> Warren Buffett Blog: June 2015

Tuesday, June 30, 2015

Buffett not optimistic on Reinsurance business

[The Reinsurance industry] will not be as good as it has been in the last 30. It’s a business whose prospects have turned for the worse and there’s not much we can do about it.

Monday, June 29, 2015

Buffett looks for businesses that can grow

When asked what kind of businesses Warren Buffett likes to invest in

“It will be businesses that I think I understand and that understanding will grow over time, as will the value of the business grow over time. And then we will look for businesses that we think have good long-term economics, where we think that the managers and employees are both trustworthy and able and where the money makes sense, and they’re the same criteria we would use in this country as well.”

Thursday, June 25, 2015

Warren Buffett confident in US and Australian economy

I feel very comfortable with both the US and the Australian economy. I have no idea what’s going to happen six months from now in business or the market, but I mean, I would be very happy over a five or 10-year period, which is the way you look at these things, or much longer even, investing in either country.

In both areas you have a respect for capital, the rule of law, you have a market that’s well established, you have able and ethical people.

I know less, obviously, about Australia than of the United States but everything I know about it gives me the reason to have the same kind of forecast for it as I have for the United States.

Wednesday, June 24, 2015

Charlie Munger says to invest big when the right opportunity comes

Experience tends to confirm a long-held notion that being prepared, on a few occasions in a lifetime, to act promptly in scale, in doing some simple and logical thing, will often dramatically improve the financial results of that lifetime. A few major opportunities, clearly recognizable as such, will usually come to one who continuously searches and waits, with a curious mind that loves diagnosis involving multiple variables. And then all that is required is a willingness to bet heavily when the odds are extremely favorable, using resources available as a result of prudence and patience in the past. 

- Charlie Munger (Vice Chairman of Berkshire Hathaway and Warren Buffett's right handman)

Tuesday, June 23, 2015

Warren Buffett invests in Australian company for first time

Last week the world's greatest living investor and third richest person made his first foray into the Australian stock market with a US $390 million stake in Australian insurer IAG.

Shares in the insurance group quickly jumped 4 per cent; the investment was widely hailed as a vote of confidence in IAG and in Australia generally.

Under the deal, IAG is issuing Buffett's investment conglomerate Berkshire Hathaway with $390 million (Australian $500) million worth of shares for a 3.7 per cent stake in the company. Berkshire Hathaway will also receive 20 per cent of IAG's insurance premium revenue and cover a fifth of the insurance customers' claims in exchange for an undisclosed fee.

For Berkshire Hathaway, the deal means a fast track into Asia, where IAG is strong, as well as the premium income.

Buffett has committed to the deal for the next decade, but envisages the investment will be much longer term.

Warren comments after the deal were , 
"I am 84 years old and this is my first investment in an Australian company - I have been very derelict, but it has been worth waiting for. Even though this contract only runs for 10 years, I expect for decades and decades and decades we will both benefit from this"
- Warren Buffett

Monday, June 22, 2015

Quote on difficulties making profit in Airline industry

In 60 years the world-wide airline industry had profit margins of less than 1 percent on average.

"A durable competitive advantage has proven elusive ever since the days of the Wright brothers. Indeed, if a far-sighted capitalist had been present at Kitty Hawk he would have done his successors a favor by shooting Orville down." 
    - Warren Buffett

Friday, June 19, 2015

Do the right things the right way

"You only have to do a very few things right in your life so long as you don't do too many things wrong."

Wednesday, June 17, 2015

Lunch donor joins Berkshire to manage investments

The donor in 2011 Ted Weschler who bought lunch with Buffett for a whopping $2.6 million now helps manage Berkshire Hathaway’s Investment Portfolio, suggesting that lunch with Warren Buffett can pay dividends.

Meeting in July, 2010 for the $2,626,311 dinner, the two men liked each other right away. Buffett learned about Weschler’s investment success and how he achieved it—the ‘how’ being as important to Buffett as the gains themselves.

Tuesday, June 16, 2015

Your friends and network define who you become

"It's better to hang out with people better than you. Pick out associates whose behavior is better than yours and you'll drift in that direction."

Monday, June 15, 2015

Warren Buffett invests in Canadian company Suncor Energy

Warren Buffett with Berkshire staff Tracy Cool
Suncor Energy is now became Berkshire’s biggest oil holding after the company sold all shares in Exxon last year, while increasing its stake in the Calgary-based producer since the second quarter of 2014.

Berkshire owned about 22.3 million shares of Suncor as of the end of the first quarter, up from 13 million at the end of 2013, according to data compiled by Bloomberg. Since the end of 2013, Suncor has declined 4.7 percent.

For Williams, a former Exxon executive who is now the Canadian oil-sands producer’s chief executive officer, Berkshire’s stake in Suncor is a testament to a strategy of cutting costs and investing in its best assets even as the industry confronts a price collapse.

“I’m very proud that Warren has come in so heavily to the stock.” Williams, who’s had “occasional discussions” with the billionaire, said in an interview at Bloomberg’s Calgary bureau on Wednesday. “I’m particularly pleased because I worked for Exxon for 20 years before I came to Suncor, so it’s slightly personal as well.”

Suncor has the highest gross margins among 18 of the world’s largest oil and natural gas producers, four times higher than Exxon’s, data compiled by Bloomberg show. The margins have risen while those of global and Canadian peers declined, according to the data.

