Warren Buffett 01 (May 08 - Jan 10)

[Cheng]

Posted on Fri, Sep. 26, 2008

Warren Buffett biography reveals flaws, recounts triumphs

By JOSH FUNK
The Associated Press

Warren Buffett’s youthful confidence about his business acumen hid a self-doubt about nearly everything else, yet the son of a Nebraska congressman grew into one of the world’s greatest investors.

The tale of how the brilliant but needy Buffett built a fortune by investing in undervalued companies is recounted in the first authorized biography of the chairman and CEO of Berkshire Hathaway Inc. The book’s author, former insurance analyst Alice Schroeder, writes that when Buffett was a newlywed in his early 20s, he relied on his wife, Susan, to help cut his hair, stock the pantry and deal with people.

The new book, The Snowball: Warren Buffett and the Business of Life, goes on to explain how Susan Buffett left Warren Buffett in 1977 and moved to San Francisco. But the couple never divorced before her death in 2004, even though he lived with another woman most of those years.

Buffett married his longtime companion, Astrid Menks, in a private ceremony on his 76th birthday in 2006.

Some of the information in Schroeder’s book is new, but much of it will seem familiar to Buffett’s legions of fans.

More than most books about Buffett, Schroeder examines the billionaire’s flaws as well as his successes.

Buffett spent thousands of hours talking to Schroeder, and he gave her access to his files and friends. The book details Buffett’s life and his investing career, which began to take off in 1956, when he gathered $105,000 from relatives and friends to start the Buffett Partnership. Later, the partnership began buying the stock of Berkshire Hathaway, a New England textile firm, for $7 and $8 a share in 1962. After 1969, Berkshire became Buffett’s investment vehicle.

Schroeder describes how Buffett and his first wife gradually began to spend more time apart as Susan became more involved in community groups and Warren relentlessly pursued investing.

The book says Susan Buffett thought she and Warren had an understanding that he would quit investing once he amassed $8 million to $10 million. But her husband’s pace never slowed.

In 1977, Susan Buffett visited a friend in San Francisco and decided she wanted to have an apartment there, to be in an art-friendly city and be closer to friends and their youngest son, who was attending Stanford.

After she moved, Susan Buffett encouraged her friend Menks to check in on her husband, and Menks eventually moved in and became Warren’s companion.

In 1984, Susan returned to Omaha for a birthday party for Warren’s mother. At that time, Susan told Warren Buffett that her move to San Francisco was related to a relationship with another man.

Buffett did not tell anyone — even Menks — about the loss of his beautiful image of his marriage. Instead, Schroeder wrote, he focused on running Berkshire and flushed the painful memory from his mind.

Susan and Warren Buffett remained married and were together often and talked frequently over the years.

Pre-orders of the book have already pushed it into the top 75 of Amazon.com’s bestseller list. The publisher says the first printing is 1 million copies.

http://warren-buffett-news.newslib.com/story/1061-3237070/

[kennynah]

surely Hollywood wil make a film on the life of this successful investor in future

[helios]

Buffett’s Bet on G.E.: Almost as Good as a Bailout By STEVE LOHR

Warren E. Buffett is emerging as the banker of choice to the embattled blue-chip companies of American business.

Mr. Buffett, the billionaire investor, announced on Wednesday that he would invest $3 billion in General Electric, the industrial giant that is also the nation’s largest nonbank financial company. The move comes eight days after he said he would invest $5 billion in Goldman Sachs.

In both cases, Mr. Buffett has driven a hard bargain and extracted favorable terms. Still, he is betting when other investors remain fearful and on the sidelines. And his investments, analysts say, are based on the assumption that these two companies will come through the financial turmoil in good shape — helped by a government economic rescue package that will not only emerge but will bring confidence to shaky markets.

“Buffett is the poster child for what the Fed and Treasury want to see happen, private money coming in to turn things around,” said James W. Paulsen, chief investment strategist for Wells Capital Management. “The government plan is about tamping down Wall Street fear and bringing back Wall Street greed to pursue profit-making opportunities. Buffett is just doing it ahead of the game, before there is a government package, betting there will be one and it will work.”

G.E. is selling $3 billion of preferred stock in a private offering to Mr. Buffett’s company, Berkshire Hathaway. The preferred stock pays dividend of 10 percent, and G.E. can purchase the shares back from Mr. Buffett after three years by paying a 10 percent premium, or $3.3 billion.

But the real payoff for Mr. Buffett will come if G.E.’s battered stock rebounds. As part of the financing, Berkshire Hathaway is receiving warrants to purchase $3 billion of G.E. common stock for $22.25 a share, at any time over the next five years. In regular trading, G.E. shares closed down $1 a share on Wednesday, at $24.50 a share, and rose in after-hours trading before closing at the same price. G.E.’s shares are off 13 percent in the last month, and down 34 percent so far this year.

