STOR - taking my cue from Warren

Buffett's Bet on Store Capital Shows Not All Retail Real Estate Is Equal - Berkshire Hathaway takes 9.8% stake in single-tenant REIT

Excerpt:

Warren Buffett is betting that some types of brick-and-mortar real estate will hold up better than others in the age of Amazon.

His Berkshire Hathaway Inc. took a 9.8 percent stake in Store Capital Corp., sending shares of the real estate investment trust surging Monday. Unlike other retail landlords that have come under pressure as consumers shop more online, Store focuses on what it calls service properties: preschool facilities, health clubs, dine-in movie theaters and pet-care sites. Less than a fifth of its portfolio is invested in traditional retail -- and even those it calls “internet resistant,” including furniture stores, hobby and craft centers, and hunting, fishing and camping shops.

“Store doesn’t compete on the beaten path,” said Haendel St. Juste, an analyst at Mizuho Securities USA Inc. “They are targeting more experiential retail, trying to provide a buffer against risk.”

Comment: 5% dividend. Hard to find that kind of yield!

Buffett: "Most investors struggle to stay focused on the long-term"

Warren Buffett: Here's the 'big mistake' investors make

Excerpt:

“Well, the big mistake is thinking they know when to buy and sell stocks,” Buffett says with a chuckle. “That there are times to buy ’em and times to sell ’em. There’s times to buy ’em. And eventually maybe, when you decide to start dis-saving when you’re 70 or 80 years of age or something of the sort, at that time you may sell ’em. “But basically any attempts to pick the times to buy or sell, I think, are a mistake for 99% of the population. And I think that even attempts to pick individual securities is a mistake for people.” The attempt to beat the market by tilting asset class weighting and trading in and out of stocks is known as active investing. Buffett recommends passive investing through a “very, very low cost S&P 500 index fund.”

Comment: My advice. Just invest in something ... something that makes money .... something that pays a dividend. Example INTC

Investing in the Airlines: Still a "death trap for investors"?

So far I have eschewed investing in the airlines. I've followed the sage advice, since changed, of Warren Buffett who famously said (2002):

"It's been a death trap for investors ... If a capitalist had been present at Kitty Hawk back in the early 1900s, he should have shot Orville Wright. He would have saved his progeny money. But seriously, the airline business has been extraordinary. It has eaten up capital over the past century like almost no other business because people seem to keep coming back to it and putting fresh money in. You've got huge fixed costs, you've got strong labor unions and you've got commodity pricing. That is not a great recipe for success. I have an 800 (free call) number now that I call if I get the urge to buy an airline stock. I call at two in the morning and I say: 'My name is Warren and I'm an aeroholic.' And then they talk me down.”

He since has changed his mind ... at least a bit (2017):

These aren't last century's airline companies, and that's why legendary investor Warren Buffett is spending money on them. "It's true that the airlines had a bad 20th century. They're like the Chicago Cubs. And they got that bad century out of the way, I hope," Buffett said Monday on CNBC's "Squawk Box." "The hope is they will keep orders in reasonable relationship to potential demand." Buffett's Berkshire Hathaway revealed late last year in an SEC filing it had taken a stake in American Airlines, United Continental Holdings and Delta Air Lines. CNBC also reported that Berkshire had taken another stake in Southwest Airlines. Ironically, Buffett implied he had not taken a commercial flight in several years. "We'll save that (conversation) for after the show," he said. The Oracle of Omaha also revealed why his holding firm previously hesitated to take significant positions in the industry. "I think there have been almost 100 airline bankruptcies. I mean, that is a lot," he said. "It's been a disaster for capital."

So I am thinking of dipping my toe into the airlines ... just 10 shares of each. Thoughts? Advice?

Top image: Biplane crash, East Boston Airport, 1928-05-31


Updated: Passengers may hate airlines, but investors love them (even United)

Warren Buffett breaks silence on Wells Fargo

Buffett Says Stumpf ‘Made a Hell of a Mistake’ at Wells Fargo

Excerpt:

Stumpf is a “very decent man” who “made a hell of a mistake,” the billionaire said in an interview posted on CNN’s website Friday. “And he didn’t correct it. That’s the thing.”

