Warren Buffett Made money in USAir but not when he sold BRK entire stakes in American, Delta, Southwest, and United Airlines

Sunday, 3 May, 2020

Tap Dancing to Work: Warren Buffett on Practically Everything by Carol J. Loomis - pix 1

 

Good written report of Warren Buffett selling Berkshire Hathaway’s entire stakes in American, Delta, Southwest, and United Airlines from Will Horton @Forbes,

Warren Buffett’s Berkshire Hathaway BRK.B has sold at a loss its entire portfolio of U.S. airline stocks comprising American Airlines AAL , Delta DAL Air Lines, Southwest LUV Airlines and United UAL Airlines.

“We put, whatever it was, seven or eight billion into it and we did not take out anything like seven or eight billion,” Buffett said during Berkshire’s annual meeting on May 2. “That was my mistake.”

“We have sold the entire positions,” he said. “When we change our mind we don’t take half measures or anything of the sort.” 

And as I reported in an 2012 post talking about Carol Loomis’ Tap Dancing to Work,

“… the afterword for articles like “Buffett Hits $200 million Downdraft” (Nov 17, 1994) reminds readers that Warren actually made money on the USAir investment (which many people may have an impression of it being a money losing investment).”

Warren Buffett: Why we sold our entire stakes in American, Delta, Southwest, and United Airlines

xxx


Keanu Reeves & Warren Buffett have Love in common

Wednesday, 15 May, 2019

Keanu Reeves left Stephen Colbert speechless

Keanu Reeves left Stephen Colbert speechless on Friday night when the subject of death came up as he promoted two of his upcoming projects (third “John Wick” movie & third instalment of the “Bill and Ted” film series).

“After the late-night host asked him what happens if they aren’t able to write the song, Reeves responded: “Well it’s the end of the universe, it’s the end of the time and space continuum. It’s all over.”

“So you’re facing your own mortality and the mortality of all existence?” Colbert asked.

“Yeah,” Reeves nodded his head.

Colbert quickly followed up by asking Reeves what he thinks happens when we die.

The “John Wick” star thought about it for a moment before giving the profound response: “I know that the ones who love us will miss us.

As the audience said “Awwww,” Colbert appeared stunned. As a smile spread across his face, the late-night host said, “Wow,” before he shook Reeves’ hand for a moment and ended the segment.

Reeves is no stranger to tragedy. According to People, the actor lost his best friend to a drug overdose in 1993 and his girlfriend Jennifer Syme died in a car crash in 2001. Syme and Reeves previously had a child who was born stillborn in 1999.” [source text of this quote: Fox]

Watching Keanu’s insightful answer reminded me of a relevant Warren Buffett quote I read in his biography “The Snowball: Warren Buffett and the Business of Life” by Alice Schroeder which also comes down to LOVE:

“Basically, when you get to my age, you’ll really measure your success in life by how many of the people you want to have love you actually do love you.

I know many people who have a lot of money, and they get testimonial dinners and they get hospital wings named after them. But the truth is that nobody in the world loves them.

That’s the ultimate test of how you have lived your life. The trouble with love is that you can’t buy it. You can buy sex. You can buy testimonial dinners. But the only way to get love is to be lovable. It’s very irritating if you have a lot of money. You’d like to think you could write a check: I’ll buy a million dollars’ worth of love. But it doesn’t work that way. The more you give love away, the more you get.

I’ve added Reeves’ quote and an excerpt of Warren’s quote to my long list of Quotes I Love.


Warren Buffett PBS NewsHour interview

Tuesday, 27 June, 2017

June 26, 2017 America should stand for more than just wealth, says Warren Buffett

PBS, June 26, 2017, Here is Warren Buffett’s first tax return, filed at age 14

Warren Buffett says GOP health reform bills are relief for the rich


Was Warren Buffett’s $150,000 1971 beach house (on sale/listed now for $11 million) a good or bad investment for him?

Sunday, 28 May, 2017

For anyone who bought a $150,000 beach house that is on sale for $11 million now could be consider a good investment. (Have a look of this video of the inside of Buffett’s beach house.) But for fame investor Warren Buffett, well, thats different. To Buffett, the same $150,000 in 1971 could become quite a different beast in 2017 over 46 later. In “The Oracle of Omaha is selling. This time it’s real estate” CNBC news reported in March 2017 (emphasis added),

He [Warren Buffett] paid $150,000 for the property back in 1971, which is about $900,000 in today’s dollars.