Yet despite the seemingly generous terms for Mr. Buffett, analysts say, G.E. is getting not only needed financing but also a credibility dividend.

“Warren Buffett has become the new triple-A credit rating system,” said Edward Yardeni, an independent investment strategist. “It’s a big endorsement for G.E.”

Mr. Buffett, the chief executive of Berkshire Hathaway, said in a statement, “G.E. is the symbol of American business to the world,” adding that he has known the company’s leaders for decades. “They have strong global brands and businesses with which I am quite familiar. I am confident that G.E. will continue to be successful in the years to come,” he said.

Besides the Buffett investment, G.E. announced that it planned to sell at least $12 billion in common stock to the public. The offering is expected to be priced just before the opening of the stock market on Thursday.

G.E. portrayed its financing plans as a kind of insurance policy, giving the company ballast in extremely uncertain times. Last Thursday, G.E. announced that it would report lower-than-expected profits for the third quarter, citing “unprecedented weakness and volatility in the financial services markets.” The company also lowered its earnings outlook for the year.

The company also outlined steps to bolster its finance arm, GE Capital, by reducing the dividend it pays to the parent company, halting G.E.’s stock buyback program and becoming less dependent on short-term commercial paper borrowings. Last Thursday, Jeffrey R. Immelt, G.E.’s chief executive, called those steps “tough decisions to further reduce risk and strengthen our balance sheet.”

After a few days, however, those steps did not seem to go far enough. After Wachovia, the nation’s fourth-largest bank, reached for a lifeline and was sold to Citigroup, and the House rejection of a bailout plan on Monday, G.E. decided more drastic action was needed. Mr. Immelt, who has known Mr. Buffett for years, quickly negotiated the financing deal.

G.E. is potentially vulnerable to a credit squeeze because of GE Capital, whose global portfolio spans aircraft leasing, commercial real estate, credit cards and home mortgages. It no longer has a mortgage-lending operation in the United States, it has shunned exotic securities and G.E. retains its triple-A credit rating.

But G.E. has about $90 billion in commercial paper, which is short-term, low-cost borrowing made for as little as one month. Commercial paper costs have risen for G.E., as it has for others, though it has been tapping that market throughout the crisis.

Yet if that lending market simply froze in a panic, analysts say, G.E. would face a liquidity squeeze and probably be forced to pull back from some businesses in a forced shrinkage.

The financing from Mr. Buffett and sale of shares to the public, plus its cash on hand and credit lines from banks, analysts say, add up to about $90 billion — effectively hedging the company’s risk from a seize-up in the commercial paper market.

In a statement on Wednesday, Mr. Immelt said the financing gave G.E. more flexibility and liquidity in case the financial markets worsen. If things hold steady, he suggested, G.E. will be looking for opportunities to buy with its extra cash. “It gives us the opportunity to play offense in this market should conditions allow,” he said.

Source: NewYorkTimes.com
Date: 01-Oct 2008

[LenaHuat]

When a tightwad like WB opens his wallet, every1 sits up and takes note. He's buying up what he really knows well, Goldman Sachs (fr the age of 9 or 10) and GE (being a great friend of Jack Welch). He seems to know more than the sellers or maybe he's learnt from history that Pearl Harbor marks the US resolve to win the War.

[LenaHuat]

This is what WB meant when he said he loved investing in human capital:

Oct. 2 (Bloomberg) -- Goldman Sachs Group Inc.'s top four executives agreed to hold on to 90 percent of the stock they own in the company as part of Goldman's agreement to raise money from Warren Buffett's Berkshire Hathaway Inc.

Chief Executive Officer Lloyd Blankfein, Chief Financial Officer David Viniar and Co-Presidents Gary Cohn and Jon Winkelried are named in the ``material definitive agreement'' disclosed by New York-based Goldman in a regulatory filing today.

The accord prevents the executives, their families and their estates from selling more than 10 percent of the common stock they own until Oct. 1, 2011, or until Berkshire redeems its $5 billion in preferred stock, whichever comes soonest.

[LenaHuat]

Now WB has let this nugget out of the bag :

He also revealed that he owns only two domestic stocks in his own personal account, Berkshire and Wells. After the live interview, he laughingly told Becky that no one had ever gotten that particular nugget out of him before.
Back in August, Buffett told Becky that Berkshire had been adding to its holdings in either American Express or Wells Fargo. Today, he solved that little mystery. It was Wells Fargo.

Gonna have something to do with his late first wife who moved to SF. She was reported to hve been an extremely investment-savy lady

[kennynah]

becky did well to tickle this old fella into revealing his secret..... old heroes die in the hands of beauties since time long ago...

[sidney]

Oh when will our local bookstore sell Snowball?

[Cheng]

Oh when will our local bookstore sell Snowball?

They are out in most local bookstores already.

[la papillion]

http://www.berkshirebusinessbooks.com/b ... p?id=21329

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