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ABC VIDEO: Warren Buffett & his secretary speak

2012-01-27T07:23:00.000+13:00

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Buffett's assistant, Debbie Bosanek & Buffett speak to the ABC about tax and the politics of envy.

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CNBC: Does Warren Buffett's Secretary Really Make Over $200,000?

2012-01-27T07:13:00.001+13:00

Published: Thursday, 26 Jan 2012 | 1:00 PM ET

By: Alex Crippen
Executive Producer

Getty Images

Warren Buffett's assistant, Debbie Bosanek.

Forbes contributor Paul Roderick Gregory got some attention with his post Wednesday afternoon headlined "Warren Buffett's Secretary Likely Makes Between $200,000 and $500,000/Year."

Buffett's assistant, Debbie Bosanek, is in the news after sitting in Michelle Obama's box for Tuesday's State of the Union address in which President Obama repeated what Buffett has been saying for years: "Right now, Warren Buffett pays a lower tax rate than his secretary."

It's part of Obama and Buffett's argument for higher tax rates on the nation's wealthiest taxpayers, with the implication that a secretary doesn't get paid all that much and thus it is unfair she is paying a higher tax rate than her extremely wealthy employer.

Gregory appears to be trying to poke a hole in that argument by saying that at her supposed income of $200K to $500K, Bosanek "is scarcely the symbol of unjustice that Obama wishes her to project."

He assumes Buffett's tax rate is around 15 percent since most of his income comes from capital gains. Then, looking at IRS data, Gregory finds that:

"... taxpayers earning an adjusted gross income between $100,000 and $200,000 pay an average rate of twelve percent. This is below Buffett’s rate; so she must earn more than that. Taxpayers earning adjusted gross incomes of $200,000 to $500,000, pay an average tax rate of nineteen percent. Therefore Buffett must pay Debbie Bosanek a salary above two hundred thousand."

While we have no idea what Bosanek's compensation actually is, it does appear that Gregory's argument is based on an "apples to oranges" comparison.

Buffett's "office staff" example, as laid out in his New York Times op-ed last fall, is that his total 2010 federal tax bill — "the income tax I paid, as well as payroll taxes paid by me and on my behalf" — was 17.4 percent of his taxable income.

In that op-ed, Buffett says that using the same calculation method, that was a "lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent."

Gregory's conclusion is based on just income tax rates, not payroll taxes, compared to adjusted gross income, not taxable income.

As Forbes personal finance staffer Janet Novack wrote in October, based on a letter Buffett sent to Rep. Tim Huelskamp, Buffett's effective federal tax rate was just 11.06 percent of his AGI. Novack writes in a comment under Gregory's post that "just based on AGI" Buffett "pays an income tax rate below the rate for those with AGI of $100,000 to $200,000."

While it is possible Buffett pays his assistant a six-digit salary higher than his own $100,000 per year, there does not appear to be any real evidence to support a claim that she "must" be making more than $200,000 a year.

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VIDEO: Warren Buffett sings for Chinese New Year

2012-01-23T09:52:00.000+13:00

US billionaire Warren Buffett has appeared singing and playing the ukulele on Chinese state television. The billionaire popped up on CCTV and wished the people of China "a happy new year." The Lunar New Year of the Dragon begins at midnight on Sunday. "Your country has accomplished amazing things, and the best is yet to come," Buffett told the broadcaster. The investor is well respected in China for his financial success.

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TIME MAGAZINE: Interview with Warren Buffett - Jan 2012

2012-01-18T22:40:00.000+13:00

The full Warren Buffett Interview with Time Magazine from the Jan 23 Issue will be available at this blog from Friday 20 Jan (NZ Time)

Here is a short taste:

Warren Buffett believes in making money. He believes in fairness. He believes in the ability of government to make people's lives better. But most of all, he believes in luck.

"I've had all this good fortune," Buffett says. "It starts with being born in this country, though. It starts with being born male in 1930."

Genes, luck and birthplace may have helped make Buffett the world's third richest man. But in the past year, his good fortune has also turned him into one of America's most unexpected radicals. He's an ardent capitalist who is demanding higher taxes on the rich and...

Other excerpts from the interview

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DAILY MAIL: Warren Buffett breaks down in tears at mention of his first wife who died of oral cancer

2012-01-18T22:23:00.000+13:00

By Meghan Keneally

Last updated at 9:25 PM on 13th January 2012

The affable demeanor of Warren Buffett is not what one might expect when picturing one of the world’s most hard-nosed and successful businessmen.

