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New Book on Buffett: “The Oracle & Omaha: How Warren Buffett and His Hometown Shaped Each Other”

The Oracle & Omaha: How Warren Buffett and his hometown shaped each other

Warren Buffett, “The Oracle of Omaha,” often speaks fondly of his hometown. The city provided him a comfortable home base, away from Wall Street’s distractions. In return, Omaha benefited from the worldwide attention that came his way and from the generosity of his early investors. It turned out to be a profitable relationship for both The Oracle & Omaha.

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Buffett’s decision to hire two investment lieutenants is paying off for Berkshire Hathaway, and it’s paying off for the two younger money managers, too.

PUBLISHED MONDAY, APRIL 29, 2013 AT 1:00 AM / UPDATED AT 7:28 AM

BERKSHIRE’S MONEYMAKERS

Investors earn handsome paychecks by handling Buffett’s business

By Steve Jordon
WORLD-HERALD STAFF WRITER

Warren Buffett’s decision to hire two investment lieutenants is paying off for Berkshire Hathaway, and it’s paying off for the two younger money managers, too. Todd Combs, 42, and Ted Weschler, 51, are expected to receive bonuses exceeding $50 million each based on their investment results in 2012, evidence that they and Buffett made the right choices when they connected. Weschler and Combs had admired Buffett long before meeting him, and both actively sought connections that led to their hiring.  Read more of this post

Obama spends more time playing golf and on holiday (976 hours) than on the economy (474 hours) since his Jan 2009 elections: Government Accountability Institute Report

Obama spends more time playing golf than on the economy: Report

LONDON — In an analysis of the presidential diary and newspaper reports, the Government Accountability Institute found that United States President Barack Obama has spent 976 hours since his January 2009 election on holiday and playing golf.

4 MIN 22 SEC AGO

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LONDON — In an analysis of the presidential diary and newspaper reports, the Government Accountability Institute found that United States President Barack Obama has spent 976 hours since his January 2009 election on holiday and playing golf. In contrast, he has only spent 474.4 hours in economic meetings. “As a government watchdog group, we just tabulate the numbers and let others decide how to interpret them,” said Mr Peter Schweizer, president of GAI, which compiled the report. “People understand that presidents have the most stressful job in the world and need a break from time to time. There will be some who will be encouraged by the numbers and some who will wish the president spent more time in economic meetings.” The American news website Breitbart claimed that the survey may have underestimated Mr Obama’s time devoted to recreation. GAI calculated a round of golf as taking four hours, but Breitbart pointed out that Mr Obama said last year that playing golf is “the only time that for six hours, I’m outside”. “Like most people, presidents still do work while on vacation,” said Mr Schweizer. “So we really went out of our way to fairly and accurately reflect how the president spends his time.” Breitbart also said that the analysts had been generous when calculating how much time Mr Obama spent in economic meetings. Anything on the White House calendar even remotely connected to economics, such as “Obama meets with Cabinet Secretaries” or “Obama has lunch with four CEOs” counted as an economic meeting. The president said in 2011 that the economy was his main priority, reported The Daily Telegraph. “You should know that keeping the economy growing and making sure jobs are available is the first thing I think about when I wake up every morning,” he told an audience of UPS workers. “It’s the last thing I think about when I go to bed each night.” But the GAI report showed that the amount of time spent on the economy has fallen significantly in the years since his 2009 election. In 2009, Mr Obama spent 187.2 hours in economic meetings. A year later that number dropped to 127.8 hours. In 2011 the total fell to 73 hours. By the end of 2012, the president had spent 100 fewer hours on finance than in his first year in office, with a total of 80.4 hours devoted to the economy. AGENCIES

Trillion-Dollar Student Loan Bubble Cracks With Pulled Sallie Mae Bond Deal

Student Loan Bubble Cracks With Pulled Sallie Mae Bond Deal

Tyler Durden on 04/29/2013 08:19 -0400

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In 2007 a small number of French hedge funds imploded over sudden losses stemming from highly leveraged bets made on the unstoppable subprime mortgage market. At the time, a few saw the writing on the wall; but many simply wrote it off as just another over-levered hedge fund and the subprime mortgage market was ‘fine’. Fast forward six years and as we have discussed numerous times (most recently here and here) there is a bubble, potentially far bigger than subprime, in student loan debt. As one of the last remaining outlets for state-sanction credit creation, this is a big deal; but, of course, the popping of the bubble (or even a slight leak) is eschewed since there is so much ‘reach for yield’ and the Fed’s got your back. That is until this week. As WSJ reportsSallie Mae (SLM), the nation’s largest non-government student lender just cancelled a $225 million debt offering as investors  decided they simply were not getting paid enough for risk – amid rising student loan defaultsSimply put, there’s a limit to what investors will tolerate. SLM was offering a stunningly low 3.5% interest on the deal and investors snubbed it, “There are certain limits that can’t, or shouldn’t, be crossed if you’re an investor,” adding that, “we’re beginning to see what the tolerances are.” This is a significant shift since SLM and other issuers of debt backed by student loans sold $7.8 billion worth of securities this year through last week, up from $5.7 billion in the same period of 2012. With the portion of student borrowers who are late on their debt payments by 90 days or more climbing to 31% in 2012, from 24% in 2008; we wonder if this is the tipping point for the student debt in 2013 that was generally ignored in subprime in 2007, until it was too late.

