McGriddle thank you, you just made me literally laugh out loud!

close thread/

Having 10% in American Express seems horrible.

confirmed clown

Insurance float allows gives him access to capital and the benefits can be hard to quantify but it definitely exists.

BRKA is quietly running a large arbitrage operation and that boosts returns a little.

But Buffet's success is really like what you said... he's more like a private equity guy than a mutual fund investor. The company, Berkshire Hathaway, itself was a takeover where Buffet downsized the firm before turning it into the corporate shell for his financial empire.

I would bet he cant even beat 200nl online

I'll take Carl Icahn any day over Warren Buffett. Not going to join the argument for or against Buffett in general though.

1. Buy 4% of company
2. Bully company to pay you off
3. ???
4. Repeat

Brilliant.

Let me correct you.

1. Invest money legally
2. Profit more money
3. ???
4. Repeat

Nothing else matters.

He should liquidate KO

The thread of this why don't we just copy Buffett not is Buffett better than the S&P over a particular investment period. Here is why you can't possibly replicate Buffett.

1. No one has mentioned the options strat/hedges he incorporates for his funds and this makes up the bulk of his net returns annually. In 2007 through a disclosure Buffett told shareholders through 2004-2007 he sold European puts on various indexes which include (S&P, EuroStoxx, FTSE, Nikkei) bought ATM (at-the-money) for a notation value of $4.5B in premiums with expiration's spread out between 2019-2017. He has incorporated new options every year so he makes bank just collected premiums annually.

2. You can't possibly get the deals he gets. Perfect example being the GS equity prop up with a sweet dividend and buyback provision which was a windfall for him post crises.

3. He started out picking great companies everyone agrees but it's not hard to leverage and take controlling stakes when you have a vault full of premiums and predictable cash flows through his insurance empire.

So if you truly want to be like buffett here is the step process..

A. Buy several insurance companies or qualified intermediaries and use the premiums and excess cash buffers to buy company stock in the open market.

B. Take a percentage interest to either maneuver greenmail or gain a few seats on the board to direct the companies strategy

C. Build a massive portfolio of other smaller companies to become a conglomerate

D. Utilize institutional money to play the options market and sell puts against your portfolio while managing risk in order to really see the returns.


Buffett is great but why is no one talking about Soros. He not only has a better track record than buffett with the Quantum Fund but he was a street kid who really started from the bottom and built his empire.

Decided to toss my hat into the anti-buffett replication strat. Note that I am not talking about an investment in BRK, but specifically against replicating the public equities he buys. Deals like the goldman one, which was absurdly profitable for him, are especially hard to come by without major financial variance. To lay out the specifics of that deal, he essentially loaned goldman $5B, in exchange for $5B worth of equity at $115/share when the stock was trading at $135/share, as well as a 10%/year annual interest payment. Individuals just cannot replicate that, and it was truly an incredible deal. I really doubt any major situations will arise that will allow buffett to announce a major public equity deal due to crisis and let individual investors profit off them before he passes away.

The market has changed dramatically from what he is used to doing, and guys like him really are not poised to make a big showing in the markets going forward. Again, I am not commenting on berkshire itself as it has a strong and massive moat. Owning insurance companies that essentially provide free leverage and virtually limitless capital will continue to have the ability to enter extremely worthwhile deals should the situations arise. The OP is specifically stating replication of public equities, and that is where people should strongly disagree compared to some other more active players, or the S&P 500 itself.

that's a very good example......... and i'd even take it further and wonder why buffett isn't compared to sam walton, bill gates .... i realize the comparison fails a few tests but comparing him with pure investors fails a few tests too.

buffett is a great businessman but i don't like how people perceive his record like it's a semi-diversified mutual fund, which it isn't.

the GS thing is interesting... obviously they (and many other huge financials) specifically wanted buffett as his name lends so much credibility to things at such an important time. i'm sure the regulators/etc. loved it too. no doubt GS couldn't got the financing, assuming they even needed it, at much cheaper rate but won't get buffett name/cachet.

and i'd wonder about one more thing. assuming that buffett financing GS at a very very difficult time is very positive for the market, did he buy up tons of market exposure ahead of that transaction?

I don't think Buffett was actively buying public shares of many companies during the financial crisis, though I could be wrong. I know he added BAC to his portfolio during the 2011 dip. Think he paid abut 7 bucks a share and gets an annual dividend of something like 6-8%?

As for the goldman deal specifically, individual investors trying to replicate what he did (aka buy GS) would have barely made much. A quick check shows that when Buffett exited the goldman position, GS itself was only up about 15-20% while SPY was up over 30%, yet Buffett made over $3B on his $5B investment (over 60%) due to the unique nature of the deal. Also, while I can't be certain and this is just an opinion, I personally think the deal was more to signify strength behind the GS brand while the rest of the institutions were scrambling and losing faith from its clients. Sort of like a "Buffett stamp of approval, look we're liquid". BTMU/MUFG did a similar deal, but larger, to buy over 20% of Morgan Stanley, again with a 10% annual dividend on the majority of it.