What you may be surprised to find out is that Buffet, one of the world’s richest people, took out a 30-year mortgage when he bought the 6bedroom, 7 bathroom seaside spot.

 

“When I bought it for $150,000, I borrowed some money from Great Western Savings and Loans. So I probably only had $30,000 of equity in it or something like that – it’s the only mortgage I’ve had for fifty years,” Buffett said.

He added, “I thought I could probably do better with the money than have it be an all equity purchase of the house.”

And indeed he did.

“That $110 or $120 thousand I borrowed, I was buying Berkshire then,” says Buffett.

The businessman says he was constantly buying Berkshire in the early ’70s, when the stock was around $40 a share.

“I might have bought 3,000 shares of Berkshire or something like that from the proceeds of the loan — so that’s [worth] $750 million [today].”

Yes, the 750 million dollars is a mind boggling number as Buffett earned that with the $120,000 he borrowed. In a sense, the $30,000 that he didn’t borrow could have meant $187.5 million if he bought BRK shares instead which is way more than the house list price of $11 million.

At the end of the day, Buffett, his first wife and family plus friends got a lot of enjoyment from the house over the years and that is more than mere “investment” and monetary return.

I remember reading Buffett gifting his three children some BRK shares (not a ton) through grandpa Howard. Warren’s three children could have been “rich” if they had kept onto their shares. BUT that would have been the wrong way to live lives as they have to experience their lives in their own ways instead of holding to “mere money” as none of us can take money away from this earth when we pass on.


Watch Berkshire Hathaway 2017 annual meeting Livestream 10AM ET, May 6th

Tuesday, 2 May, 2017

Have a watch of the livestream of the Berkshire Hathaway 2017 annual event by Yahoo Finance (10AM ET, May 6th Sunday, 2017).

From CNN Money, “Warren Buffett should answer these 6 key questions

Are you ready for the so-called Woodstock of Capitalism? Warren Buffett will address tens of thousands of Berkshire Hathaway shareholders at the company’s annual meeting in Omaha on Saturday.

And many more will be watching the festivities on their phones, computers or tablets thanks to a livestream of the event by Yahoo Finance. This is the second straight year that Yahoo will simulcast the event.

May 10, 2017 update:

May 6th, 2017 Market Watch “Warren Buffett live blog recap: Berkshire Hathaway annual meeting

May 6th, 2017 FT, “Buffett at Berkshire’s annual meeting 2017 – as it happened

Morningstar, “2017 Berkshire Hathaway Annual Meeting Live Blog


What would Warren Buffett tell United Airlines to do?

Thursday, 13 April, 2017

Billionaire investor Warren Buffett‘s Berkshire Hathaway Inc. is reportedly the largest single shareholder of United Airlines parent’s United Continental Holdings (UAL) with a stake of 28.95 million shares, or 9.2% of the shares outstanding (according to latest SEC filings).

So far Buffett has not spoken about this United self-inflicted mess (United Express Flight 3411 incident wiki page) yet but we may learn something from history. You see, Buffett biography The Snowball‘s author Alice Schroeder reported Buffett (an American Express investor) wrote the following during the 1963 Salad Oil Scandal (or “Soybean Scandal”) [with emphasis added],

It is our feeling that three or four years from now, this problem may well have added to the stature of the company [American Express] in establishing standards for financial integrity and responsibility which are far beyond those of the normal commercial enterprise.

Schroeder continues in The Snowball [with emphasis added],

Buffett wrote that two paths lay before the company, and that an American Express that took responsibility and paid the $60 million [note: remember, this is 1963!] to the banks would be worth very substantially more than American Express disclaiming responsibility for its subsidiary’s acts.” He described the $60 million payment as inconsequential in the long run, like a dividend check that got “lost in the mail”.

Using history as guidance, what would Warren Buffett tell United Airlines to do?

My guess is Buffett would advice United CEO Oscar Muñoz (or whoever replaces him) to take responsibility and pay a reasonable amount to settle the pending lawsuit as a United that take responsibility “would be worth very substantially more than United disclaiming responsibility“.

And in an imaginary world that Muñoz (or whoever replaces him) doing the RIGHT THING, “this problem may well have added to the stature of the company [United] in establishing standards for integrity and responsibility which are far beyond those of the normal commercial airlines.” Yes, things need to be done RIGHT now, and United need to lead in “establishing standards for integrity and responsibility which are far beyond those of the normal commercial airlines.

