength in Numbers ( Portfolio )
Olstein Capital’s Robert Olstein and Eric Heyman explain where they look first for insight in financial statements, why they started an activist-focused fund, why they’re happy that fundamental value investing isn’t particularly in vogue, and why they believe Sealed Air, Harman International, Dr Pepper Snapple, Intel and Checkpoint Systems are mispriced.
Olstein Capital’s Robert Olstein and Eric Heyman explain where they look first for insight in financial statements, why they started an activist-focused fund, why they’re happy that fundamental value investing isn’t particularly in vogue, and why they believe Sealed Air, Harman International, Dr Pepper Snapple, Intel and Checkpoint Systems are mispriced.
09 May 2012 Seeing the Beauty in Ugly-Duckling Stocks ( Portfolio )
Legendary fund manager Don Yacktman has delivered great results by investing in "old technology" and other value names.
Legendary fund manager Don Yacktman has delivered great results by investing in "old technology" and other value names.
08 May 2012 Whitney Tilson's updated analysis of Berkshire Hathaway ( Portfolio )
Estimated intrinsic value in one year of $208,200 per A class share - 70% above today‟s market price.
Estimated intrinsic value in one year of $208,200 per A class share - 70% above today‟s market price.
08 May 2012 Whitney Tilson on the Next Big Investment Idea ( Portfolio )
Whitney Tilson, T2 Partners, discusses why AIG offers a value play for investors.
Whitney Tilson, T2 Partners, discusses why AIG offers a value play for investors.
07 May 2012 Meet the Money Manager Who Is Beating Berkshire Hathaway and Owns It Too ( Portfolio )
Much has been made of "the lost decade" for stocks, a 10-year span in which investors in the S&P 500 index saw no gains. And yet, noted value investor Thomas Gayner, president and CIO of Markel (MKL), saw his portfolio gain more than 100%.
Much has been made of "the lost decade" for stocks, a 10-year span in which investors in the S&P 500 index saw no gains. And yet, noted value investor Thomas Gayner, president and CIO of Markel (MKL), saw his portfolio gain more than 100%.
06 May 2012 More Detailed Berkshire Annual Meeting Notes ( Portfolio )
Courtesy of The Motley Fool...
Courtesy of The Motley Fool...
05 May 2012 In Ajit Jain, Some See Next Buffett ( Portfolio )
Fans of Mr. Jain see a man who shares many of Mr. Buffett's qualities. He is highly regarded by colleagues and rivals, and widely described as smart, good-natured and quick at cutting to the essence of complicated business matters.
Fans of Mr. Jain see a man who shares many of Mr. Buffett's qualities. He is highly regarded by colleagues and rivals, and widely described as smart, good-natured and quick at cutting to the essence of complicated business matters.
05 May 2012 Live-blogging Buffettpalooza ( Portfolio )
The Wall Street Journal's live blog covering Berkshire's annual meeting...
The Wall Street Journal's live blog covering Berkshire's annual meeting...
05 May 2012 Berkshire's Charlie Munger Speaks ( Portfolio )
Vice-chairman of Berkshire Hathaway Corporation Charlie Munger talks to CNBC's Becky Quick about the consistency of Berkshire, Warren Buffett's health, the company's succession plan and his feelings on the future of the company.
Vice-chairman of Berkshire Hathaway Corporation Charlie Munger talks to CNBC's Becky Quick about the consistency of Berkshire, Warren Buffett's health, the company's succession plan and his feelings on the future of the company.
04 May 2012 Warren Buffett Revealed: Bloomberg Game Changers ( Portfolio )
"Bloomberg Game Changers" profiles Warren Buffett. Now in his eighties, Buffett has - for decades – held an unparalleled position in American finance. He is not only a legendary investor with an astounding success rate, and a billionaire forty times over; he is also – by far - the most respected businessman in America. This program includes interviews with Buffett, Microsoft co-founder Bill Gates, his Berkshire Hathaway partner Charlie Munger, his daughter Susie Buffett, early investor Chuck Peterson, newspaper publisher Stan Lipsey, former Salomon CEO John Guttfreund and Vice Chairman Deryck Maughan, and Buffett biographers Roger Lowenstein and Alice Schroeder.
"Bloomberg Game Changers" profiles Warren Buffett. Now in his eighties, Buffett has - for decades – held an unparalleled position in American finance. He is not only a legendary investor with an astounding success rate, and a billionaire forty times over; he is also – by far - the most respected businessman in America. This program includes interviews with Buffett, Microsoft co-founder Bill Gates, his Berkshire Hathaway partner Charlie Munger, his daughter Susie Buffett, early investor Chuck Peterson, newspaper publisher Stan Lipsey, former Salomon CEO John Guttfreund and Vice Chairman Deryck Maughan, and Buffett biographers Roger Lowenstein and Alice Schroeder.
03 May 2012 Legg Mason's Peters bets on Apple, MetLife to spark resurgence ( Portfolio )
Sam Peters, the money manager hired to breathe new life into Bill Miller's famed $2.5 billion Legg Mason Inc fund, thinks the time is right for a stock-picking renaissance.
Sam Peters, the money manager hired to breathe new life into Bill Miller's famed $2.5 billion Legg Mason Inc fund, thinks the time is right for a stock-picking renaissance.
03 May 2012 Note to Dataroma users: Sam Peters takes over from Bill Miller ( Portfolio )
As of April 30, Sam Peters became the sole portfolio manager of Legg Mason Value trust. Sam Peters has been co-managing the fund with Bill Miller since November 2010 to ensure a smooth eventual handover. Bill Miller will continue to serve as chairman of LMCM.
Dataroma will continue to track Value Trust's portfolio with Sam Peters at the helm.
From LMCM's Website: "Sam has been with LMCM since 2005 and he has managed or co-managed a number of LMCM strategies during his tenure. During his years with LMCM, Sam has proven to be a talented investor, independent thinker, and steady leader. Sam has made significant contributions to our investment process, including adding quantitative insights to security selection and portfolio construction. Several years ago, Sam assumed oversight of our research team, and working closely with our Director of Research, he has been instrumental in enhancing our analytical platform."
As of April 30, Sam Peters became the sole portfolio manager of Legg Mason Value trust. Sam Peters has been co-managing the fund with Bill Miller since November 2010 to ensure a smooth eventual handover. Bill Miller will continue to serve as chairman of LMCM.
Dataroma will continue to track Value Trust's portfolio with Sam Peters at the helm.
From LMCM's Website: "Sam has been with LMCM since 2005 and he has managed or co-managed a number of LMCM strategies during his tenure. During his years with LMCM, Sam has proven to be a talented investor, independent thinker, and steady leader. Sam has made significant contributions to our investment process, including adding quantitative insights to security selection and portfolio construction. Several years ago, Sam assumed oversight of our research team, and working closely with our Director of Research, he has been instrumental in enhancing our analytical platform."