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Archive for June, 2007

A few days ago, Brian Sullivan of Bloomberg did a short 12-min interview with Warren Buffett. In the interview, Warren talks about his Ebay auction for lunch and his relationship with Glide Foundation, his views on philanthropy and his plans to donate all his shares to charity.

The video can be found on the right hand side of this boomberg page under “related media on demand”.

Berkshire Annual Letter 1996 (Part 9)

In May 1996, 517,500 shares of Class B Common were sold for the first time. The creation and sales of these shares was a necessity.

Appearing in the market were many unit-trusts that were marketed as Berkshire look-alikes. Using Berkshire’s past reputation, they were trying to lure small and naive investors into investing with them (and earning high commissions and fees in the process).
…Continue reading » Berkshire Hathaway Class B Shares

Berkshire Annual Letter (Part 8)

Richard Branson, the owner of Virgin Atlantic Airways, was once asked how to become a millionaire. He had a quick answer to it: “Start as a billionaire and then buy an airline.”

Warren Buffett decided in 1989 to put that statement to the test by investing $358 million in a 9.25% preferred stock of USair. It turned out that Warren’s analysis of USair’s business was both superficial and wrong.

…Continue reading » How to Become a Millionaire

Legg Mason Thought Leader Forum 2006

Legg Mason Capital Management is one of America’s leading equity managers recognized for their distinct value investment process.

In September 2006, they conducted a leadership forum. The speakers and topics include the following: …Continue reading » Legg Mason Thought Leader Forum 2006

Berkshire Annual Letter 1996 (Part 7)

Warren Buffett feels that the best way for the majority of people to invest is through an index fund. These people are sure to beat the net results delivered by the majority of professional fund managers.

For the people who elect to do their own investments, there are a few important things to remember. Smart investing is not complex. Neither is it easy. …Continue reading » Intelligent Investing

Migration to WordPress Completed!

I have just finished migrating the entire Intelligent Investor Club site from Blogger over to WordPress. WordPress is really far better than Blogger in terms of features and functionality. Hope that the new navigation and layout will serve to enhance your reading experience.

Berkshire Annual Letter 1996 (Part 6)

The portfolio of Berkshire shows little change compared to the previous year.

Warren Buffett considers inactivity as intelligent behaviour.

He will never trade highly-profitable subsidiaries just because of a small change in some economic indicator. Neither will he do so because some Wall Street expert changes his views on the market.

In fact, this principle applies to his minority positions as well. In both cases, you want to acquire at a reasonable price, a business with excellent economics and able, honest management. …Continue reading » Selecting Stocks Investments

Berkshire Annual Letter 1996 (Part 5)

At Berkshire, reported earnings are a poor measure of the economic performance because the numbers represent only the dividends received from investees (which is a small fraction of the earnings attributable to their ownership).

Instead, the concept of “look-through” earnings is used. This consists of:

1) The reported operating earnings, plus;
2) Berkshire’s share of the retained earnings of major investees that are not reflected in their profits under GAAP, less;
3) An allowance for tax that would be paid by Berkshire if these retained earnings have been distributed.

Can we apply this concept to our own portfolio? …Continue reading » Look Through Earnings


Berkshire Annual Letter 1996 (Part 4)

GEICO is an extremely valuable asset to Berkshire and is headed by Tony Nicely, a superb business manager.

The strength of GEICO lies in its position as a low-cost operator. With low costs come low prices and good long-term policy holders.

GEICO also gets more than one million referrals (due to their low prices) annually which produces more than half of their business. This lowers than acquisition expensese, which makes their cost even lower.

In 1996, their voluntary auto policy grew 10%, which was an record growth. This is the area that Buffett focuses on and not involutary growth (from assigned risk pools and the like). That kind of growth is unprofitable.

On top of the growth, the underwriting was also profitable. The goal of GEICO is not to increase the profit margin, but to increase the price advantage given to customers. With that, the customer base would be expected to grow even further. …Continue reading » GEICO

One of Warren Buffett’s star investor is a guy called Lou Simpson, who manages GEICO’s $4 billion plus equity.

The 70 year old is one of the greatest investors of all time, out-performing the S&P 500 index an average of 7% over time.

Here are some points extracted from a recent interview that morningstar had with Lou Simpson recently. …Continue reading » Lou Simpson – Star Investment Manager of GEICO