Buffett’s comments were his most extensive public remarks on the bank since it agreed in September to pay $185 million to settle allegations that employees set up credit-card and deposit accounts without customers’ permission. Staff have said they were encouraged by cross-selling targets to open as many accounts as possible. “It was a dumb incentive system,” said Buffett, whose Berkshire Hathaway Inc. is the largest investor in Wells Fargo. “When they found out it was dumb, they didn’t do anything about it.”

Comment: Agreed. Image source is CNN Money

Warren Buffett: Waiting patiently for the right pitch

Cash is piling up faster than Warren Buffett can invest it

Excerpt:

Warren Buffett has the kind of money problem most people would envy: a growing mountain of cash. Nearly $73 billion piled up at Berkshire Hathaway by mid-summer, more than Buffett's conglomerate has ever held before.

And the total continues growing every day Buffett doesn't make a major investment because Berkshire's 90-odd businesses generate roughly $1.5 billion in cash every month. ...

Buffett compares investing to baseball, except that investing is a game where the hitter can stand at the plate indefinitely waiting for the right pitch.

"The stock market is a no-called-strike game. You don't have to swing at everything," Buffett said in "The Warren Buffett Way." ''The problem when you're a money manager is that your fans keep yelling, 'Swing, you bum!' "

Comment: Investment tip. Have some cash for a down day! Image source (cropped) (Carl Yastrzemski)

Warren Buffett: "Someone's sitting in the shade today ..."

Someone's sitting in the shade today because someone planted a tree a long time ago.

Comment: Source

What Warren Buffett is buying .... selling

Buffett's Berkshire Sells Most of J&J and GE Stakes

Selling

• Johnson & Johnson (JNJ)
• General Electric (GE)
• Ingersoll-Rand (IR)
• Dollar General (DG)
• CVS Caremark (CVS)

Buying

• Deere & CO. (DE)
• Precision Castparts (PCP)
• Wabco Holdings (WBC)
• Wells Fargo (WFC) - Up 11,504,300 shares to 422,549,545 (+3%)
• IBM (IBM)

Berkshire Hathaway's 15 Biggest Stock Holdings

Berkshire Hathaway's 15 Biggest Stock Holdings

Comment: The top 10 wouldn't be a bad place to start. If you had 10 shares of each, it would be a $ 7,000 investment with a divident yield of 2.6%.

"Sometimes Mr. Market behaves like 'a psychotic drunk'"

Live-blogging Buffettpalooza

 Excerpt:

Carol Loomis presents a question from a shareholder who asks why Berkshire shares have been undervalued for so long. Mr. Buffett responds by taking an even longer view. “We’ve run Berkshire for 47 years. There have been four or five times where we thought it was significantly undervalued,” he says. “The beauty of stocks is they do sell for silly prices from time to time. That’s how Charlie and I have gotten rich.” Then he turns to his usual speech about investing in stocks, giving a shout-out to Ben Graham’s idea of Mr. Market, which he says investors should think of as their partner. The beauty of having Mr. Market as a partner, he says, is that sometimes Mr. Market behaves like “a psychotic drunk.”

Comment: An "Oracle of Omaha" moment. More: On Wells Fargo:

Asked why he bought J.P. Morgan Chase stock for his personal account but not for Berkshire Hathaway, Mr. Buffett explains that he prefers Wells Fargo -- of which the company owns 400 million shares worth $11 billion or so at year-end -- better. "My best ideas are all in Berkshire," he says. "That I can promise you." "I know Wells better and it's easier to understand," he says, adding that he bought Wells Fargo in the first quarter.

On Wal-Mart:

"I don't think there's something fundamentally dishonorable about Wal-Mart," Mr. Munger says. At companies of the scale of Wal-Mart or Berkshire, with 270,000 workers, "I guarantee someone is doing something wrong right now," Mr. Buffett says. "I guarantee 20 people are doing something wrong."

On Investing:

"Investing is not really that complicated," ... Mr. Buffett says patience is the key virtue in investing, and that those who understand the market is a tool rather than an adviser will do well over time. The market is often wrong for a variety of reasons, he says, and those who bear that in mind can take advantage of the market's pluses, such as transparent prices and liquidity.