But neither is the image of him bursting into tears mid-interview when discussing his first wife, Susan, who died of oral cancer in 2004.

Their relationship was always an unconventional one more akin to Hollywood than that of his hometown of Omaha, Nebraska.

For after marrying in 1952 they stayed as husband and wife despite her moving away in 1977 and him forming a relationship with a close friend of hers.

Mostly happy guy: Though he is generally upbeat, the subject of his first wife's death brings Mr Buffett to tears

Loving wife: Just two months before she died in 2004, Susan Buffett spoke about her love of Warren and their unbreakable bond

Susan died of the cancer in 2004 and it was talking about her that brought the business titan to tears.

‘Her death is - it’s just terrible. It’s the only thing that’s really up there,’ Mr Buffett said in an interview with Time Magazine.

‘I still can’t talk about it,’ he said as he cried for several minutes.

Mr Buffett met Susan at an early age, when she was headed to college to be his younger sister’s roommate at Northwestern University.

‘He made some sarcastic quip - I hadn’t even met him - so I made one back and I thought “Who is this jerk?”’ Susan said in a 2004 interview with Charlie Rose.

The new group: Warren and Astrid Buffett walk with his daughter Susan who hosted their 15-minute wedding ceremony at her Omaha house

Mr Buffett then pursued Susan and she eventually relented, leading to a marriage in 1952. The couple had three children- Susie, Howard, and Peter- and lived in Omaha as Mr Buffett grew his business, Berkshire Hathaway, into one of the country’s biggest investment firms.

Then, in 1977, Susan decided that she wanted to move away in an effort to pursue her own life and a career as a singer.

‘You know I would like to have a place where I could have a room of my own,’ she said in the interview with Mr Rose.

Before she left, Susan told her friend Astrid Menks to check in on Mr Buffett during her absence, saying that his financial savvy did not always translate into social skills.
‘I called Astrid. I said “Astrid, will you take Warren, make him some soup, go over there and look after him?”’ Susan said.

Bright future: Astrid and Warren got married in 2006, two years after Susan died and almost 30 years after they started their relationship

Life partners: Even after Susan (right) moved to San Francisco in 1977, the couple stayed as close as ever and never split up

Astrid and Mr Buffett then started a relationship, and that was fine by Susan. All three were very aware of their set-up and it seemed to work happily for all parties involved.
They even sent out joint Christmas cards every year with their three names at the bottom.

Mr Buffett never divorced Susan and only married Astrid two years after her death.

The most recent tears that Mr Buffett shed over Susan are certainly not the first, as he was known to cry for hours during her prolonged battle with oral cancer.

Family values: Mr Buffett (center right) is joined by (L-R) son Howard, daughter Susie and son Peter at a Berkshire Hathaway event

One big, happy family: (L-R) Buffett's daughter Susie sits beside her dad and mom Susan at a business function in 1997

During her treatment, when she could not eat solid foods, Mr Buffett would cut himself down to 1,000 calories a day in solidarity, and would sit with her and watch episodes of Frasier in the San Francisco hospital room.

He could not force himself to attend her funeral because he would become too upset thinking about her and trying to keep a brave face.

Mr Buffett frequently attributes his success and his political consciousness to Susan, which can still be seen today as he continues to champion the cause of getting the super-wealthy to give back through charity and involvement in government.

Living arrangements: When Susan moved to San Francisco, Astrid then started a relationship with Mr Buffett and the three were all very happy

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BLOOMBERG: Gates Foundation Trust Sells 3.2 Million Berkshire B Shares

2012-01-18T22:15:00.003+13:00

By Andrew Frye, January 13, 2012, 5:53 PM EST

Jan. 13 (Bloomberg) -- The Bill & Melinda Gates Foundation Trust sold 3.2 million Class B shares of Berkshire Hathaway Inc. to comply with federal tax rules limiting holdings by private foundations.

The shares were sold from Nov. 14 through Jan. 12, according to a regulatory filing today.

Berkshire Chairman and Chief Executive Officer Warren Buffett makes annual donations to the foundation, which works to reduce hunger, fight disease and improve education. Class B shares closed today at $77.77.

