For Buffett, the Past Isn’t Always Prologue

MAY 6, 2013, 9:23 PM

For Buffett, the Past Isn’t Always Prologue

OMAHA — A little under an hour into the question-and-answer session at Berkshire Hathaway’s annual meeting here on Saturday, a name searing with history but now largely forgotten was mentioned: Henry E. Singleton. Mr. Singleton was, arguably, the Warren E. Buffett of the 1960s and ’70s, though hardly famous. His company, Teledyne, became a remarkably successful and huge conglomerate, with an assortment of related — and unrelated — businesses. Like Mr. Buffett, Mr. Singleton was a modest man with a rare sense of rationality. He didn’t pay his shareholders dividends; he was convinced he could allocate the money more profitably. And he was right more often than not. But after spending decades creating one of the world’s largest conglomerates, Mr. Singleton, who stepped down as chief executive in 1986 but remained as chairman, decided to break it into three companies in the early 1990s before he died at age 82 in 1999. He decided that Teledyne had become too big and unwieldy for a single manager to effectively oversee and expand. It’s a narrative that has been speculated about for years when it comes to Mr. Buffett’s Berkshire Hathaway, the fifth largest company in the world, judged by market value. Mr. Singleton’s name was invoked by Douglas A. Kass, an investor who is betting against Berkshire’s stock and was invited to the meeting to pepper Mr. Buffett with questions along with a panel of analysts and journalists, including this one. After explaining the story of Mr. Singleton, whom Mr. Buffett long admired, Mr. Kass then asked: “What is the advisability of restructuring Berkshire into separately traded companies organized along business lines?”

Mr. Buffett, who has described Berkshire as his “painting,” paused briefly. With a slight smirk that turned briefly into a scowl, he rejected the notion that the path Mr. Singleton chose was the right one for Berkshire. “Breaking them up into several companies I’m convinced would create a poorer result,” Mr. Buffett insisted, while praising Mr. Singleton as an investor. Charles Munger, Berkshire’s vice chairman, had this to say about Mr. Singleton: “I don’t think you should get into your head, just because he is a genius, he did it better than us.” (Mr. Munger knew Mr. Singleton personally.) But Mr. Munger quickly also acknowledged a truism of business: “You look at companies that got really big in the world, the record is not very good. We think we’ll do a little better than the giants in the past. Maybe we have a better system.” Read more of this post

Jeff Matthews on The Berkshire Hathaway Annual Meeting, 2013 Edition

Monday, May 06, 2013

“We Want to Win”: The Berkshire Hathaway Annual Meeting, 2013 Edition

Well props to ‘CD 105.9’ is all I can think, driving east on Dodge Street in a cold rain to the Berkshire Hathaway shareholder meeting early on a dark Saturday morning.  The reason for my good mood?  The Omaha “classic rock” station I’ve had my rental car radio set to the last three days is playing “Back in the USSR,” making this the first time I’ll have been to a Berkshire meeting with Paul McCartney’s Beatles-era send-up of communist Russia ringing in my ears.  “Let me hear your balalaikas ringing out/come and keep your Comrade warm/I’m back in the USSR/You don’t know how lucky you are, boy/Back in the USSR.”  What better way to get ready for Warren Buffett’s “Woodstock for Capitalists” than that?  Unfortunately, while CD 105.9 manages to mix more Beatles into its playlist than most “classic rock” formats do (they played “With a Little Help From My Friends” twice in two days)—something I’ve never quite understood, since The Beatles’ catalogue is about as “classic” as it gets—the good vibes never last long because the station also plays an inexplicably heavy rotation of Bob Seger. Enough about him. Pondering this strange play list as the final A chord on “USSR” fades out, I focus on my driving, because there’s still snow on the ground here in Omaha—unusual at this time of year, when the fields should be springing to life—and the roads are slick with rain, which is why they’ve already opened up the CenturyLink arena to Berkshire shareholders and Buffett groupies instead of forcing them to wait outside until the normal 7 a.m. doors-open time, according to a text message from a waiting acquaintance who’s already nabbed a seat inside and is saving one for me.