We will see what will happen in time. With Berkshire’s $2 billion (April 13 closing price of $68.07 multiply by 28.95 million shares) investment holding in United, I won’t be surprised reporters will want to ask what Buffett thinks about this mess next time he is interviewed on CNBC or other news media. We will see if I’m right or wrong.

Have a watch of Dr. Dao’s lawyers (more info at Thomas Demetrio’s law firm) and his daughter Crystal Dao Pepper’s hour long press conference today (CNN report) (CBC FB full video, CBC News report).

April 13, 2017 Update:

Sen. Franken (April 11, 2017), “Sen. Franken Presses United Airlines to Explain Forcible Removal of Passenger on Weekend Flight” [emphasis added]

– A federal cap exists on the amount of money a commercial airline may compensate a passenger for being involuntarily denied boarding or rescheduled for a flight. Why was the full amount of $1,350 not offered to passengers aboard Flight 3411 before the passengers were involuntarily denied boarding and forcibly removed? Does the $1,350 cap serve any benefit to consumers?

– Was the Louisville-bound flight oversold prior to including the four United Airlines personnel reported to have been granted seats to enable them to reposition from Chicago to Louisville? If so, were there alternative flight or ground transportation options for these four crew members that could have ensured they arrived in Louisville with sufficient time to board their next flight? Did United Airlines have the ability to assign other crew members to that flight departing from Louisville?

Does United Airlines limit the number of airline tickets that may be oversold on each flight?

Aviation Week, “Podcast: United in Crisis” – ATW and Aviation Daily editors discuss multiple mishaps and backlash after video of passenger’s violent removal goes viral.

LA Times Op-Ed. “Let Richard Branson kill United Airlines

LA Times, “At United Airlines and Wells Fargo, toxic corporate culture starts with the CEORead the rest of this entry »


Warren Buffett after Trump win

Saturday, 12 November, 2016

CNN Money (Nov 11, 2016): One-on-one with Warren Buffett after the 2016 election


Tap Dancing to Work: Warren Buffett on Practically Everything – First Look

Wednesday, 21 November, 2012

Tap Dancing to Work: Warren Buffett on Practically Everything by Carol J. Loomis - pix 1

Forty-two months! Thats how long I’ve been eagerly awaiting for Carol Loomisnew book “Tap Dancing to Work: Warren Buffett on Practically Everything, 1966-2012: A Fortune Magazine Book” (368 pages, on sale Nov 26th and online amazon.com & indigo.ca). Carol is Fortune magazine senior editor-at-large and a long time (40+ years) close friend of Warren Buffett! I am thrilled to see Carol’s book published and in my hands as it feels like having an insightful person who knows Warren really well to guide me through some important and insightful articles. It will take me some time to read & review the book, please stay tune for my detailed review. Until then, my first impression of the book is it looks awesome!

Long time readers of Warren‘s news and insights will be familiar with some of key articles in this collection and also see many (for me) new articles that are important but less well known. Carol has added many insightful commentaries before the articles to give us context and share with us her views. For example, the article “The Inside Story of Warren Buffet” (April 11, 1988) is Fortune’s first profile of Warren and Carol’s preamble explains what lead her to finally wrote the first profile about Warren after knowing him for 20+ years at that point! And then the afterword for articles like “Buffett Hits $200 million Downdraft” (Nov 17, 1994) reminds readers that Warren actually made money on the USAir investment (which many people may have an impression of it being a money losing investment).

P.S. Now, let me explain my wait of almost forty-two months in this postscript. You see, in April 2009, shareholders of Warren Buffett‘s Berkshire Hathaway NOT physically presented at the annual shareholders’ meeting in Omaha were given opportunities to ask Warren & Charlie remotely in advance via email for the first time. And I jumped at the chance by emailing my question to Carol! Along with my question, I told Carol that,

I am a big fan of your Fortune articles about Warren and BRK. (I have taken the time to look up some of your older articles and really enjoy reading them.)”

In Carol’s email reply was where I first read of the mention of a possible book (the book that I am finally holding in my hands)! So, yes, I’ve been eagerly awaiting the book since Apr 2009, and that is about forty-two months! :)

P.P.S. Sharp-eyed readers may have noticed there is a stack of five books in the above picture. Can you guess the titles of the Warren related books in the stack? Find out how many you guess correctly by clicking here to see this picture.