On Prostate Cancer:

"I have four doctors. At least a few of them own Berkshire Hathaway, though I don't screen them." He and his family listened to doctors a few weeks ago. His plan says survival rate is above 99%. "Maybe I will get shot by a jealous husband," Mr. Buffett says. Mr. Munger says he doesn't know if he has prostate cancer "because I don't let them test for it."

Warren Buffett buys high-tech

Berkshire buys 5 pct of IBM

Excerpt:

Warren Buffett said Monday that his company has spent $10.7 billion to buy more than 5 percent of IBM's stock this year, a surprising move by the billionaire investor who has long shied away from investing in high technology companies.

Berkshire Hathaway also revealed several other new investments made during the turmoil of the third quarter. Besides the new IBM investment, Berkshire added much smaller stakes in Intel Corp., DirecTV, General Dynamics Corp. and CVS Caremark Corp.

Most of the details emerged from the quarterly update Berkshire filed with regulators on its $59 billion U.S. stock portfolio. Buffett disclosed some details in interviews earlier in the day.

Monday's filing doesn't offer a full picture of Berkshire's holdings, however, because the Securities and Exchange Commission allowed the Omaha-based company to keep some of its investments confidential.

Buffett has long refused to invest in high-tech companies because he has said it's too difficult to predict which technology businesses will prosper in the long run.

But he said he recently realized his view of IBM was wrong based on what he read in the company's annual reports and what he learned by talking to information-technology departments at Berkshire subsidiaries. He said he should have realized years sooner that hardware is no longer the heart of IBM's business.

"Now they're very much a services company, and they're very intertwined with their customers," Buffett said. And he said IBM's customers are reluctant to change once they start working with IBM.

So Berkshire has bought about 64 million shares since March, or about 5.5 percent of IBM. Buffett says he believes IBM has a sound plan for the future.

Comment: We bought into IBM earlier this year and it has been our most positive stock of the year. Just starting to buy INTC

"One gloriously capitalistic weekend"

Live-Blogging the Berkshire Annual Meeting

Excerpts:

(10:11 a.m.) It's the cast of "The Office," with Michael Scott (Steve Carrell) telling Dunder Mifflin about a possible replacement. Enter Warren Buffett.

...
(12:08 p.m.) Buffett says that America is still a good place for banks to lend money, and singles out Wells Fargo and US Bancorp as two particularly well-run firms.

...

(12:21 p.m.) Buffett says that if you collect all the gold in the world and melt it together, you could form a cube with 67 feet on each side.

Here's what you could do with it: "You could get a ladder and climb on top of it and say I'm sitting on top of the world. You could fondle it, you could polish it, you could stare at it."

But Buffett's kicker is this: You can't do anything with it. It has no inherent value. Buying into gold is betting that someone else will come along and pay more for it -- who then is hoping that someone else will pay even more for it down the line.

...

(3:05 p.m.) Buffett says that growing up rich could rob children of crucial drive and enterprise. And if a child of privilege grows up unproductive, it's a matter of parenting.

"If your kids grow up rich and without incentive, I don't think you should point the finger at them," he says. "You should point it at yourself."

...

(3:35 p.m.) Don't question Buffett's commitment to nuclear power. He views it as essential to helping fill the United States' energy needs.

"I think some people misinterprted my interview when I said that it had suffered a major setback," he said. "That does not change my view that nuclear power is important for the world."

...

Comment: My Brother-in-Law went last year! Quote in title is at 9:36 a.m.

Berkshire extends holdings in Wells Fargo

Berkshire Hathaway & Warren Buffett Add More Wells Fargo Shares

Excerpt:

Buffett grew his holdings in Wells Fargo & Co. (NYSE: WFC) yet again and that position was reported as now being some 358,936,125 shares… This means that he again grew his holdings even from the end of 2010 as he recorded that figure as more than 342 million shares and it was over 336 million at the end of Q3-2010.