Thursday, June 11, 2015

Warren Buffett could win big if Fed raises rates

A rising interest rate environment could benefit Warren Buffett and he is probably hoping the Federal Reserve starts raising interest rates sooner. The famed billionaire investor's investment vehicle, Berkshire Hathaway has 44.8% of its portfolio invested in the financial sector, according to FactSet. 

Financial stocks tend to benefit in a rising rate environment, because they can make more money on the spread between the interest they earn on assets and the interest they pay on liabilities.

Wednesday, June 10, 2015

Warren Buffett oldest CEO in S&P500 companies

It's another list that Warren Buffett can say he tops. At the age of 84, the Berkshire Hathaway chief is the oldest CEO in the S&P 500, according to data provided to CNBC by S&P Capital IQ. 

Tuesday, June 9, 2015

Learning from failures is important

"People succeed in life countless different ways but failures group around a few key themes. As such, you learn more from people's failures than people's successes."

Monday, June 8, 2015

Chinese company pays $2.3 billion for lunch with Warren Buffett

A Chinese gaming company won this year’s charity auction for lunch with Warren Buffett Friday night, displaying a sense of humor with a bid of $2,345,678. The amount was not a record, but was higher than what fans of Mr. Buffett have paid in the past couple of years.

Da Lian Zeus Entertainment Co., an online gaming firm based in Beijing, was the winner of the 16th annual auction, according to a statement from the Glide Foundation, the San Francisco charity that receives the proceeds from the auction each year. 

The bidding was done on behalf of the company rather than individuals. That the winning bid came from China reflects the fact that Buffett and his firm Berkshire Hathaway have been picking up Chinese fans by the droves in recent years. More than 200 Chinese investors attended the Berkshire annual meeting in Omaha last month.

Last years winning bidder was Andy Chua of Singapore who paid $2.16 million to lunch with Mr Buffett

Thursday, June 4, 2015

Charlie Munger says Berkshires success is due to Learning non stop

Warren Buffett has become one hell of a lot better investor since the day I met him, and so have I. If we had been frozen at any given stage, with the knowledge we had, the record would have been much worse than it is. So the game is to keep learning.

Wednesday, June 3, 2015

Buffett automaker BYD to do placement

BYD halted trading on its shares saying it was preparing for a potential private placement.

China Merchants Securities, Guosen Securities and UBS Securities were working on the deal, with other banks joining the deal later, added IFR. Details of the deal are yet to emerge.

The company, which counts Warren Buffett’s Berkshire Hathaway Inc.as a shareholder, joins the rush of Chinese companies tapping the equity market. “It makes perfect sense to go ahead with a share placement now, given the rally in the market”.

To date, the firm has not specified what the funds from the placement will be used for, but issuing shares now allows the company to take advantage of the increase in its share price.

BYD Co. will spend the proceeds from a planned share sale to increase its capacity to manufacture batteries to meet the growth in demand for electric vehicles. The analyst also suggests that the funds will be further financed in research and development and will give the company an edge over its competitor, Tesla.

BYD made the announcement via a posting on a Shenzhen stock exchange affiliated website. The group has laid out its plans to compete with Tesla in the EV market, where its only real advantage right now batteries. Efficient, Lightweight and High energy are considered to be the few vital components to make a successful electric car. They also pledged to deliver more electric buses on the United States market after securing recently a big contract from a mass-transit operator last month. It also plans to start taking orders for electric trucks from overseas buyers in the second half of the year and begin deliveries in 2016, with the U.S. being one of the likely first destinations, the company said.

Tuesday, June 2, 2015

Leverage your strengths for success

"You don’t have to be an expert on everything, but knowing where the perimeter of that circle of what you know and what you don’t know is, and staying inside of it is all important. Tom Watson Sr., who started IBM, said in his book, he said, ‘I’m no genius. But I’m smart in spots, and I stay around those spots.’ And, you know that is the key. So if I understand a few things and stick in that arena, I’ll do OK.”

Monday, June 1, 2015

Your chance to lunch with Warren Buffett

Bidding has opened for a lucky person's chance to chat with Warren Buffett over lunch.

Warren Buffett is auctioning himself so that someone could eat lunch with him. The funds will go to his favourite San Francisco charity, the Glide Foundation, which helps the homeless. Over the last 15 years he has raised $17.9 million for it. The bidding is stuck at $178,100 and 77 bids. 

The most expensive meal ticket was in 2012, when the winner paid a record $3,456,789 to have lunch with Buffett, the founder of Berkshire Hathaway. Last year’s winner paid a mere $2,166,766 for a private audience with Buffett, who recently likened Tesco’s problems to finding cockroaches in the kitchen. He also confessed to spending too long “thumb-sucking” over exiting Tesco, in which he once held almost 5%.

Bidding for the lunch — during which his next investments cannot be discussed  —  ends on Friday.

Some of the previous winners of the bids 

    -2003 David Einhorn, Greenlight Capital – $250,100
    -2004 Jason Choo, Singapore – $202,100
    -2005 Anonymous – $351,100
    -2006 Yongping Duan, California $620,100
    -2007 Mohnish Pabrai, Guy Spier, Harina Kapoor – $650,100
    -2008 Zhao Danyang, China – $2,110,100
    -2009 Salida Capital, Canada – $1,680,300
    -2010 Ted Weschler – $2,626,311
    -2011 Ted Weschler – $2,626,411
    -2012 Anonymous - $3,456,789