--Editors: Dan Kraut, David Scheer

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BLOOMBERG: BYD Co. Said to Plan Sale of 3 Billion Yuan of Bonds in China

2012-01-18T22:11:00.000+13:00

By Bloomberg News - Jan 18, 2012 8:31 PM GMT+1300

BYD Co., the Chinese automaker part- owned by Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), plans to sell 3 billion yuan of bonds, according to a person familiar with the matter, who asked not to be identified because the details are private.

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FORBES: Why Warren Buffett Disdains The Private Equity Crowd

2012-01-18T22:08:00.000+13:00

1/14/2012

The Oracle of Omaha has never retreated from his long standing revulsion at the Leveraged Buyout Crowd who tried to camouflage their profession by calling themselves The Private Equity Crowd. He and his curmudgeon partner Charlie Munger also show their disdain for Mitt Romney’s wheeling and dealing at Bain Capital . by calling the Private Equity Crowd The Two and Twenty Crowd for the obscene 2% management fees and 20% carried interest The Private Equity Crowd demand for their services.( A recent report said Bain even charged a 30% carried interest fee, which brings PE to a new level of high class greed, if there is such a thing) Carried interest sounds a harmless concept, as if the borrower was somehow a charity case– as in being ” carried.” Sounds almost philanthropic.

Just recently Buffett told Time Magazine that “ I don’t like what private equity firms do in terms of taking every dime they can and leveraging (companies) up so that they really aren’t equipped, in some cases, for the future.”

More generally Buffett always includes a pungent blast at The Private Equity Crowd in his letters to shareholder. Just last year Buffett stuck it to the Private Equity Crowd for changing their “moniker” from “leveraged-buyout operators” to “private equity,” which you may notice no longer has the attribute “leverage” in its name. He has always sworn never to buy a company from the PE Crowd– as it doesn’t have the long-standing management-owner nucleus long associated with it.

Calling this “Orwellian”: Buffett wrote that “private equity” is a “name that turns facts upside-down: A purchase of a business by these firms almost invariably results in dramatic reductions in the equity portion of the acquiree’s capital structure compared to that previously existing.”

In other words its “Orwellian” because in point of fact there is less private equity and more dangerous debt piled on them. ” A number of these acquirees are now in mortal danger because of the debt piled on them by their private-equity buyers,” Buffett wrote.

“ It’s a lopsided system whereby 2% of your principal is paid each year to the manager(ie Bain Capital) even if he accomplishes nothing– or, for that matter, loses you a bundle– and additionally 20% of your profit is paid to him if he succeeds.”

Now, The Private Equity Crowd– as personified by Mitt Romney’s quest for the White House, has become the vivid and telling controversy over the future of finance Capitalism. It is an issue closely related to the income disparity between rich and poor, between the 1% on Wall Street and the 99% on Main Street.
Romney is being attacked by his rivals in the Republican party and will be assaulted by the notion of his greed during the days he ran Bain during the general campaign, should he, as seems likely, win the nomination.. That’s why such highly respected and influential pundits as David Brooks of the New York Times, Mark Shields, a syndicated columnist on PBS and Peggy Noonan in the Wall Street Journal are calling on Bain to articulate his views on the unfair ramifications of finance today and relate it to what Romney promises to do once he’s in the White House– profuse claims of creating new jobs in the economy. Trust me, his Private Equity Model isn’t going to create any new jobs. In the first instance, it’s going to reduce them.

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FORBES: Warren Buffett's Big Earnings Week

2012-01-18T22:03:00.000+13:00

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1/13/2012 @ 3:49PM

With earnings season kicking into high gear, dozens of companies from across the market spectrum are slated to step up to the plate in the coming week.

In their reports, these firms will provide important insights into how they fared over the past three months as well as what they expect to see as we progress further into 2012.

Fans of Warren Buffett should have their eyes set on the earnings calendar in the coming days as a number of the investor’s top portfolio holdings take the spotlight. While, given his long- term investing horizon, a single quarter’s showing will likely do little to impact Buffett’s investment decisions, these showings will be interesting to watch for his followers.

Wells Fargo (WFC) will kick off the week’s festivities when it releases its report on Tuesday. For decades, the California-based financial titan has been a staple of the Berkshire Hathaway (BRK.A) investment portfolio. Currently, the firm is the third largest holding, representing a nearly 15% slice of its assets.

