Author Topic: Wedgewood Partners on selling their BRK stake  (Read 10734 times)

longinvestor

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1803
  • Never interrupt compounding unnecessarily -Munger
Re: Wedgewood Partners on selling their BRK stake
« Reply #20 on: October 14, 2019, 05:13:10 AM »
I agree Gregmal regarding MSFT.

I've always thought that the reason he never bought MSFT was because he didn't think it had a durable competitive advantage, but in order to not offend his friend Bill he gives this excuse.

I don't believe that the shrewdest investor of all time would pass up on an opportunity for such a stupid reason.

Yeah, I think that some people care a fair amount about integrity and other people don't at all and will do what they can get away with. What's more, I think it's hard for both types of people to believe in their hearts that the other side truly exists. (You can see this in the comments here: "I don't believe that the shrewdest investor of all time would pass up on an opportunity for such a stupid reason." Similarly, I have a hard time believing anyone would even consider selling their integrity when they have literally no need for the money.)

As for the argument "who cares what people think--it doesn't have anything to do with responsibilities to people and shareholders", I find the argument pretty weak.

First, Buffett isn't Berkshire shareholders' bitch. He has no responsibility to destroy his own reputation--or compromise his integrity--to make money for shareholders. To me, this point is sufficient to refute the argument.

Second, displaying a lack of integrity could hurt his business. One reason people sell private companies to Buffett is because they believe he'll act with integrity in his dealings. Not everyone's trying to maximize their own profit, particularly when they're thinking more about their own legacy and the outcome for their company and it's employees.  If Buffett were viewed as someone lacking integrity, some people might decide not to sell to him the company they've spent decades building. That would hurt Berkshire.

(Chrispy, the difference with Microsoft is that Buffett is good friends with Gates, but not good friends with Bezos or Dimon.)

+1

I share your thoughts re: integrity.

But, this message board is literally filled with folks who have trounced the index, Buffett and virtually stand alone by way of performance. Based on reported performance here over the past decade. Give it another decade and the world should stop listening to Buffett’s words.

Who knows if I will do so myself but for now, Buffett and Munger are on top of my reading list.


Read the Footnotes

  • Sr. Member
  • ****
  • Posts: 313
Re: Wedgewood Partners on selling their BRK stake
« Reply #21 on: October 14, 2019, 05:53:43 AM »
We are at a point in the markets that might prove to be the end of one of the longest and worst time periods for the relative performance of value investors. To abandon Warren Buffett or any value investor at this point may say more about the person removing their funds than about Warren Buffett or any other (formerly) great value investor.

One qualitative indications of this situation is that Justin Sun, a cryptocurrency promoter paid $4.6 million to have lunch with Buffett in order to explain to Buffett how he was mistaken about cryptocurrencies. He sought media attention and talked about how he was going to educate Buffett. Almost immediately after attracting attention to himself, he was investigated, accused of fraud and criminal activity, and his business seemed to collapse. As far as his coin, it has fallen from an all-time high last year of 0.22 USD to 0.016 USD today. So much for TRON being a store of value. It looks like Buffett's statements that cryptocurrency is a "gambling device" or "rat poison squared" are more likely to stand the test of time.

People who claim that he has lost touch risk eventually looking like the people who said the same thing in the late 1990's. It's hard for anyone pursuing a sound, conservative policy to look good on a relative basis when surrounded by bubbles inflated by easy money monetary policy.

Gregmal

  • Hero Member
  • *****
  • Posts: 2521
Re: Wedgewood Partners on selling their BRK stake
« Reply #22 on: October 14, 2019, 06:01:14 AM »
I agree Gregmal regarding MSFT.

I've always thought that the reason he never bought MSFT was because he didn't think it had a durable competitive advantage, but in order to not offend his friend Bill he gives this excuse.

I don't believe that the shrewdest investor of all time would pass up on an opportunity for such a stupid reason.