Comment: Wells is Buffet's favorite bank stock. Full list here

Warren Buffett as your stock picker

5 Buffett-Style Dividend Stocks to Own

Excerpt:

Coca Cola (KO), for example, makes up roughly 20% of Warren Buffett's stock holdings

...

Stock markets today are volatile, and many investors who don't want to own bonds here for somewhat obvious reasons (for one, Bill Gross is shorting them) may look to the following five high-yielding dividend payers which appear to be exceptional long term-values, based on cash flows and earnings. All five of the following pay out solid dividends to their investors, and are all owned by investment gurus who make a living by holding stocks for incredibly long periods of time.

A handful of the stocks Berkshire Hathaway owns:

• Coca Cola (KO)
  
• Johnson and Johnson (JNJ)
  
• Procter and Gamble (PG)
  
• Wal-Mart (WMT)
  
• Wells Fargo (WFC)
  
• US Bank (USB)
  

Comment: Image snapshot from the Berkshire Hathaway Annual Report. Available here.

Warren Buffett: "We're still in a recession"

Warren Buffett: "We're still in a recession"

Excerpt:

Billionaire investor Warren Buffett said the U.S. economy remains in recession, disputing this week's assessment by a leading arbiter of economic activity that the downturn ended more than a year ago.

"We're still in a recession," Buffett told CNBC television in an interview broadcast on Thursday. "We're not gonna be out of it for a while, but we will get out."

On Monday, the National Bureau of Economic Research said the world's largest economy ended an 18-month recession in June 2009, but cautioned that its assessment did not mean normal activity had resumed.

Buffett said he defines a recession differently from the NBER, saying it ends when real per capita gross domestic product returns to its pre-downturn level.

Comment: Whether one calls where we now are "in a recession" or not, it sure feels like it to the 9% unemployed (and that number is understated!)

"The Oracle" on taxing banks

Buffett Says He Can’t See Rationale for Bank Levy

Excerpt:

Warren Buffett opposes President Barack Obama’s proposed levy on financial institutions because firms including Goldman Sachs Group Inc. and Wells Fargo & Co. already repaid bailout funds.

“I don’t see any reason why they should be paying a special tax,” said Buffett, the chairman and chief executive officer of Berkshire Hathaway Inc., in an interview on Bloomberg Television today. Supporters of the plan to tax the banks “are trying to punish people,” he said. “I don’t see the rationale for it.”

Obama announced a plan last week to impose a fee on as many as 50 financial companies to recover losses from the federal government’s Troubled Asset Relief Program. The levy would apply to firms with more than $50 billion in assets, including Wells Fargo and Goldman Sachs, two companies that Berkshire has investments in. It would exclude Fannie Mae and Freddie Mac, the government-sponsored mortgage lenders taken over by the U.S.

“Look at the damage Fannie and Freddie caused, and they were run by the Congress,” said Buffett. “Should they have a special tax on congressmen because they let this thing happen to Freddie and Fannie? I don’t think so.”

Wells Fargo, Goldman Sachs and other beneficiaries of the bailout such as Bank of America Corp. and JPMorgan Chase & Co. repaid the money they got from the government. Fannie Mae and Freddie Mac owe about $110 billion, according to Bloomberg data.

“Most of the banks didn’t need to be saved,” Buffett said. “Including Wells Fargo.”

Comment: I agree with the Oracle of Omaha

Warren Buffett: a "gusher" of "greenback emissions"

Excerpt:

The U.S. must address the massive amounts of “monetary medicine” that have been pumped into the financial system and now pose threats to the world’s largest economy and its currency, billionaire Warren Buffett said.

The “gusher of federal money” has rescued the financial system and the U.S. economy is now on a slow path to recovery, Buffett wrote in a New York Times commentary yesterday. While he applauds measures adopted by the Federal Reserve and officials from the Bush and Obama administrations, Buffett says the U.S. is fiscally in “uncharted territory.”

The government is trying to spark business and consumer spending through a $787 billion stimulus plan spanning tax cuts and infrastructure projects, while the Treasury and the Fed have spent billions more on separate programs to rescue financial institutions and resuscitate the banking system. The U.S. budget deficit is forecast to reach a record $1.841 trillion in the year that ends Sept. 30.

“Enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects,” Buffett, 78, said. “For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself.”

The “greenback emissions” will swell the deficit to 13 percent of gross domestic product this fiscal year, while net debt will increase to 56 percent of GDP, Buffett said.

Comment: And he doesn't mean "gusher" or "emissions" in a good sense!

"Oracle of Omaha": "the economy will be in shambles"

Buffett Offers Gloomy Outlook for ’09

Excerpt:

In his eagerly-anticipated annual letter to Berkshire shareholders, Buffett also offered a gloomy economic outlook, saying "the economy will be in shambles throughout 2009 -- and for that matter, probably well beyond."

Still, despite what he called "paralyzing fear" resulting from the credit crisis and falling housing and stock prices, Buffett was optimistic about American resilience.

"Though the path has not been smooth, our economic system has worked extraordinarily well over time," he said. "It has unleashed human potential as no other system has, and it will continue to do so. America's best days lie ahead."

Comment: Other outlooks (and of course there are many!)

Dr. Sung Won Sohn (It is imperative for the Obama Administration to introduce a concrete plan to improve confidence in the credit process. Without improved confidence and trust in the credit markets, the stimulus plan won’t have the desired effect.)
Wells Fargo research (What is shaping up as the deepest and longest recession since the 1930s will end in the second half of 2009)

Stocks are unreasonably cheap now

Is Buffett Insane?

Excerpts:

In the midst of economic chaos, Warren Buffett recently made a bold prediction. He said that now is the time to buy American stocks.

...

1974: Stagflation


The years 1973 and 1974 were two very bad ones for the market. OPEC had started flexing its muscles, causing oil to quadruple. This resulted in a long recession, with inflation spiking to 12.3% in 1974, while real GDP growth fell by 0.5%. America experienced stagflation -- the ugly combination of a recession and high inflation rates -- and people were terrified. The situation was even worse in the United Kingdom, where the government was bailing out banks after real estate crashed. Over those two years, the S&P 500 plunged by 42%.

It was then, on Nov. 1, 1974, at the height of the pessimism, that Buffett made his first well-publicized bullish market call. He noted that he was well aware that the world was in a mess, but that stocks were simply too cheap. "If you're only worried about corporate profits, panic or depression, these things don't bother me at these prices."

To be totally clear, Buffett made one of the most direct predictions of his entire career: "Now is the time to invest and get rich." Buffett himself was buying shares of The Washington Post (NYSE: WPO) and advertising agency Interpublic (NYSE: IPG).

It worked out pretty well for him. The market jumped 32% in 1975, and another 19% the next year. Even today, the Dow Jones Industrial Average's 38% gain in 1975 stands up as its biggest increase since 1955.

Comment: Unreasonable Pessimism has replaced Irrational Exuberance. Time to keep investing!

Warren Buffett: BUY!

Buy American. I Am

Excerpts:

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.

...

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”

I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.

Comment: We continue to invest in our 401K's as well as Sharebuilder.com. I like the DIA EFT (Diamond Trust)

Derivatives: "financial weapons of mass destruction" or "an extraordinarily useful vehicle"

Taking Hard New Look at a Greenspan Legacy

Excerpt:

George Soros, the prominent financier, avoids using the financial contracts known as derivatives “because we don’t really understand how they work.” Felix G. Rohatyn, the investment banker who saved New York from financial catastrophe in the 1970s, described derivatives as potential “hydrogen bombs.”

And Warren E. Buffett presciently observed five years ago that derivatives were “financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”

One prominent financial figure, however, has long thought otherwise. And his views held the greatest sway in debates about the regulation and use of derivatives — exotic contracts that promised to protect investors from losses, thereby stimulating riskier practices that led to the financial crisis. For more than a decade, the former Federal Reserve Chairman Alan Greenspan has fiercely objected whenever derivatives have come under scrutiny in Congress or on Wall Street. “What we have found over the years in the marketplace is that derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn’t be taking it to those who are willing to and are capable of doing so,” Mr. Greenspan told the Senate Banking Committee in 2003. “We think it would be a mistake” to more deeply regulate the contracts, he added.

Comment: Derivatives. I don't understand them!