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Archive for May, 2007

Slight delay in updates

I’m currently in the midst of attending two back-to-back seminars (lasting a total of 6 days), so it will be a few days before I resume with the summary of Warren Buffett’s Berkshire letters again.

Please check back to the site again in a few days time.

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Recently, I wrote that Berkshire was purchasing shares in Burlington Northern Santa Fe Corp.

Apparently, Warren Buffett seems to be having a liking for railway companies now.

Last week, Berkshire Hathaway Inc. said it had acquired stakes in Norfolk Southern Corp. and Union Pacific Corp.

As of Dec 31 2006, Berkshire owned 3.95 million shares of Norfolk Southern valued at $198.9 million, and 8.21 million shares of Union Pacific valued at $755.6 million, according to a filing with the U.S. Securities and Exchange Commission.

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Commencement Speech by Charlie Munger

Here’s a video recording of the recent commencement speech given by Charlie Munger, long-time partner of Warren Buffett and vice-chairman of Berkshire Hathaway Inc, to 300 Law graduates from University of Southern California.

The entire video is about 2hrs long but you can fast forward to about 43min to hear Charlie speaking (Introduction about Charlie by the Law Dean starts at about 39min). Charlie’s speech lasts about 40 minutes.

He’s not going to be talking about value investing or anything similar, but shares more of his ideas towards life and gives some general advice for the law graduates.

Here are some ideas from his speech: …Continue reading » Commencement Speech by Charlie Munger

Buffett for President

After searching for a day, I still can’t find any other sources with news of Warren Buffett standing for President. I would have expected to find such an important news reported over all the major news broadcasters. It looks increasingly likely that the previous news might be a hoax.

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Breaking News

A local news source has reported that Warren Buffett will be running for the 2008 US Presidential Election. According to the source, Buffett will be using a $11 billion warchest to fund his election campaign.

At the present moment, I’m still trying to get confirmation of the news.

More details to follow.

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Just listen finished to the interview of Warren Buffett by Charlie Rose.

Here’s a summary list of the points that were covered in the interview:

2006 was a good year. Largest growth in networth in corporate America history.

Most expensice lunch $610,000. 7 other people came along with the bidder.

Size is an anchor on performance. 73 businesses.

Discussion on newspapers.

Succession. One criteria is able to handle risk. They will be selected not just by their performance, but also how they achieve their performance.

Weapons of mass destruction.

Current account and trade deficit. Giving away our assets in order to feed our spending habits.

His thoughts on the presidential candidates.

South Korea.

Looking more overseas compared to the past. Through investing in foreign and international companies.

Why he stopped holding foreign currencies.

Berkshire’s stake in Petrochina.


The 2 and 20 fee (fund management).

What the 19 people at Berkshire HQ do.

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More Warren Buffett Videos

Here’s an exclusive 1-hr interview of Warren Buffett by Charlie Rose. I haven’t got a chance to watch it yet but I will make another post on the key points once I have managed to do so.

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In this video interview with John P. Hamilton of Bloomberg, Warren Buffett talks about his philanthropic efforts, United States tax policy, his search for a chief investment officer and his support for both Barack Obama and Hillary Clinton as presidential candidates.

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Buffett on Being Buffett

In this short interview with Susan Lisovicz of CNN, Warren Buffett gives us his views on the Dow (when it will go to 2,000,000), the future of the housing market (sick!), gas prices (cheap), executive salaries (high) and Berkshire’s stake in Petrochina.

Note: You have to watch a short 6 second advertisement before you can watch the interview.

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Berkshire Annual Letter 1996 (Part 3)

In Berkshire’s super-cat business, they sell policies to insurance and reinsurance companies to protect them from the effects of mega-catastrophes.

As such events occur rarely, Berkshire’s super-cat business will thus show large profits in most years with the occasion huge loss in certain years.

That huge loss year will come – it is only a matter of when. When that happens, shareholders need not panic and sell Berkshire shares. Their after-tax “worst-case” loss from a true mege-catastrophe is probably no more than 3% of their book value (and 1.5% of their market value).

To take things into perspective, the swings in the market price of Berkshire would have been even greater.

Volatility in Berkshire’s earnings isn’t too important either. Warren Buffett would rather earn a lumpy 15% over time than a smooth 12%.

Berkshire has three major competitive advantages in the super-cat business.

1) The parties buying reinsurance from them know that Berkshire has the financial strength to pay under the most adverse of situations.

2) After a mega-catastrophe, insurers might find it difficult to obtain reinsurance even though their needs would be very great at that time. Berkshire will have the capacity to underwrite it when the time comes.

3) They can provide a coverage size that cannot be matched in the industry.

With regards to the pricing, they are made at a level so that eventually 90% of total premiums will end up being paid out in losses and expenses.

It will take a long time to find out whether those prices were correct.

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