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BLOOMBERG: Wells Fargo Posts Record Profit, Citing Mortgage Lending

2012-01-18T21:52:00.001+13:00

January 17, 2012 9:18 PM

Jan. 17 (Bloomberg) -- Wells Fargo & Co., the largest U.S. bank by market value, posted record profit for the fourth quarter and full year that beat analysts' estimates as mortgage financing improved.

Net income rose 20 percent in the quarter to $4.11 billion, or 73 cents a share, from $3.41 billion, or 61 cents, a year earlier, the San Francisco-based company said in a statement today. That exceeded the 72-cent estimate of 31 analysts surveyed by Bloomberg. Revenue declined 4 percent to $20.6 billion, better than the $20 billion forecast by analysts. For the year, net income climbed 28 percent to $15.9 billion.

“I'm extremely pleased with Wells Fargo's performance in 2011,” Chief Executive Officer John Stumpf said in the statement, citing growth in deposits and loans. The bank plans on “returning even more capital to our shareholders.”

Slowing economic growth, low interest rates and volatile capital markets have sapped revenue at the largest U.S. banks, leading them to seek other sources and cut expenses. Stumpf, 58, reduced his staff by 3 percent to 264,200 and reaffirmed plans to trim $1.5 billion in quarterly costs by the end of this year.

New Mortgages

New mortgages rose 35 percent to $120 billion from the three months ended September at Wells Fargo, the biggest U.S. home lender. Net interest margin, the difference between what the bank pays for funds and what it earns on loans and securities, climbed to 3.89 percent from 3.84 percent in the third quarter.

Compared with the third quarter, “the net interest margin went up, revenues were up,” Paul Miller, an analyst at FBR Capital Markets in Arlington, Virginia, told Betty Liu on Bloomberg Television's “In the Loop” today. “These were two things that people really look at out there, and they showed really good numbers.”

Some year-over-year comparisons weren't as favorable, with the net interest margin narrowing from 4.16 in 2010's fourth quarter and pretax, pre-provision profit dropping 1 percent. Management calls the latter figure a useful gauge of the company's ability to generate capital to cover losses through a credit cycle. Income was boosted by a release of $600 million from reserves, with the bank predicting more of the same during 2012. Noninterest income from mortgage banking dropped 14 percent from a year earlier as originations slipped 6 percent.

Shares Gain

Wells Fargo shares advanced 0.7 percent to $29.83 in New York. The company became the most valuable U.S. bank even after last year's 11 percent stock decline, because most rivals fell further. The lender's market value of $156.1 billion as of last week compares with $136.5 billion at JPMorgan Chase & Co. and was more than the value of Goldman Sachs Group Inc., Morgan Stanley and Bank of America Corp. combined.

Berkshire Hathaway Inc., the investment and holding company run by Chairman and CEO Warren Buffett, is the biggest Wells Fargo shareholder, with a stake of about 6.9 percent.

The bank finished absorbing Wachovia Corp., the lender saved from collapse in 2008 when Wells Fargo beat Citigroup Inc. in a bidding contest. Stumpf said future deals are likely to be domestic, “bolt-on acquisitions,” using a term for takeovers that fit with a company's existing operations or expand in nearby regions, rather than venturing into a new field.

Tire-Kicking

“We are kicking lots of tires and we are in a unique position in that we are not capital constrained and can do some things that make good sense for us economically,” Stumpf said during a conference call with analysts. “It'll have to make a lot of sense for us, and if all we get out of this is sore toes, that's fine.”

Banks including Wells Fargo have fallen short in efforts to replace revenue lost to new financial rules such as those capping debit-card interchange fees. Wells Fargo reported a $365 million decline in debit-card interchange fees, partially offset by more fee income from credit cards.

The bank canceled plans last year to charge $3 monthly for using its debit cards after customers in a five-state pilot program protested, and Bank of America abandoned a proposed $5 fee.

Wells Fargo is facing claims from mortgage-bond investors. A bondholder group that won an $8.5 billion settlement from Bank of America said this month it may also seek payments from Wells Fargo on more than $19 billion of residential mortgage-backed securities issued by affiliates of the bank.

Building Share

Wells Fargo has pursued more home lending even as rivals shy from the business, according to Stumpf. “We like the mortgage business,” he said on the conference call.

A retreat “makes absolutely no sense to us,” said Chief Financial Officer Tim Sloan in an interview. “There are lots of reasons to look at a business and get upset about it,” Sloan said. “This is a great opportunity for us and we have been building share throughout this entire time.”

