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      « March 2008 | Main | May 2008 »

      April 30, 2008

      Berkshire Hathaway Meeting This Weekend

      With Berkshire Hathaway's annual meeting taking place this weekend, some random thoughts come to mind.

      I've never attended one of these, but I'm sure they're a blast.

      I wonder, though, if the truly long-time Berkshire shareholders feel sort of like the fans of a rock band who they used to see in small clubs and other venues. Then the band gets really, really big and seeing their favorite act means "sharing" the experience with massive crowds in huge arenas. Though I'm not denying Buffett's and Munger's investment wit and wisdom surely deserves as large an audience as possible.

      I've read that this weekend's gathering is, at least in part, being carried live by CNBC and the Fox Business Network (I don't know about Bloomberg).

      I remember when I first subscribed to Outstanding Investor Digest in 1991, it was one of the few, if not only, publication running lengthy transcripts of the Q&A session. I don't remember the financial media giving the Berkshire meeting much coverage, let alone the general press. OID's coverage of the meeting was really a competitive advantage for the publication, but I can't imagine it is any longer. (I stress that OID remains a great publication for value investors, but its publication schedule is lousy.)

      In picking stocks, investors have hits and misses. Then they have those stocks they missed by not buying. That was certainly the case with Berkshire Hathaway at the height of the Internet bubble. Reading and seeing second- and third-rate investors putting down Buffett was clearly the bell ringing in hindsight. And it shouldn't have taken hindsight to see that.

      I haven't looked at the company closely lately, but my impression is that Berkshire is more or less trading at roughly fair value. I've got a few names on my dance card I'm thinking about buying -- but Berkshire isn't among them. Maybe I'll look back and regret that, too.

      Anyway, if any of you reading this are heading out or in transit to Omaha, have a safe journey there and back.

      And a great time in between.

      Joe over at The Stalwart is going, and I'll be sure to read his thoughts about the gathering. He has a consistently interesting take on various topics and, while I don't know if he's a value player or not, getting his perspective on the Berkshire Hathaway annual meeting sounds more than worthwhile.

      GM Posts $3.3 Billion Loss

      Yet I patiently remain a holder. I may be brave, crazy or stupid, but if I wasn't prepared to see results like those announced today I would have sold last fall. When it was apparent we were headed for a downturn, if not full blown recession.

      General Motors (GM/NYSE) has a great non-US business. Clearly, more work -- read cuts -- needs to be done in North America.

      In short, GM shares are trading for less than my personal cost in the low $30s (I first bought these shares in early 2005, before launching Controlled Greed). And they are also below the $26.75 price when I recommended them in April 2005.

      But if I didn't own the stock, I'd buy it here, putting 4% to 5% of a portfolio in it.

      Should you? Only you can decide that. Just do your own due diligence before jumping in.

      April 29, 2008

      Harbinger's "Midas of Misery"

      By way of Sivaram's Can Turtles Fly? blog, I found this BusinessWeek feature on Philip Falcone, founder of Harbinger Capital Partners.

      Those of us shareholders in Media General (MEG/NYSE) know the name because Harbinger owns more than 18% of the Class A shares. And also because last week Harbinger succeeded in electing its three nominees to Media General's Board of Directors.

      The BusinessWeek article makes a good read. My advice is to print it out because it's fairly long. My printer spit out six pages and I have a hard time reading stuff that long on any computer screen.

      Anyway, you'll find lots of interesting material in this profile. It touches on Media General but there's lots more worthy of your time.

      April 28, 2008

      Reviving Brooks Brothers

      Anyone with any appreciation for traditional men's clothing wishes for Brooks Brothers to regain its past glory. The popularity of "dress casual" some years back, among other things, certainly took a toll on the company.

      The Daily Telegraph reports on Claudio del Vecchio's efforts to restore the old-fashioned standards that made Brooks:

      "We changed everything," says del Vecchio. "A lot of it we changed back to what it was before."

      An interesting bit is that del Vecchio claims the late Gianni Agnelli -- jet-set fashion icon and Fiat chief -- wore Brooks Brothers shirts.