Yeah, I think that some people care a fair amount about integrity and other people don't at all and will do what they can get away with. What's more, I think it's hard for both types of people to believe in their hearts that the other side truly exists. (You can see this in the comments here: "I don't believe that the shrewdest investor of all time would pass up on an opportunity for such a stupid reason." Similarly, I have a hard time believing anyone would even consider selling their integrity when they have literally no need for the money.)

As for the argument "who cares what people think--it doesn't have anything to do with responsibilities to people and shareholders", I find the argument pretty weak.

First, Buffett isn't Berkshire shareholders' bitch. He has no responsibility to destroy his own reputation--or compromise his integrity--to make money for shareholders. To me, this point is sufficient to refute the argument.

Second, displaying a lack of integrity could hurt his business. One reason people sell private companies to Buffett is because they believe he'll act with integrity in his dealings. Not everyone's trying to maximize their own profit, particularly when they're thinking more about their own legacy and the outcome for their company and it's employees.  If Buffett were viewed as someone lacking integrity, some people might decide not to sell to him the company they've spent decades building. That would hurt Berkshire.

(Chrispy, the difference with Microsoft is that Buffett is good friends with Gates, but not good friends with Bezos or Dimon.)

+1

I share your thoughts re: integrity.

But, this message board is literally filled with folks who have trounced the index, Buffett and virtually stand alone by way of performance. Based on reported performance here over the past decade. Give it another decade and the world should stop listening to Buffett’s words.

Who knows if I will do so myself but for now, Buffett and Munger are on top of my reading list.

And the hyperbole is great and all, but, it completely avoids addressing the real issue. The integrity argument doesn't really add up for somebody who has used it as their main crux for not making an investment. Is the public perception that, let me get this straight, he is trading off inside info from Gates, really any more reality based than the negative perception of helping to bail out the horrible big banks that robbed hard working everyday Americans during the housing crisis? Or you know, disagreeing with Muhtar Kent and that horrendous Coke compensation plan, but letting them go ahead with it anyway? Or the nepotism argument he makes while having Howard on his board? I'm not saying he doesnt have a right to do these things or even that I think he shouldn't, but its just a bs argument that of all things, two of the wealthiest and (as far as we know) most philanthropic people the world has ever seen, would collude to trade Microsoft stock! LOL, GTFO. Not to mention, Buffett rarely even trades! I'm calling bs here and I think most objective folks are too. But...

Lets stretch the logical interrogation a little further.

Buffett has said, numerous times that stock are fairly valued here, and actually very, very cheap if indeed these rate levels are permanent. I remember him, perhaps using some hyperbole but nonetheless making the claim that the Dow should be at 100,000 if 2% rates were permanent. Yet for years we've been rates stay around there, and now on the horizon are FURTHER RATE CUTS! And yet, Warren hasn't bought a stock in ages and his largest position, by far, is CASH!

My objective is not trashing Buffett; I'm looking to be an honest investor and not just make excuses for nonsense I would not tolerate from other portfolio companies. I dont know why this is so hard for people. Buffett's decision making prowess has not exacxtly been up to par the past half decade or so, maybe longer. I dont know why people would rather hear glowing things about their investments than get cold, hard, pushback from opposing viewpoints....
« Last Edit: October 14, 2019, 06:03:28 AM by Gregmal »

Mephistopheles

  • Hero Member
  • *****
  • Posts: 1567
Re: Wedgewood Partners on selling their BRK stake
« Reply #23 on: October 14, 2019, 07:05:45 AM »

(Chrispy, the difference with Microsoft is that Buffett is good friends with Gates, but not good friends with Bezos or Dimon.)

Todd Combs is on the board of JPM just like Gates is on the board of Microsoft. Buffett is friends with Dimon, who are we to say how good of friends they are? Buffett, Bezos and Dimon I'm sure are friendly given the healthcare initiative.