Non-interest expenses rose to $12.5 billion in the fourth quarter from $11.7 billion in the three months ended September on higher compensation and foreclosure costs, according to the statement.

Wells Fargo may seek to return more capital to shareholders this year. The bank may boost its quarterly dividend from 12 cents to 20 cents this year, according to Edward Najarian, an analyst at International Strategy & Investment Group Inc. He has a “buy” rating on Wells Fargo.

JPMorgan, the largest bank by assets, said last week that fourth-quarter net income slid 23 percent to $3.73 billion. Bank of America, based in Charlotte, North Carolina, will probably post $1.63 billion in profit on Jan. 19, according to 13 analysts surveyed by Bloomberg. New York-based Citigroup said today fourth-quarter income dropped 11 percent.

--Editors: Rick Green, Dan Kraut

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TIME.COM: Warren Buffett Ready to Take Republicans’ Tax Challenge

2012-01-18T21:47:00.000+13:00

Mark Seliger for TIME

Warren Buffett is ready to call Republicans’ tax bluff. Last fall, Senator Mitch McConnell said that if Buffett were feeling “guilty” about paying too little in taxes, he should “send in a check.” The jab was in response to Buffett’s August 2011 New York Times op-ed, which made hay of the fact that our tax system is so unbalanced, Buffett (worth about $45 billion) pays a lower tax rate than his secretary. Senator John Thune promptly introduced the “Buffett Rule Act,” an option on tax forms that would allow the rich to donate more in taxes to help pay down the national debt. It was, as Buffett told me for this week’s TIME cover story, “a tax policy only a Republican could come up with.”

Still, he’s willing to take them up on it. “It restores my faith in human nature to think that there are people who have been around Washington all this time and are not yet so cynical as to think that [the deficit] can’t be solved by voluntary contributions,” he says with a chuckle. So Buffett has pledged to match 1 for 1 all such voluntary contributions made by Republican members of Congress. “And I’ll even go 3 for 1 for McConnell,” he says. That could be quite a bill if McConnell takes the challenge; after all, the Senator is worth at least $10 million. As Buffett put it to me, “I’m not worried.” (See below for a statement from McConnell’s office.)

Listen to Buffett’s retort to McConnell’s contribution theory:

(PHOTOS: The Life and Career of Warren Buffett)
Buffett doesn’t want to sound ungrateful, especially since McConnell and other Republicans have lobbied to keep taxes low for the über-rich, saving him between $6 million and $7 million this year. Oddly, though, conservatives can’t seem to make up their mind about taxes. On Wednesday in the Wall Street Journal, supply sider Arthur Laffer bashed Buffett for, among other things, shielded income, because he doesn’t pay taxes on unrealized capital gains (currently taxed at 0%) or charitable contributions (which are tax deductible). “Well, I had a net unrealized loss in 2011,” says Buffett. “But if Arthur has a plan for how he wants to tax unrealized capital gains, I’d love to hear it — it’s an interesting thing for a Republican to put forward!”

If Buffett had his way, he’d pay more than the 17% rate he currently forks over on his net adjusted income — and he’d have the government put that additional money to work by making sure that whatever portion of the 99% that isn’t thriving in the market economy gets some help. As Buffett wrote in Fortune a few years back, “I’ve worked in an economy that rewards someone who saves the lives of others on a battlefield with a medal, rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mispricing of securities with sums reaching into the billions.”

Listen to Buffett discuss why a capitalist system should take care of good citizens:

Buffett doesn’t want to hobble capitalism. He just wants to give it a heart. And he says the way to do that is to change our tax policy to ensure that people who earn their money from investments rather than by working for a paycheck contribute their fair share. “We need a tax system that takes very good care of people who just really aren’t as well adapted to the market system and to capitalism but are nevertheless just as good citizens and are doing things that are of use in society.” Note to bond traders: your higher taxes should help subsidize the building of bridges and the running of state-sponsored day-care centers.
Buffett has plenty of other prescriptions for America — from more progressive consumption taxes to penalties for errant corporate directors to an overhaul of health care. He’s also got a few choice words for the Republican field and their ideas about bootstrapping and “merit” economies: “This whole business about [Newt] Gingrich going down to Occupy and saying, ‘They ought to be getting a job,’ that’s just … you know, maybe they can be historians for Freddie Mac too and make $600,000 a year.” When I ask whether Mitt Romney is a job creator or destroyer, Buffett says that while businesses shouldn’t keep people they don’t need, “I don’t like what private-equity firms do in terms of taking out every dime they can and leveraging [companies] up so that they really aren’t equipped, in some cases, for the future.”