Updated April 25, 2013, 7:23 p.m. ET

Investors Say No to Sallie Mae Bond Deal

Poor Demand for Security Backed Only by Excess Cash Flows Shows Limits to Appetite for Risk

By AL YOON

There’s a limit to how much risk investors will tolerate.

Student-loan company Sallie Mae SLM +0.24% canceled a $225 million bond offering on Thursday after about two weeks on the market, according to people familiar with the deal. The move may mark a line in the sand: Investors whose thirst for yield has revived all manner of riskier asset classes decided they weren’t getting paid enough to buy at the offered price amid rising student-loan defaults. Read more of this post

The Opportunistic Reporting of Material Events and the Apparent Misconception of Investors’ Reaction

The Opportunistic Reporting of Material Events and the Apparent Misconception of Investors’ Reaction

Benjamin Segal INSEAD – Accounting & Control Area

Dan Segal Interdisciplinary Center (IDC) Herzliyah; Singapore Management University – School of Accountancy

April 23, 2013
INSEAD Working Paper No. 2013/54/AC

Abstract: 
Using a comprehensive sample of non-earnings 8-K filings from 1996 to 2011, we examine whether firms engage in opportunistic reporting of mandatory and voluntary news. We find strong evidence of opportunistic reporting of negative news, especially among public firms. Public firms are more likely to delay disclosure of negative news, report negative news after trading hours, and report on the last day of the week. We also find evidence of opportunistic bundling of news. Our findings support the notion that managers engage in strategic disclosure by delaying or obfuscating negative news in order to mitigate the potential market reaction. Factors such as the risk of litigation, information asymmetry, and corporate governance influence reporting behavior. Further analysis of the market reaction to opportunistic disclosure uncovers no evidence of investor inattention or under-reaction.

How Entrepreneurs Come Up With Great Ideas: There is no magic formula. But that doesn’t mean there’s no formula at all.

April 29, 2013

How Entrepreneurs Come Up With Great Ideas

There is no magic formula. But that doesn’t mean there’s no formula at all.

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At the heart of any successful business is a great idea. Some seem so simple we wonder why nobody thought of them before. Others are so revolutionary we wonder how anybody could’ve thought of them at all. But those great ideas don’t come on command. And that leaves lots of would-be entrepreneurs asking the same question: How did everybody else get inspiration to strike—and how can we work the same magic? To find out, we turned to the experts—investors, advisers and professors who have seen and heard countless success stories, as well as entrepreneurs who have written success stories of their own. They saw inspiration coming from all sorts of sources—everyday puzzles, driving passions and the subconscious mind. Here’s what they had to say. Read more of this post

P&G has a higher PE than Google as investors drive up the shares of dividend-paying companies, fueling a debate over whether these haven stocks are getting dangerously expensive

Updated April 28, 2013, 4:42 p.m. ET

In Stocks, Payouts Trump Potential

By JONATHAN CHENG

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Analysts expect paper-towel, toothpaste and soap maker Procter & GamblePG +0.68% to churn out per-share earnings growth of about 6% this year. Google‘sGOOG -0.95% profits will jump 18%, other analysts predict. So which stock is hotter? The answer: P&G, trading at 18 times projected per-share earnings and far above its five-year average of 15.4, according to data provider FactSet. In contrast, Google has a P/E ratio of 16.6, below its five-year average of 17.2. Investors are attracted by P&G’s sturdy dividend yield of 3.1%, assuring them at least a modest return on a stock known for its reliable performance. Google pays no dividend.

Investors searching for higher yields are driving up the shares of dividend-paying companies, fueling a debate over whether these traditional haven stocks are getting dangerously expensive. Some buyers argue that dividend stocks have entered a period where demand for income will keep valuations high, perhaps for years, thanks to Federal Reserve easy-money policies that are expected to remain in place at least into 2015. Skeptics say the “this time is different” thesis will prove wrong, and that investors will discover they have overpaid. Read more of this post

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