Finding Your Edge a Key to Investing Success

By John P. Reese The mathematician Ed Thorp figured out how to beat Las Vegas casinos at blackjack and baccarat and they didn’t like it. But the MIT and University of California Irvine professor didn’t get discouraged. He applied those same mathematical principles to the markets, and also won. Mr. Thorp knows that good ideas have limited runs. As more investors pile into a winning trade, the returns start to diminish and the idea can… Read More

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… Read More

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,… Read More

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… Read More

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… Read More

Learning from Buffett and IBM

Warren Buffett’s announcement prior to this year’s Berkshire Hathaway annual meeting to sell a third of the firm’s IBM shares spurred a host of headlines, writes Validea CEO John Reese in a recent article for Nasdaq. In the article, Reese explains that while Buffett is known for his penchant to buy and hold, the article explains how the firm’s partial sale of IBM holdings is aligned with his philosophy around and focus on competitive advantage.… Read More

Highlights from Berkshire Hathaway’s 2016 Letter to Shareholders

On Saturday, February 25th, Berkshire Hathaway released its much-anticipated 2016 letter to shareholders in which Warren Buffett presents his company’s results for the year and shares his inimitable insights and wisdom. Here are some highlights (Part I was posted yesterday): “Starting from scratch, America has amassed wealth totaling $90 trillion.” Meg McConnell of the New York Fed: “We spend a lot of time looking for systematic risk; in truth, however, it tends to find us.”… Read More

Highlights from Berkshire Hathaway’s 2016 Letter to Shareholders

On Saturday, February 25th, Berkshire Hathaway released its much-anticipated 2016 letter to shareholders in which Warren Buffett presents his company’s results for the year and shares his inimitable insights and wisdom. Here are some highlights: Berkshire has undergone a “gradual shift from a company obtaining most of its gains from investment activities to one that grows in value by owning businesses.” The company’ present course is to: Continue to build insurance operation; Acquire large and… Read More

A Little-Known Buffett Home Run

Long before Berkshire Hathaway became the acquisition behemoth it is today, Warren Buffett was primarily involved in the insurance business. That hasn’t changed, and these operations have been some of his biggest and most successful ventures. In an article for CNBC, Validea CEO John Reese describes how the Oracle’s foresight back in the 1970s led to a relatively unknown but impressive investment win. Insurance companies rely heavily on data for their risk analysis and pricing.… Read More

Berkshire’s Close-Ended Investment Model – Simple and Successful

Every year, droves of shareholders attend the Berkshire Hathaway annual meeting, some lining up before sunrise to get front row seats. The high point of the event is the question-and-answer session with Warren Buffett and Charlie Munger, celebrities in the investment world. It makes perfect sense that attendees want to pick the brains of these market moguls. They have enjoyed enormous success with the simple, closed-end fund strategy of establishing close engagements and long-term commitments… Read More