P.P.P.S. If you have read this far, you might as well check out my review of Warren’s biography “Snowball” by Alice.

note: this article is cross-posted by me at examiner.com

May 16, 2016 Update: (with video) “Buffett’s editor Carol Loomis: Pen, paper, Fed-Ex & email but never the telephone“. Via Yahoo, click here to view a full replay of the 2016 Berkshire Hathaway annual shareholder meeting


Obama’s State of the Union speech 2012 – Selected excerpts

Wednesday, 25 January, 2012

Keywords: Trade Enforcement Unit, Reemployment system, community career centers, clean energy, natural gas, wind, solar, battery industry, , , ,

Watch President Obama Deliver the 2012 State of the Union Address

Some excerpt from Obama’s State of the Union address: Full text [HT CBS]

Trade Enforcement Unit

“I will go anywhere in the world to open new markets for American products. And I will not stand by when our competitors don’t play by the rules. We’ve brought trade cases against China at nearly twice the rate as the last administration – and it’s made a difference. Over a thousand Americans are working today because we stopped a surge in Chinese tires. But we need to do more. It’s not right when another country lets our movies, music, and software be pirated. It’s not fair when foreign manufacturers have a leg up on ours only because they’re heavily subsidized.

Tonight, I’m announcing the creation of a Trade Enforcement Unit that will be charged with investigating unfair trade practices in countries like China. There will be more inspections to prevent counterfeit or unsafe goods from crossing our borders. And this Congress should make sure that no foreign company has an advantage over American manufacturing when it comes to accessing finance or new markets like Russia.”

Reemployment system

“Jackie Bray is a single mom from North Carolina who was laid off from her job as a mechanic. Then Siemens opened a gas turbine factory in Charlotte, and formed a partnership with Central Piedmont Community College. The company helped the college design courses in laser and robotics training. It paid Jackie’s tuition, then hired her to help operate their plant. Read the rest of this entry »


Quotes of Warren Buffett at Fortune’s Most Powerful Women – Buffett dares Rupert Murdoch to publish tax returns together re WSJ challenge

Wednesday, 5 October, 2011

Few interesting quotes from “Transcript of Warren Buffett at Fortune’s Most Powerful Women Summit

* “As of today, our housing-related businesses are as bad as they’ve ever been during this period. Everything else you name is up. And our railroad carried 200,000 car loads last week, that’s the highest total in three years. That’s stuff moving around the country, supplying merchants and doing all kinds of things. If you take our five largest businesses, all of them will either set records for earnings or just about set records for earnings this year.”

* “If I can buy dollar bills for 90 cents, I’ll buy them. I want to warn the people that are selling to me that I believe I am buying their dollar bills for 90 cents because they’re our partner. So, I give them notice first. And then if they want to sell me dollar bills cheap — any of you want to do it, I’m here.”

* “And since 1992, the average income of the 400 highest incomes has gone from 40-odd million to 220-odd million, fivefold. During that time, their tax rate as a percentage of taxable income has fallen from 29 percent down to 21 percent. That counts payroll taxes and income taxes.”

* “I’m not supposed to mention it here, but the Forbes 400 just came out. (Laughter.) And the aggregate wealth of the Forbes 400 this year was over $1.5 trillion. That’s up sevenfold in the last 25 years from 200 million roughly 25 years ago. That is not what the American public has experienced. So, the disparity has grown wider and wider in this country.” Read the rest of this entry »


Warren Buffett on Charlie Rose talking about his NYT op-ed “Stop Coddling the Super-Rich”

Tuesday, 16 August, 2011

Have watch of the insightful Warren Buffett, in his own words, chatting with the great interviewer Charlie Rose about his NYT op-ed “Stop Coddling the Super-Rich” 14, Aug, 2011. With respect to business insights, Warren loves data and he sees data from 70+ businesses, so insights from him are worth considering.

update: Last night, Aug 15, 2011, program is now on YouTube. Have a watch.

P.S. As a side note, I not only have read Warren’s 62 chapters and 960 pages biography “Snowball”, I also frequently read Alice’s blog. Including, belatedly, this Aug 6 article “Buffett Makes First “Unfriendly” Takeover Offer“.


Credit worthiness of the United States; End the deficit in five minutes; 60% long-term capital gain and 40% short-term gain

Tuesday, 12 July, 2011

I finally managed to find some time to catch up on things I want to read, “CNBC Transcript: Warren Buffett on Russian Roulette, Tax Breaks for Corporate Jets, and America’s Bright Future

Here are a few excerpts from CNBC Transcript: Warren Buffett.