Disoriented in Downtown Omaha

But it’s not just the early morning darkness and wet roads causing me to pay more attention than usual. Omaha’s had a growth spurt since last year’s meeting, a fact I’d discovered last night trying to find the Hilton, which is right next door to the CenturyLink Center (where the meeting takes place), and both the hotel and the arena used to stand out like the Empire State Building (in its heyday) above an otherwise barren strip of vacant lots and highway exit ramps just a few blocks from downtown Omaha.  But most of those lots have given way to multi-story parking garages, hi-tech warehouses, bustling industrial buildings and a baseball stadium (Omaha hosts the college world series every summer), causing me to lose my bearings more than once last night and prompting me to pay attention this morning.  (It’s not just the business district that’s growing: the Old Market area—Omaha’s Soho, if you will—is changing, too. What used to be not much more than a square city block of jarring cobblestone streets and red bricked restaurants, bars and the occasional shop has spread into neighboring streets, with new restaurants everywhere and even a near-high-rise condo building going up along its fringe.)  I park on a side street in a metered spot a few blocks from the CenturyLink—the parking meters aren’t used on Saturdays (a little trick to save the $8 they now charge for event parking…I could swear it was $5 last year)—and head to the show while admiring the new buildings, which seem to be everywhere. It’s almost Miami-esque, at least in terms of quantity if not in bling.  After all, the Midwest doesn’t do bling.

Not Exactly ‘Hard Time Mississippi’

It does do volatile weather, of course, and the cold rain has eliminated the usual long lines of eager shareholders waiting for the doors to open, pushing everyone inside to find a seat and then get coffee before the movie starts.  I find my seat and settle down while absorbing the scene inside the arena, where 19,000 other people are finding their seats while Stevie Wonder’s gritty “Living For the City” plays on the sound system—painting quite a verbal contrast with the very rich, urbane crowd gathering here: “A boy is born/in hard time Mississippi/surrounded by four walls that ain’t so pretty/his parents give him love and affection/to keep him strong, moving in the right direction/Living just enough, just enough for the city…”  Paul Simon’s “The Boy In the Bubble” comes on next, its terrific beat marred by reference to “the bomb in the baby carriage,” which is a little to close to the recent events in Boston for comfort, so I head out to try to find Mario Gabelli, who usually works the floor for investment ideas from locals he has been grilling for decades, as only Mario can, and immediately bump into Doug Kass and his son Noah.  Doug is the short-seller Buffett has chosen to be on the panel of three analysts asking questions (in conjunction with another panel of three reporters asking questions, with shareholders making up the rest), and we hug despite him carrying a bulging briefcase and a clutch of papers.  Dougie is prepared, as well he should be, but that’s no surprise to me. We go way back to the early days of TheStreet.com, where the strictures of a for-profit enterprise eventually led me to start this not-for-profit blog, and I’ve always admired his willingness to say what he means and mean what he says without the need for crowd approval—a trait that will come in handy today. Read more of this post

The elite boast of little sleep, but it’s those at the bottom who really suffer

The elite boast of little sleep, but it’s those at the bottom who really suffer

Sleep proves how inequality touches even our most intimate lives – just ask those who toil for low pay with inadequate rest

Studies show that people at the bottom of society have among the least amount of sleep. 

Aditya Chakrabortty

The Guardian, Monday 6 May 2013 21.25 BST

For Bob Iger, boss of Disney, the day begins at 4.30am. “I exercise … I look at email. I surf the web. I watch a little TV, all at the same time. I call it my quiet time, but I’m already multi-tasking.” Attaboy, Bob! Mind you, no early bird gets near a worm if Brett Yormark, chief executive of the Brooklyn Nets basketball team, has his way. Brett’s up by 3.30am and in the office within an hour, from where he bombards flunkies with apparently “motivational emails”. Weekends are down time, so he only clocks in at 7am.

Some executives seize the day so firmly they might as well not bother with a kip at all. Take Dan Akerson, head of General Motors: he’s up before dawn to phone subordinates in Asia, but has confessed to Associated Press that even sleeptime is plagued by the question, “Why is the stock not doing better?” Still, his schedule means such dark nights of the soul are at least ultra-short. Read more of this post

What Triggers People to Reveal Too Much; Avoiding the Post-Conversation Cringe

May 6, 2013, 6:42 p.m. ET

Thank You for Not Sharing

What Triggers People to Reveal Too Much; Avoiding the Post-Conversation Cringe

By ELIZABETH BERNSTEIN

Ever shared too much information—and you weren’t even tipsy? Bonds columnist Elizabeth Bernstein joins Lunch Break with a look at why we over-share, and how to control the impulse. 

Read more of this post

Ignore Anyone Who Tells You Insurance Is An Investment

Ignore Anyone Who Tells You Insurance Is An Investment

Michael, Bankers Anonymous | May 6, 2013, 8:48 AM | 2,886 | 8

Insurance has one purpose, and one purpose only. Remembering that purpose will keep you from expensive insurance ‘solutions.’ The purpose of insurance is risk transfer. For the rest of your life, insurance salespeople will try to sell you the idea that you can both increase your wealth and protect against risk at the same time. Not True. Buying insurance transfers your personal risk to an insurance company – and should be used only that way. Insurance does not increase your wealth and attempts to convince you otherwise end in expensive financial monstrosities. Read more of this post