(SPECIAL: See Warren Buffett in TIME’s List of the People Who Mattered in 2011)

Listen to Buffett explain why education can’t solve all the U.S.’s problems:

Despite Buffett’s disenchantment with conservatives and partisan politics, he’s more than ever a bull on America’s future. What would Warren do to get the U.S. back on track? Read TIME’s cover story this week, available Thursday morning online and Friday on newsstands, to find out.

Listen to Buffett talk about why housing will bounce back:

(MORE: What Politicians Have to Lose — and Gain — from the “Buffett Rule”)

Listen to Buffett discuss the tensions between the U.S. and China:

UPDATE: Don Stewart, a spokesman for Senator McConnell, provided the following response to Buffett’s remarks:

Sen. McConnell says that Washington should be smaller, rather than taxes getting bigger. And since some, like President Obama and Mr. Buffett, want to pay higher taxes, Congress made it possible for them to call their own bluff and send in a check. So I look forward to Mr. Buffett matching a healthy batch of checks from those who actually want to pay higher taxes, including Congressional Democrats, the President and the DNC.

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TIME.COM: What Warren Buffett Has to Say About Kim Kardashian. (Seriously.)

2012-01-18T21:29:00.000+13:00

Getty Images (2)

This week’s TIME cover features Warren Buffett, the world’s third richest man, who is an advocate for higher taxes on wealthy Americans. He even told TIME’s Rana Foroohar he would match the total amount of voluntary tax contributions made by Republican members of Congress.

Buffett’s call for higher taxes on the one percent made waves for much of the past year. The message has spread so far that it now includes a reality-television star. A group called Courage Campaign created an online movement at TaxKimK.com, arguing that E! network star Kim Kardashian ought to pay a higher tax rate. Rick Jacobs, the chairman and founder of Courage Campaign, told ABC News he’s not sure what Buffett would think about the call for Kardashian to pay up. “I wonder if he knows who she is,” he said.

So, for inquiring minds, here’s what Warren Buffett had to say to TIME about Kim Kardashian.

“I’ve seen her name, but I wouldn’t be able to tell what she does but put her name in the paper,” he says. He didn’t offer an opinion on Kardashian’s particular financial situation, but Courage Campaign says she made more than $12 million in 2010 and paid a tax rate only 1% higher than a middle-class Californian.

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BLOOMBERG: Combs Hands Gains to Buffett by Raising Bets When Picks Slip

2012-01-11T08:05:00.002+13:00

By Andrew Frye - Jan 11, 2012 3:38 AM GMT+1300

Todd Combs, Warren Buffett’s apprentice stock picker at Berkshire Hathaway Inc. (BRK/A), posted gains on his first equity bets at the company by buying when markets fell and increasing stakes in investments that declined.

Purchases of seven stocks by Combs in the nine months ended Sept. 30 advanced almost 14 percent as of Dec. 31, according to data compiled by Bloomberg. The Standard & Poor’s 500 Index was little changed last year. Combs’s results were propelled by a 51 percent surge in holdings of MasterCard Inc. (MA), the world’s second-biggest payments network, and a 28 percent advance in an investment in retailer Dollar General Corp.

Combs followed the example set by Buffett, who invested in Goldman Sachs Group Inc. at the depths of the 2008 credit crunch and advised shareholders in 1998 to “rejoice when markets decline.” The portfolio manager hired by Buffett in 2010 added shares of Intel Corp., CVS Caremark Corp. (CVS) and Dollar General on Aug. 8 last year as the S&P 500 had its biggest decline of 2011.

“Those are very Buffett-like tenets of value investing: Buy when the markets are fearful,” said Tom Lewandowski, an analyst with Edward Jones & Co. who has a “buy” rating on Berkshire. “So I’m not surprised to see that Todd was buying.” Aug. 8 was the first trading day after S&P downgraded the U.S.
Buffett, 81, has said he’ll focus on managing Berkshire’s largest stockholdings and count on Combs and Ted Weschler, who was hired to join the Omaha, Nebraska-based firm this year, to take stakes of about $200 million.