      Oil Storage: World Point Terminals

      I don't know anything about World Point Terminals -- but I'm a huge admirer of Peter Cundill. According to this from The Globe and Mail Cundill has served on the company's Board since 1998:

      This little company, which seemingly trades by appointment and has a market capitalization of about $350-million, arrived on the Vox radar screen because it's had a healthy little run over past month, rising 40 per cent for no obvious reason. Mind you, it also fell by 70 per cent before it bounced back, again for no immediately apparent reason.

      The stock is not covered by any analyst, which makes it hard to get a grasp on but also possibly interesting if you can figure it out. I submit that for these reasons and more, it's worth a careful look.

      World Point Terminals trades in Canada. The linked story says Peter Cundill owns 10,000 shares.

      April 27, 2008

      More on Sequoia Reopening

      Michael Santoli mentions the Sequoia Fund reopening in his Barron's column (scroll down). It's notable that the fund's redemptions stem from attrition in the fund's longstanding shareholder base. Remember that this fund was launched to accommodate investors when Buffett ended his partnership.

      Santoli writes:

      Sequoia's performance is ahead of its peers' and the S&P 500 over the past year. That's impressive for a value-oriented fund, especially one with 19% stashed in retailers, and speaks to the managers' avoidance of credit-sensitive names in the 25-stock portfolio.

      Santoli points out that nearly half of Sequoia's net asset value consists of unrealized taxable gains. So anyone thinking of getting in may want to do so in a non-taxable account, if possible.

      Two Views of St. Joe

      St. Joe has long been a favorite of many value investors including Marty Whitman. The company owns 700,000 acres in the state of Florida -- with 310,000 acres within 10 miles of the Gulf Coast.

      This week's Barron's has a bullish piece on St. Joe. The stock price has fallen in half since 2005. But Barron's suggests this is a good time to get in, believing Florida's real estate market to pick up in the next year or so.

      Another positive view of St. Joe is found on Clyde Milton's Cheap Stocks blog. Clyde has owned the stock previously, but doesn't now. He says he'd like to see it fall a bit more before getting in.

      I've never owned St. Joe, and don't know anything about it compared to Clyde. Yet one of the things I find interesting about his blog is his theme of finding undervalued real estate assets in value stocks. So if you're a value player and real estate plays appeal to you, keep an eye on Clyde's moves with St. Joe in particular and his blog in general.

      April 24, 2008

      Sequoia Fund Reopens

      Longtime readers will recall my posting about the death of Bill Ruane in 2005. I wrote:

      When Warren Buffett closed the Buffett Partnership in 1969, he gave the partners a choice of receiving shares of Berkshire Hathaway or cash. Those taking cash were encouraged by Buffett to put their money in the Sequoia Fund. Either choice turned out to mean profits of millions of dollars.

      The Wall Street Journal reports the Sequoia Fund is reopening to new investors for the first time since 1982.

      Harbinger's Nominees Voted on Board

      In a most unsurprising development, Harbinger's three nominees for Media General's (MEG/NYSE) Board were elected today. I say unsurprising because you couldn't follow this story and not get the feeling as time went on -- from both Harbinger and Media General management -- that the slate was likely to make it.

      The only question was the vote tally. The results are preliminary and will be finalized in the next several days.  But Harbinger says the preliminary tabulations show its candidates received between 57% and 68% of the votes cast.

      If true, that sounds like a lot.

      Media General's Class A stock is overwhelmingly held by institutions. There's very little float considering its a NYSE-listed company.

      One thing about that is if the institutions are against you on something, they can wage and win a proxy battle. With Gabelli owning 22% and Harbinger owning another 18%, the three director nominees didn't need all that much more support.

      Of course, you know what I'm going to type next, don't you?

      Media General, like most other media outfits, has a dual-class structure keeping the founding family in charge. So this event may turn to be every bit as underwhelming as it was unsurprising.

      We'll see.

      April 23, 2008

      Bill Miller: End of Panic

      I've never followed Bill Miller of Legg Mason closely. That's no slighting or putting-down of him, we can't follow everyone and he's just never been on my dance card.

      That said, he's obviously got a great long-term record. So when I see the Bloomberg story with Miller saying the Bear Stearns sale signaled the end of the panic, I read it:

      "We have seen the bottom in financials and consumer stocks,'' Miller, 58, wrote. "I think we will do better from here on, and that by far the worst is behind us.''

      I confess to having no idea about that one way or the other. What's more, as Francis Chou has pointed out, we can't know if the managements of some financials know themselves. Until it's too late, that is.


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