My main point is that Buffett isn't the guy to replicate. He doesn't do deals where following along is the best use of your capital. The Duracell announcement yesterday being a good example of how his breadwinners tend to get structured. Following a guy like Icahn will be far more worthwhile if someone is really so inclined to follow someone's investments -- which I wouldn't advise is being the best decision anyway.

my comment was supposed to be that GS could have got the financing much cheaper but they wanted the buffett brand. not sure if it was some sort of auto-correct or me. probably me.

buffett really has been this incredible "brand" for the last 40+ years. he's not this garden variety equity investor that so many people want to compare his record to.

I believe Buffett himself said there aren't many opportunities for him going around at the market size he plays in anymore.

Can't really call him a purely stock investor because he gobbles up whole companies. He's a pure business man.

But to say he hasn't done anything notable.... Like come on, at his level he still negotiates incredible deals.

Buffets companies would have been hit really hard if the economy went under.

Buffett built his image over the decades and leveraged it perfectly during the crisis. He was on Charlie Rose and one step away from begging the US government for a bailout.

That bailout did wonders for the economy and Buffett's companies.

There are lots of opportunities if you're not a dickhead. Microsoft was available for $26 just two years ago and it was classic Buffett - hugely undervalued, cash cow, growing, highly reliable and zero chance of not growing. Yet Buffett can't keep up with the new world. The clown bought IBM instead!!!!!! IBM!!!! That is boss clown level of incompetence.
He's a fantastic old world businessman/deal maker. He can't cut it in the new world trading public equities. All the evidence shows he's out of his depth. The strategy of following him is a very poor one, and quite separate from the strategy of buying BRK.

If you single out a handful of losers from every billionaire hedge fund guy you'll find them all clowns.

That Carl Icahn clown went into Atlantic city casinos. Clown.

Kerk Kerkorian bought ford stock. Clown.

John Paulson fund down 25%. Clown.


But yeah that IBM pick was odd, never buys tech companies and when he does...

Did you buy microsoft stock? Congrats if you did.

Are you just saying words?

1. I didn't call him a purely stock investor, as is clearly evidenced in my discussion of the structured deals he makes.

2. I never said he hasn't done anything notable. I specifically pointed out several notable things he's done in the last decade and he has obviously done many more throughout his lifetime.

Huh? Carl Icahn has made a fortune off the bankrupt Taj Mahal. His ~$300M investment in the nevada casinos was sold for $1.3B. Maybe he is a rich clown thanks to casinos?

I was agreeing with you.

IBLN is an interesting ETF along the lines of follow Buffet/other billionaire investors. It's a portfolio of 30 of the large-cap S&P 500 stocks most favored by billionaire investors based on their most recent 13F filings with the SEC.

Dont understand why People think BRKs returns, relative to S&P are a good indicator of Buffetts edge( or lack of)
BKR has has a beta considerably less than 1 for awhile now. Also I would think, and maybe I am wrong, any expected 'super normal profits' BRK is expected to make, would already be factored into it trading price

If somebody had made a MSFT thread here two years ago with that exact argument, you would have called them a clown, and said there was 'no edge' buying the stock.

That's your MO. Call every idea ******ed and then monday morning quarterback every stock that goes up (or down), acting like you knew it was going to happen.

Why don't you go troll somewhere else. You are a cancer to this forum. Seriously.

You seem a little Butthurt. I made hundreds of percent on MSFT calls posted in real time and strongly urged other people to buy. Buffett made a horrible pick and it was inexcusable IMO and shows how out of his depth he is. It is also false that there are no longer large opportunities at his level (MSFT was one such).

I'm sorry, but this just isn't true. I only give idiotic ideas/reasoning a hard time. I'm sorry if this means you feel picked on, but it's not my fault you choose to post horrible reasoning. If you have a good thesis, I'll agree with you. I am looking for hugely undervalued stocks that I can buy options on. But the Yahoo thesis was horribly idiotic, probably the dumbest thing I've ever read in this forum.
I don't think you know what "monday morning quarterback" means.
All the smart minds in this forum have agreed with me that following Buffett's public stock picks is a bad idea and that his alpha these days is in savvy private deals (he's more like a PE guy). Without getting into all of his picks, I've laid out a decent case for why. Do you disagree?

Rather than coming into here to troll because you're butthurt that I tried to improve your mental and trading strategy (your reasoning skills are horrible and won't improve until you realize and accept this fact), why not actually contribute? Do you think following Buffett's public stock picks is a good idea? a bad idea? I've provided content and opinion relevant to the OP while you're just trolling, dude. Do you have an opinion on the OP?

TS has probably posted short MSFT and PRSC ideas so he could quote them in an argument if they went the other way.