BUFFETT: I can— I can— I can end the deficit in five minutes.
BECKY: How?
BUFFETT: You just pass a law that says that any time there’s a deficit of more than 3 percent of GDP, all sitting members of Congress are ineligible for re-election. Yeah. Yeah. Now you’ve got the incentives in the right place, right? So it’s capable of being done. And they’re trying to use the incentive now we’re going to blow your brains out, America, you know, in terms of your— of your— in terms of your debt worthiness over time, and that’s being used as a threat. A more effective threat would be just to say if you guys can’t get it done, we’ll get some other guys to get it down. And incidentally, we had— we had Simpson-Bowles, you know, almost eight or 10 months ago.
BECKY: Right. […]”

BUFFETT: Oh, I would— well, you certainly change it on capital gains and dividends. I mean, if you take the 400 richest Americans and the 400 people who paid the greatest income tax— the Treasury’s been putting those figures out for 15 years or so. If you go back 15 years, the average income of the 400 top people— the 400 top people’s around 45 million. They paid about 27 percent. Now it grew, the most recent figures, to 350 million. That is incredible. And that’s nothing like’s happened to the rest of the world. The tax then was 16.6. So while they’ve gotten ungodly richer, the rate has come down 11 points. Now, that is a big tilt in the world. And I would go after the very rich. […]”

BUFFETT: I would say this. I would say this. The capital gains rate at 15 percent, the— if you buy a future, S&P future in Chicago and it goes up 10 seconds later, you resell it, it’s 60 percent long-term capital gain and 40 percent short-term gain. Now, I’m not sure, you know, how anybody can come up with the logic of that.”


Warren Buffett talks about David Sokol and the Lubrizol deal at BRK Annual shareholders meeting

Saturday, 30 April, 2011

Check out NYT DealBook Live-Blogging of the Meeting. Highly recommended. I’ve excerpted a few sections related to David Sokol that is important to read (with emphasis added),

“12:50 p.m.  Buffett’s message on compliance: Trust me

DealBook’s Andrew Ross Sorkin asks: Given what’s happened, why doesn’t Berkshire institute stricter controls for employees’ trades?

Buffett’s answer hinges on trust. The company lays out what he says are clear rules about what is and isn’t permitted. Berkshire isn’t an investment advisory firm, and it isn’t a mutual fund, he says, suggesting that it’s not obligated to have a big compliance department.

He also cites the expansiveness of Berkshire — some 260,000 employees — and how subsidiaries handle most of the issues with their workers.

To Buffett, his view appears to boil down to this. People determined to break the rules will do so, regardless of compliance policies. How can the company stop someone from trading in his cousin’s name?

“If there’s anything we can do in the rules that will make it even more explicit that rules are not made to be danced around … we want to make sure we do it,” he says.

Munger adds that having a big compliance department doesn’t necessarily preclude problems. Wall Street banks have armies of compliance officers and still suffer huge numbers of scandals. (His exact words were “the most scandals.”) [note: True but this means another scandal can happen.] Read the rest of this entry »


Berkshire Audit Report: David Sokol’s Trading Violated Company Insider Trading Policies and Procedures

Wednesday, 27 April, 2011

Today Berkshire Hathaway‘s Audit Committee released its report, “Trading in Lubrizol Corporation Shares by David Sokol” (PDF file). Have a read. Here is a notable paragraph,

“Mr. Sokol’s answer to Berkshire Hathaway’s CFO, Mr. Hamburg, concerning the investment bankers similarly fell short of the degree of candor required of a corporate fiduciary, and suggests his answer to Mr. Buffett’s earlier inquiry noted above was intended to deceive.

Check out what Alice is saying in “World Learns New Facts Showing Buffett Was Misled” (here is an excerpt),

“However, upon several readings of this release, there do not appear to be *any* new significant facts that were unknown to Berkshire on March 30th when its initial press release was issued. These facts are only *new* to those of us who are reading the audit committee report “

and “Sokol Fights Back Round 1“.

Here are some notable media reports.