Combs is on the JPM board and BRK owns JPM. Neither Buffett, Combs or Weschler are on the MSFT board. I think illegal insider trading is more likely with JPM stock than with MSFT stock.

We're splitting hairs if we're comparing the quality of the friendships in determining whether they should invest or not.

Mephistopheles

  • Hero Member
  • *****
  • Posts: 1567
Re: Wedgewood Partners on selling their BRK stake
« Reply #24 on: October 14, 2019, 07:09:30 AM »
FWIW, it appears that Buffett is friendly with Tim Cook too. Remember, they had a conversation re: use of all that cash at AAPL, and Buffett advised Cook to repurchase shares? And then all of a sudden Buffett has a $50 billion position in the stock...

LongTermView

  • Sr. Member
  • ****
  • Posts: 336
Re: Wedgewood Partners on selling their BRK stake
« Reply #25 on: October 14, 2019, 08:03:03 AM »
People are talking past each other in some respects. Arguments can be made that it is just as "unethical" to buy companies other than Microsoft. But it was silly for Wedgewood to single out Microsoft without mentioning all the times that Buffett has said he won't buy their stock because of his relationship with Gates.

Gregmal

  • Hero Member
  • *****
  • Posts: 2521
Re: Wedgewood Partners on selling their BRK stake
« Reply #26 on: October 14, 2019, 08:09:55 AM »
Thats why I used Costco.

But its not about a specific name. It s about the oddity of, his macro outlook has actually been pretty spot on, but his investing style has been flaccid and completely contradicts what's he is saying. If he thinks what he thinks(ie at worst fairly valued and at best wildly undervalued...) he really can't find ANYTHING! to invest in? Especially companies he's pointed out as having missed but admires, like GOOG which was at $1000 not to long ago or Costco? Let alone myriad others? Theres something off. IMO its because he's selfishly invested in the idea of one last giant elephant hunt. But thats just my opinion and it could be any number of other things, which as a shareholder I dont like.

DooDiligence

  • Hero Member
  • *****
  • Posts: 1978
  • ♪ 🎶 ♫ ♪ 🎶 ♫
Healthcare 20.9% - EW NVO // BRK.B - 22.7% // Auto's & Oil 14.7% - CLB GPC VDE

Banking 10.2% - WFC // Entertainment 4.8% - DIS // Drinkers & Smokers 7.0% - MO

Retail 1.5% - ULTA

---

%'s held @ MV 11/29/2019 minus 18.2% investable cash

i trumpet my ignorance

https://twitter.com/tunawish

scorpioncapital

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1826
    • scorpion capital
Re: Wedgewood Partners on selling their BRK stake
« Reply #28 on: October 14, 2019, 01:36:01 PM »
I believe I read somewhere gates recounting a story that buffet came to him about thinking of buying msft or ibm and gates told him buy msft not IBM. He did in fact buy ibm. Probably it was a mistake.
 If Berkshire only matches sp500 going forward it would not be a good result. Why exist at all then ? It really should outperform, even by a little.

cherzeca

  • Hero Member
  • *****
  • Posts: 2433
Re: Wedgewood Partners on selling their BRK stake
« Reply #29 on: October 14, 2019, 03:08:15 PM »
Buffett has always made sense to me when he points out that you are buying a piece of a business when you are buying a share of common. so my takeaway has been that while timing (buying right) is always important it is not the overarching criterion (especially when your targeted holding period is forever).  now comes the great FC and Buffett does quite well being the backstop (in addition to the Treasury, buying at the right time).  it seems to me that Buffett (having done well with the FC) is not willing to swing at a good pitch and is just waiting for the fat pitch (the punchcard concept).  the problem with buying only at the right time is that you can take too many pitches that are hittable.  there is no way you can justify building up a cash portfolio of >$120B during a period of low interest rates, extremely low employment, peace, and reasonable growth.  it means you are waiting for the next FC.  too conservative