High Hopes for Buffett’s Annual Letter

A Bloomberg article published prior to the release of this year’s letter to Berkshire Hathaway shareholders notes that Warren Buffett “has provided himself with plenty of fodder—if only he’ll use it to answer two nagging questions for investors:” Does the company’s recently “relatively new, and recently erratic, interest in technology investments” signal anything to its investors? “If Buffett didn’t find a “significant acquisition in December’s market swoon, then when will he?” The article notes that… Read More

Takeaways from Berkshire’s Annual Letter to Shareholders

Here are some highlights of Warren Buffett’s widely-anticipated annual letter to Berkshire Hathaway shareholders: Format Change While for thirty years the billionaire investing legend has opened with a paragraph concerning the change in the firm’s per-share book value, this year he wrote, “It’s now time to abandon that practice,” citing three reasons for the change: Berkshire has “gradually morphed from a company whose assets are concentrated in marketable stocks into one whose major value resides… Read More

Learning from Buffett’s Performance

In my last article, I looked at the stocks owned by Warren Buffett and Berkshire Hathaway and asked the question, “How Active is Buffett’s Portfolio?”. As we found out, the answer is very active in terms of how different the equity portfolio looks vs. the broader market index. The combination of Buffett’s portfolio and investing acumen has translated into one of the best investment track records in history. There are some interesting observations we can… Read More

How Active is Buffett’s Portfolio?

By Justin J. Carbonneau (@jjcarbonneau) —  With a $500 billion market capitalization, Berkshire Hathaway is the fifth largest company by market cap in the U.S. stock market and the majority of the company’s value comes from three sources. The first is the 60 or so operating companies Berkshire owns and the future earnings power of those companies. The second is the cash on the balance sheet and the optionality to invest that in in the… Read More

An Analysis of Buffett’s Alpha

A 2018 paper published in the Financial Analyst’s Journal analyzes  the alpha created by Warren Buffett’s Berkshire Hathaway. The introduction, by authors Andrea Frazzini, David Kabiller, and Lasse Heje Pedersen (of AQR Capital management), reads: “While much has been said and written about Warren Buffett and his investment style, there has been little rigorous empirical analysis that explains his performance. Every investor has a view on how Buffett has done it and the practical implications… Read More

Buffett and Cooperman Agree Luck is Key to Investing Success

“Whatever success I’ve achieved, I think I’ve achieved it because I’ve been very lucky,” said founder and CEO of Omega Advisors Leon Cooperman in an October interview on CNBC. Cooperman echoes sentiment of Berkshire Hathaway CEO Warren Buffett, who has often said he was born with advantages that helped him along the way—which he refers to as winning the “ovarian lottery.”. In 2013, Buffett said, “The womb from which you emerge determines your fate to… Read More

Buffett Repurchases Over $900 Million in Berkshire Stock

An article in The Wall Street Journal reports that Berkshire Hathaway repurchased $928 million in stock in the third quarter of 2018, calling it a rare move that indicated Chairman Warren Buffett sees a dearth of appealing investment options for his company’s large cash balances. This is the first repurchase since 2012, the article says, reflecting the “the scarcity of attractively priced projects and deals that can satiate yield-hungry investors and firms more than nine… Read More

Investing Strategies of American Billionaires

An article in last month’s Forbes offers a synopsis of the investment approaches of some of our country’s prominent billionaires: Warren Buffett, CEO of Berkshire Hathaway– Buffett uses a “common-sense playbook” of investing in companies that have a track record of making money, that have strong management teams and low debt levels. His mantra is summarized as, “only put your money into companies you understand, and don’t overpay.” Mark Cuban—This investor became a billionaire through… Read More

The Underappreciated Role of Luck in Investing

By Justin J. Carbonneau (@jjcarbonneau) —  The $1.5 billion Mega Millions jackpot had a lot of people daydreaming about what they would do if they won such a windfall. With odds of about 1 in 250 million, you can almost guarantee with 100% certainty that you and everyone else you know that bought a ticket woke up on last Wednesday to be disappointed. Still, someone was lucky enough to become a multi-millionaire overnight. While luck… Read More

Buffett’s Secret to Investing Success

A recent article in Forbes outlines what Warren Buffett frequently cites as the central themes of his investing approach—which can be found in two of his favorite books: The Intelligent Investor, by Benjamin Graham, and General Theory by John Maynard Keynes. The article breaks down the three themes as follows: Investment vs. Speculation: Graham’s book differentiates between investing, which consists of “buying stocks for less than they are fundamentally worth,” and speculation, which is “trying… Read More