Buying Stocks

Combs spent about $1.24 billion accumulating positions in seven companies in first three quarters of 2011, according to the data from filings distributed by the National Association of Insurance Commissioners. The holdings of CVS, Intel, Dollar General (DG), MasterCard, Visa Inc. (V), General Dynamics Corp. (GD) and DirecTV were valued at about $1.41 billion at year-end.

“I’d give him an excellent grade,” said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business. “He is very much demonstrating what you might expect a value investor like Warren Buffett to do.”

MasterCard was acquired by Combs at an average cost of about $246.74 in January and April, according to data compiled by Bloomberg. MasterCard, based in Purchase, New York, surged to $372.82 by year-end.

An initial stake in Dollar General was acquired through June 27 at an average price of $33.39. Combs bought a second batch of shares through Aug. 8 at $31.29, and a third through Aug. 29 at $31.69. He paid an average of $32.07 for about 4.5 million shares. Dollar General ended the year at $41.14.

Next Generation

Combs bought about 3.5 million shares of CVS, the largest U.S. provider of prescription drugs, through Aug. 8 at a cost of about $36.15 a share, the data show. He added 2.2 million shares less than a month later at an average of $34.05. The stock ended the year at $40.78 in New York trading.

Combs is part of a second generation of Berkshire leaders who will collectively assume the responsibilities that Buffett has held through his four decades as chairman, chief executive officer and head of investments. He joined Berkshire as Buffett’s longtime backup stock picker, Lou Simpson, retired. Combs made the equity investments through Berkshire’s Geico Corp., the car-insurance subsidiary whose portfolio previously was overseen by Simpson.

Berkshire’s biggest stock bet of 2011 was made by Buffett, who wagered more than $10 billion on International Business Machines Corp. (IBM) Berkshire’s top stake is a holding of Coca-Cola Co. valued at more than $13 billion. Combs was assigned to oversee as much as $3 billion and can make trades without consulting Buffett.

‘Bigger Things’

“Any time there’s a $200 million purchase or something like that, that’s very likely to be Todd or Ted,” Buffett said Nov. 14 in a televised CNBC interview. “That’s not me because I look at bigger things.”
Buffett didn’t respond to an interview request e-mailed to his assistant, Carrie Kizer. Combs declined to comment.

Combs came to Berkshire from Castle Point Capital Management LLC, where he oversaw shares of financial-services companies including MasterCard. The former hedge fund manager, who was 39 when Buffett announced the hiring in October 2010, has a bachelor’s degree from Florida State University. Combs also has a master’s in business administration from Columbia University, where Buffett studied.
Berkshire added four companies to the portfolio in the days through Aug. 8, spending about $125 million each on CVS, Intel (INTC), General Dynamics and DirecTV. Berkshire added about $75 million of shares in each company in purchases through late August or early September.

‘A Great Time’

“It was a great time for him to step in, in retrospect,” said Patrick Wang, an analyst at Evercore Partners Inc. who has an “equalweight” rating on Intel shares. “There were a lot of questions about whether stocks would work” in early August.

DirecTV, the largest U.S. satellite-TV provider, was one of Weschler’s stock picks at his Charlottesville, Virginia-based, Peninsula Capital Advisors LLC. Berkshire said in September it was hiring Weschler, a marathoner who also invested in W.R. Grace & Co. and made a gain trading Bank of America Corp. shares.

“I found it fascinating that Todd Combs purchased DirecTV (DTV),” said Kass. “It sort of implies that Todd Combs is in agreement with Ted Weschler” on the stock, he said.

The purchase dates and prices, detailed in NAIC statements, aren’t included in quarterly filings to the Securities and Exchange Commission. When stakes are built across multiple days, the NAIC allows companies to consolidate acquisitions under the date of the last purchase. The NAIC tracks securities held by regulated insurance companies.

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BUSINESSWEEK: For Sequoia, Life After Warren Buffett Is Sweet

2012-01-09T08:49:00.001+13:00

January 05, 2012, 3:30 PM EST

Warren Buffett recommended the Sequoia Fund when it opened in 1970, and that proved to be a smart call. The fund’s performance beat the U.S. stock market over the past four decades, in part because it had a lot of its money in Buffett’s diversified and highly regarded company, Berkshire Hathaway. That all changed in 2010, after Buffett warned that Berkshire wouldn’t grow as fast as it once did. The managers of the $4 billion Sequoia Fund cut their reliance on the stock almost in half. That proved to be another smart call. Sequoia delivered a 13 percent return in 2011, better than 99 percent of its value-stock fund peers, according to data compiled by Bloomberg.