Bloomberg (Alice Schroeder), “Buffett Disciples Want ‘Oracle’ to Come Clean” [Apr 28 update] Highly recommended reading. Have a watch of Alice’s Bloomberg video interview. Here is an excerpt from the article (emphasis added),

“The problem isn’t the about-face. It is the missing explanation for why Berkshire went so easy on Sokol in the first place. Whatever the detailed reasons, ultimately it boils down to Berkshire’s reliance on Buffett’s personal judgment about his managers and his ability to delegate to them to the point of abdication. When this one-man infrastructure makes a mistake, it’s hard to admit that Buffett is at fault. Changes in the way the company is managed are personal, not corporate. Under the circumstances, the temptation is high to blame everything on a single rogue employee. That doesn’t excuse Sokol’s behavior, but the failure of oversight needs to be acknowledged and corrected. […] Read the rest of this entry »


Worth Reading: Michael Douglas headlines fundraiser for McGill, Berkshire Hathaway Insider Trading/Shareholder Suit, Herzog/McCarthy/Krauss talk science & art

Tuesday, 19 April, 2011

* CBC News, “Michael Douglas began cancer journey in Canada – Star will headline Montreal fundraiser for head and neck cancer

* Alice Schroeder, Berkshire Hathaway Insider Trading, Shareholder Suit [Here is a link to the shareholder suit filing http://www.scribd.com/doc/53362856/kirby-v-sokol]

* Filmmaker Werner Herzog, novelist Cormac McCarthy, and physicist Lawrence Krauss talk about the connection between science and art (NPR Science Friday).


Warren Buffett’s Dilemma & Berkshire’s Challenges

Monday, 4 April, 2011

From Alice Schroeder, Warren Buffett’s biographer,


Whatever happened to Warren Buffett’s famous saying, “Lose a shred of reputation for the firm, and I will be ruthless”? – 96,400 free lottery tickets ($3 million winnings)

Thursday, 31 March, 2011

April 13th, 2011 Update: MarketWatch, “David Sokol knew of progress toward a possible Berkshire Hathaway Inc. bid for Lubrizol Corp. before he bought almost $10 million worth of stock in the lubricant company, according to a new regulatory filing.

April 1st, 2011 Update: “Sokol affair “credit negative” for Berkshire: Moody’s

Alice’s “Moody’s Weighs In on Sokol, Cites Succession Risk

***

As a fan of Warren Buffett, it saddens me to see David Sokol‘s surprise resignation, Warren’s press release about the resignation, and Sokol‘s CNBC appearance this morning. Seeing these and the many news reports today lead me to question if Warren has forgotten his saying as told in the 1996 book Buffett: The Making of An American Capitalist,

Lose money for my firm and I will be understanding; lose a shred of reputation for the firm, and I will be ruthless.

Alice Schroeder has become my “go-to” expert on all things Warren and Berkshire since she published Warren’s biography “Snowball” in 2008 and what I’ve learned of her as a reporter and as a person. I highly recommend you read Alice’s Bloomberg opinion piece, “Buffett Misses Chance to Show Moral Courage: Alice Schroeder” and her blog entry.

I think it is very important for someone like Alice to speak up and hold Warren accountable while his mind is still very sharp. I think Warren has set up some bad precedence for the next CEO. (Or may be this mess will paradoxically serve as what NOT to do?)

Here are excerpts from Alice’s opinion (emphasis added),

What were they thinking? How could Warren Buffett excuse David Sokol’s trading in Lubrizol Corp. (LZ) stock while Sokol was pitching the company to Berkshire Hathaway Inc. (BRK/A) as an acquisition candidate?

Buffett and Sokol both say that nothing “unlawful” was going on (Sokol even went so far as to tell CNBC he did nothing inappropriate). Their explanation is that, because a deal with Lubrizol hadn’t actually been struck and wasn’t likely when Sokol bought his shares, it was all right for Sokol to profit from his knowledge of a possible deal.

On Wall Street, we call this kind of trading front-running, and everybody knows that it is wrong. People get fired for doing it. […]

Lottery Tickets

In substance, when Sokol pitched the deal to Buffett, he was holding stock in Lubrizol that had the equivalent of free lottery tickets attached. These 96,400 lottery tickets gave Sokol unfair odds — odds far better than in the kind of lottery the general public gets to play. Read the rest of this entry »


Warren Buffett’s (PR) nightmare – David Sokol’s surprise resignation and Buffett’s “unusual” statement

Thursday, 31 March, 2011

Update 1:07am MST, Apr 1, 2011: “CNBC TRANSCRIPT: David Sokol Defends His Controversial Lubrizol Stock Purchases

