Jan 242020
 

From CNBC “Warren Buffett Watch”:

Buffett tops 5-year list of most generous billionaires

Warren Buffett gave away $14.7 billion worth of Berkshire Hathaway stock over five years, putting him in the number one slot of Forbes’ list of the “Top 25 Billionaire Givers (2014-2018).” (Buffett also topped the magazine’s list of the top givers in 2018.)

 

His five-year total is 16.3% of his current net worth.

 

Top 5 Billionaire Givers

 

Since 2006, when he announced his intention to give away almost all his fortune, Buffett has donated $34 billion.

 

 

 

 

 

 Posted by at 10:13 pm
Jan 232020
 

I am quoted in InvestorPlace on General Electric:

Is JPMorgan Right to Call the General Electric Stock Price “Wrong?”

With GE’s earnings report right around the corner, Culp’s positive influence simply cannot be underestimated. As University of Maryland’s Robert H. Smith School of Business Clinical Professor of Finance, David Kass, explained in an e-mail to InvestorPlace:

“CEO Larry Culp is beginning to turn GE around.  There is optimism among investors that GE’s fourth quarter report to be issued on January 29 will show evidence of an improvement in corporate performance with revenues and earnings exceeding most analysts’ expectations.  Culp had been lead director of GE before being promoted to CEO.  Prior to that he had a stellar record of building and managing Danaher Corp. (NYSE:DHR), a Washington, DC based conglomerate.”

 

 Posted by at 9:23 am
Jan 092020
 
6 largest market capitalizations:
 
(1) Apple — $1.35 trillion
(2) Microsoft — $1.22 trillion
(3) Google — $969 billion
(4) Amazon — $938 billion
(5) Facebook — $614 billion
(6) Berkshire Hathaway — $553 billion
 Posted by at 9:06 am
Jan 062020
 

MANY ARE GIVEN THE TITLE. BUT WHO DESERVES IT?

Jan 06, 2020
Finance

SMITH BRAIN TRUST –  Maryland Smith’s David Kass can hardly keep up with all the Warren Buffetts that are rumored to be out there at any given time.

There has been Yang Liu, the “Warren Buffett of China,” and Ratan Tata, a so-called “Warren Buffett of India.” There’s Masayoshi Son, the supposed “Warren Buffett of Japan,” and Carlos Slim, the “Warren Buffett of Latin America.” Don’t forget Prem Watsa, the supposed “Warren Buffett of Canada,” and alternatively, Jim Pattison, also the “Warren Buffett of Canada.” And Al-Waleed bin Talal, he’s called the “Warren Buffett of Saudi Arabia.”

Then there’s Ed Lampert, once dubbed “the Warren Buffett of the hedge-fund world;” Robert Parker, dubbed the “Warren Buffett of wine;” and even Charles Fabrikant, dubbed the somewhat random “Warren Buffett of barges.”

“There’s only one Warren Buffett,” Kass smiles. “And it’s Warren Buffett.”

He knows. A clinical professor of finance at the University of Maryland’s Robert H. Smith School of Business, Kass has closely followed Buffett’s investments and philosophy for more than 35 years. For many years, he made an annual journey to Nebraska, always with a group of students, to attend the Berkshire Hathaway annual shareholders meeting, and often to attend a private meeting with the so-called Oracle of Omaha himself.

With his expertise, Kass is often asked to opine on a business luminary who has been hailed as a “Warren Buffett of” something, or someplace.

Most recently, he was asked about money manager Neil Woodford, who was said to be the “Warren Buffett of Britain,” before his spectacular flameout in 2019. Woodford’s empire – with more than 15 billion British pounds under management – crumbled last year, crushed by the asset manager’s newfound inability to pick stock winners and newfound propensity to pick stock losers. Today, he’s under investigation by U.K. financial authorities.

Kass calls it hubris.

“Woodford is another failed portfolio manager who does well for 20 or 25 years, and then blows up – loses everything. There are many examples similar to Woodford, and only one Warren Buffett,” he says.

Why the obsession about who will be the next “Warren Buffett” or who is the “Warren Buffett” of some country or some investment sector?

“The answer,” Kass says, “very simply is that Warren Buffett has been the only investor in the world who has been among the top three wealthiest people for decades. He has achieved his wealth and status primarily by buying and holding a portfolio of stocks of large American companies that are industry leaders in terms of growth and profitability.”

Buffett has said the quality needed to succeed as an investor is a steady temperament, Kass says, an ability to handle sharp market swings – favorable and unfavorable. In terms of intelligence, Buffett has said an above average IQ of 120 is plenty. “Indeed, Buffett has joked that if someone has an IQ of 150, they should sell the extra 30 points above 120.”

It’s temperament, not intelligence, that dooms the fortunes of the other “Warren Buffetts,” Kass says. “Eventually, it’s overconfidence on the upside and/or panic selling on the downside.”