Like Buffett, Sequoia’s managers look for high-quality companies with competitive advantages, and they hold their investments for long periods. One crucial difference: While the scale of Buffett’s $68 billion stock portfolio forces him to buy mainly the largest companies, Sequoia is small enough to benefit from investments in midsize businesses. The fund beat 97 percent of peers over the past 10 and 15 years, according to research firm . From 1970 to 2010, the fund returned 14 percent annually, compared with 11 percent for the Standard & Poor’s 500-stock index. “They have the kind of portfolio Buffett might have if he ran a mutual fund,” says Steven Rogé, a portfolio manager with Bohemia (N.Y.)-based R.W. Rogé, which holds shares in Sequoia.

Sequoia Fund was founded by Richard Cunniff and William Ruane, a friend of Buffett’s since both studied under legendary value investor Benjamin Graham at Columbia University in 1951. When Buffett shut down his investment partnership in 1969 to concentrate on Berkshire Hathaway, he recommended that his clients invest with Ruane. “Bill formed Sequoia Fund to take care of the smaller investor,” Buffett writes in an e-mail. “A significant percentage of my former partners went with him and many of those still living have their holdings of Sequoia.”

Ruane closed Sequoia to new investors in 1982 because he didn’t want its size to limit what the fund could buy. It opened again in 2008, three years after Ruane’s death. Ruane also held a concentrated portfolio. In 2003, Sequoia had 75 percent of its money in its top six holdings, according to a regulatory filing. The fund is now managed by David Poppe and Robert Goldfarb, who didn’t respond to a request to be interviewed.
Since Ruane’s death, the firm has hired more analysts and added more holdings. Berkshire represented 11 percent of Sequoia’s holdings as of Sept. 30, down from 20 percent at the end of 2009 and 35 percent in 2004, according to fund reports. In 2011, Buffett bought shares of and , two companies Sequoia already owned.

Valeant Pharmaceuticals International, the fund’s largest holding, gained 65 percent last year. At a 2011 investor meeting, the fund’s managers emphasized Valeant’s unusual business model, which focuses on acquiring drugs with a proven track record rather than spending money on research and development. They also praised the firm’s chief executive officer, J. Michael Pearson. Goldfarb told investors that over time he has become convinced that the right executive is crucial to a business’s success. “We’re betting more on the jockey and a little less on the horse,” he said in May at the fund’s annual meeting.

While the fund’s Berkshire Hathaway stake has been enormously profitable, it has been a drag on the fund’s returns in recent years, according to Kevin McDevitt, an analyst for Morningstar. Over the 20 years through December, Berkshire outperformed Sequoia by 2.6 percentage points a year. Yet over the past five years Sequoia rose 4.5 percent a year, compared with an annual gain of 1 percent for Berkshire. “There was a time when you could have said they were riding Buffett’s coattails,” says McDevitt. “That’s not the case anymore.”

The bottom line: After cutting its Berkshire Hathaway stake to 11 percent as of Sept. 30, Sequoia returned 13 percent last year, beating 99 percent of its peers.

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BBC : Warren Buffett to sing to millions of Chinese web users

2012-01-09T08:43:00.001+13:00

Warren Buffett, the billionaire US investor, is set to sing to millions of Chinese internet users, state media has claimed.

According a report from the Xinhua news agency, Mr Buffett has recorded a special video that will be played as part of the Spring Festival Gala.

The gala will mark the Chinese New Year on 23 January.

Mr Buffett has history when it comes to crooning, previously appearing in an advert for insurance firm Geico.
"We all know that Buffett is good at investment, but few knew he also did well in singing," the Xinhua news agency quoted production executive Wang Pingjiu as saying.

Mr Wang did not disclose what song Mr Buffett would sing.

The programme will be streamed on CNTV, an online broadcast service of the official broadcaster China Central Television (CCTV), the report said.

Mr Buffett, who is also known as the Oracle of Omaha for his investing savvy, has already put his money in China.

He owns about 10% of the carmaker BYD through his company MidAmerican Energy.

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