Update 8:57pm MST, March 31: Bloomberg, “Buffett Misses Chance to Show Moral Courage: Alice Schroeder

Update 9:17am MST: CNBC, “Sokol to CNBC: I Shouldn’t Have Told Buffett I Liked Lubrizol” (with extensive video interview of Sokol)

NYT DealBook entry after Sokol CNBC appearance, “The Perception of the Sokol Situation

Watch the CNBC Sokol interview first, Bloomberg TV interview, “Jeffrey Matthews Interview on Sokol, Buffett”

CNBC, “LIVE BLOG – David Sokol’s Live Interview on CNBC’s Squawk Box”

***

Today is not a good day for Warren Buffett or Berkshire Hathaway shareholders.

* Here is the unusual statement/official news release “Warren E. Buffett, CEO of Berkshire Hathaway – Announces the Resignation of David L. Sokol” (PDF file)

Paradoxically, the most damaging bit may be the second last paragraph, “I have held back nothing in this statement. Therefore, if questioned about this matter in the future, I will simply refer the questioner back to this release.” To me, this is in full prep mode to fight with lawyers (SEC lawyers, et al). A totally silence after issuing such an “unusual” statement is asking for serious headline news trouble! (see more excerpt at the end) I hope I am wrong here.

* NYT DealBook, “Abrupt Exit for a Top Deputy to Warren Buffett

* CNBC Warren Buffett Watch, “Surprise Resignation of Leading Buffett Successor Raises Unanswered Questions” (with video)

* More excerpt from the official news release,

“Finally, Dave brought the idea for purchasing Lubrizol to me on either January 14 or 15. Initially, I was unimpressed, but after his report of a January 25 talk with its CEO, James Hambrick, I quickly warmed to the idea. Though the offer to purchase was entirely my decision, supported by Berkshire’s Board on March 13, it would not have occurred without Dave’s early efforts. Read the rest of this entry »


Warren Buffett having some fun (CNBC videos and transcripts)

Wednesday, 2 March, 2011

The following are links to videos and transcripts of Warren Buffett having some fun on CNBC and, in a sense, putting up a big free TV ad to attract profitable businesses to sell to him.

Part 1 “Most Berkshire Businesses ‘Inching Along”, Part 2 “The ‘Zebra’ That Got Away”, Part 3 “‘Elephant Gun’ Targets & Riding the Railroad”, Part 4″Blame Bankers, Bankers, Bankers?”, Part 5 “Cars and Bricks”, Part 6 “China and America’s Diminishing Dominance”, Part 7 “What Should Happen to CEOs of Failed Companies”.


$1 billion of free cash flow a month

Sunday, 27 February, 2011

Warren Buffett made a point in 2010 letter to Berkshire Hathaway shareholders,

“Money will always flow toward opportunity, and there is an abundance of that in America. Commentators today often talk of “great uncertainty.” But think back, for example, to December 6, 1941, October 18, 1987 and September 10, 2001. No matter how serene today may be, tomorrow is always uncertain.

Alice Schroeder, biographer of Buffett, wrote this about the letter,

“It goes without saying that historically, capital management has long been the single greatest creator of value at Berkshire. The company has been built from a series of capital transactions and asset/liability matching and capital allocation decisions over many years. Therefore it is not really surprising to see Buffett acknowledge this as the third pillar. Yet one could almost see Buffett salivating as he wrote that Berkshire is now generating $1 billion of free cash flow a month, a threshold it crossed this year. That’s an astounding figure. Wal-Mart, the world’s largest company, does not even come close to generating cash flows like this.

Buffett was speaking of free cash flows. In another part of the letter, he wrote about how happy he to be committing enormous amounts of capital to regulated businesses like BNSF and utilities. This is *not* coming out of the $1 billion! Berkshire will either be making acquisitions or buying securities to the tune of $1 billion or more a month for the foreseeable future. By way of comparison, the cash expended for the enormous BNSF acquisition took Berkshire about 16 months to accumulate (at today’s run rate). Imagine Berkshire buying the equivalent of more than two BNSFs every three years.”

More from Alice, “Who Will Create the Third Pillar of Value?“, “How to Run a Bank“, “New Info on NetJets“, “NetJets Europe

WSJ, interesting excerpts of facts & figures, “Warren Buffett’s 2010 Report: The New Beige Book Guide to the U.S. Economy

Carol Loomis, Fortune, “Buffett, Simpson and a mountain of Berkshire investments


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