What Does It Mean to be a Value Investor?

In a piece written for Forbes.com’s “Gurus’ Guide to 2009“, John Heins and Whitney Tilson do a great job in examining just what makes an investor a value investor. While value investors come in all shapes and sizes — large-cap, small-cap, activist, non-activist, U.S.-focused, foreign-focused — Heins and Tilson list 12 similarities they share. A sampling: They focus on intrinsic company value and buy only when there is a substantial margin of safety, rather than… Read More

Buffett: Fear Is Winning — But It Won’t Win In The End

In a wide-ranging interview with Dateline NBC’s Tom Brokaw, Warren Buffett says that fear is currently winning out over hope in the U.S. economy — but that he wouldn’t bet against the country’s ability to recover from this crisis and go on to new heights. “Right now fear is [winning],” Buffett said. “It really is an economic Pearl Harbor. … The country is facing something it hasn’t faced since World War II. And [people] are… Read More

Buffett’s ’08 Bargain Binge: $20 billion +

The final tally from Warren Buffett’s 2008 buying spree: $20 billion-plus. “While most investors panicked or were forced to sell, [Buffett] put more than $20 billion to work last year, positioning his insurance-focused conglomerate to profit if the economy and markets recover in coming years,” writes Alistair Barr of MarketWatch. Buffett’s firm had about $44 billion in cash entering ’08, according to Barr, who notes that Buffett had had trouble finding attractively valued investments in… Read More

Buffett’s “Timeless” Predictions

CNBC.com outlines eight timeless predictions by Warren Buffett on its Warren Buffett Watch blog. While CNBC labels these as predictions, we tend to think of these more like lessons that Buffett offers up to long-term stock market investors. After a year like 2008, Buffett’s lessons provide some perspective on dealing with recessions, bear markets and investor psychology. 1. Recessions can’t be avoided forever. 2. We’ll survive current and future recessions just as we’ve survived past… Read More

Looking at Berkshire’s Holdings by ROE, ROA & ROI

We know that following Warren Buffett’s investments, even after they are publicly disclosed, can produce stellar long-term returns for investors. Knowing this, we decided to take 30 of Berkshire’s Q3 holdings and look more closely at each company’s returns on equity, assets and investment (Validea’s Buffett-based model uses ROE in its formula). By looking at ROE, ROA and ROI, we are able to see what firms in Berkshire’s portfolio are generating the highest return to… Read More

Tilson on “Points of Maximum Pessimism”, and Buffett Bashers

In a column for The Financial Times, fund manager Whitney Tilson says that, while he’s no optimist about the U.S. economy’s short-term prospects, he does “believe the level of panic that has overtaken the market has created buying opportunities for investors who can see light at the end of the very dark tunnel.” Tilson indicates that we’re at or near what the great John Templeton called “points of maximum pessimism”; that is, as Tilson puts… Read More

Buffett, Berkshire Snatch Up More Rail Shares

Warren Buffett’s Berkshire Hathaway now owns almost 20% of Burlington Northern after put options it wrote were exercised. Over the past year or so, Buffett has continued to buy up shares in Burlington Northern, the country’s second largest rail company. He has previously said that “railroads have good long-term prospects and are healthier today than in past years,” according to the Associated Press. CNBC’s Warren Buffett’s Watch, written by Alex Crippen, provides additional detail on… Read More

Buffett, Berkshire Navigating Subprime Better than Many

While many have criticized Warren Buffett’s recent Goldman Sachs stock buy (Goldman shares have tumbled since Buffett bought $5 billion in preferred stock on Sept. 23), Bloomberg’s Ari Levy reports that Berkshire Hathaway’s overall financial stock performance has been well ahead of the sector average in recent months. Writes Levy, “Berkshire’s bank-related investments rose 36 percent in the third quarter, while the 84-member Standard & Poor’s 500 Financials Index declined 0.2 percent.” For the past… Read More

Buffett to Disclose More on Derivatives; Tilson Ups Berkshire Stake

Warren Buffett says he will give more information on Berkshire Hathaway’s much discussed derivative bets in the company’s end-of-year-report, Reuters is reporting. The derivatives contracts call for the firm to pay out billions to purchasers if, by certain dates starting in 2019, four different market indices fall below agreed-upon levels. Rumors that Berkshire’s liabilities for the contracts could be more than previously thought caused the firm’s stock to plunge — and its credit default swap… Read More

Is Buffett Market Timing?

Warren Buffett stated in his recent New York Times Op-Ed that he had begun buying U.S. stocks for his personal portfolio, in which he previously held only Treasuries. Does that make him a market timer of sorts? Morningstar’s John Coumarianos offers some interesting thoughts on that question, focusing his answer on the difference between value investors, like Buffett, and market timers or traders. Value investors, like Mr. Buffett and others, look at investing as buying… Read More