It is important to note that Warren Buffett’s Berkshire Hathaway, between 1965 and 2018, grew at a compounded annual return of 20.5% per year, compared to 9.7% for the S&P 500 (with dividends included). $1,000 invested with Warren Buffett (Berkshire Hathaway) in 1965 would be worth $23.6 million today. By contrast, $1,000 invested in the S&P 500 during the same time period would be valued at $148,300 today. “He achieved this result without leverage (debt) and derivatives,” Kass says. “It was plain vanilla investing. He has achieved high returns with low risk.”

“Warren Buffett has succeeded,” Kass continues, “because of his rare combination of intelligence, analytical ability, strong finance background, and, of course, temperament. His preferred holding period for his stock investments is ‘forever.’ How many investors would not panic and sell when their investments decline in value by over 50% in a short period of time, such as during the Great Recession of 2007-2009, or by 23% on one day, October 19, 1987 (Stock Market Crash of 1987)? Very few.”

(Note:  I was interviewed for this article published by Smith Brain Trust – Robert H. Smith School of Business, University of Maryland.)

 Posted by at 4:43 pm
Jan 062020
 

Over the past 78 years (1942-2019), the S&P 500 (with dividends included) has gone up in 80% of those years.

S&P 500 Total Returns by Year
YearTotal Return
201931.49
2018-4.38
201721.83
201611.96
20151.38
201413.69
201332.39
201216.00
20112.11
201015.06
200926.46
2008-37.00
20075.49
200615.79
20054.91
200410.88
200328.68
2002-22.10
2001-11.89
2000-9.10
199921.04
199828.58
199733.36
199622.96
199537.58
19941.32
199310.08
19927.62
199130.47
1990-3.10
198931.69
198816.61
19875.25
198618.67
198531.73
19846.27
198322.56
198221.55
1981-4.91
198032.42
197918.44
19786.56
1977-7.18
197623.84
197537.20
1974-26.47
1973-14.66
197218.98
197114.31
19704.01
1969-8.50
196811.06
196723.98
1966-10.06
196512.45
196416.48
196322.80
1962-8.73
196126.89
19600.47
195911.96
195843.36
1957-10.78
19566.56
195531.56
195452.62
1953-0.99
195218.37
195124.02
195031.71
194918.79
19485.50
19475.71
1946-8.07
194536.44
194419.75
194325.90
194220.34

 

 Posted by at 10:15 am
Dec 262019
 

At today’s closing price of $289.91 for Apple, Berkshire’s 5.4% stake in the company is valued at $72 billion, double its $36 billion investment.  One of Berkshire’s portfolio managers, Ted Weschler or Todd Combs, made Berkshire’s initial purchases in Apple during the first quarter of 2016. Since then, however, the vast majority of additional purchases were made by Warren Buffett.  Apple is the largest holding in Berkshire’s common stock portfolio, representing about 30% of its total value.

 Posted by at 8:35 pm
Dec 252019
 

On December 23, Berkshire Hathaway announced that Todd Combs, one of Warren Buffett’s portfolio managers, will become CEO of its Geico automobile insurance business on January 1, 2020.  Todd Combs will likely be reporting to Ajit Jain,  who heads up all of Berkshire’s insurance operations.

This appointment represents a major increase in responsibility for Combs (48) and raises the possibility of his being considered as an eventual successor to Warren Buffett (89) as CEO of Berkshire.  Until now, it has been widely believed that Greg Abel (58) was the most likely candidate to succeed Buffett, with Ajit Jain (68) also under consideration.

Combs will continue in his role of portfolio manager for Berkshire, along with Ted Weschler (57), where each is currently managing $14 billion. Warren Buffett on many occasions has praised the performance of both Combs and Weschler.  Combs, a former hedge-fund manager, was hired by Buffett in 2010.

Combs has also led Berkshire’s involvement in its venture, along with its partners Amazon and JPMorgan Chase. to lower health-care costs for their employees. He also played a major role in Berkshire’s acquisitions of Precision Castparts Corp. and Duracell.  More recently, he made investments in financial-technology companies in emerging markets, StoneCo Ltd (Brazil) and Paytm (India).

Combs has previous experience in automobile insurance. He worked at Progressive Corp., a Geico competitor, earlier in his career.  Combs also sits on the board of directors of JPMorgan Chase.

Geico is the second largest U.S. personal car insurer by premium volume, behind only State Farm. The company wrote $26.49 billion in premiums, and reported $1.54 billion in pretax underwriting earnings in the first nine months of 2019 vs. $ 1.98 billion in 2018. This 22% decline in pretax underwriting earnings was attributed to increases in losses from claims and increases in advertising expenses, insurance premium taxes and employee-related costs, which reflected wage and staffing increases.

Although Greg Abel is currently considered to be the front runner to succeed Warren Buffett, another internal candidate such as Combs may emerge over time as his eventual successor.  If Buffett (89) can match Charlie Munger’s (95) longevity, and Combs succeeds in his additional responsibilities, then his relative youth as compared to the other current candidates would become a large advantage.  Charlie Munger will turn 96 on January 1.

 

 

 

 Posted by at 11:24 pm