February 2010

Berkshire letter, part 2 -- capital intensive businesses

Sun, 02/28/2010 - 13:55

The second most significant statement made in Buffett's shareholder letter was his revised description of Berkshire's portfolio of businesses.

Formerly Berkshire was a Sistine Chapel, a "museum" of businesses that had some type of competitive advantage that enabled them to throw off high cash flows for long periods of time. Buffett assembled a remarkable collection of businesses ranging from Benjamin Moore paints to Justin boots to Acme brick to Iscar.

Berkshire letter, part 1 -- BNI + Mid-American = Less Transparency

Sat, 02/27/2010 - 11:39

My first take on the shareholder letter this a.m. is that it didn't say a whole lot that was new but there are some interesting points worth commenting on. Forgive me for starting out with a gripe but as a former CPA, I must say this. Berkshire has been growing less transparent year by year. Now it is going to combine BNI with its utlity segment for financial reporting next year. Buffett made the argument for combining them (regulated, high capex etc.), but the result is less transparency. BNI is in the transportation business.

Hold for Mr. Buffett Please: a bit of the back story

Fri, 02/26/2010 - 14:42

My cover story for this week's Bloomberg BusinessWeek appears on newsstands today and on BusinessWeek website (read it here).

Garbage in the Moat Part 2

Tue, 02/23/2010 - 15:58

I was talking on the phone yesterday to a very smart person whose idea I am going to shamelessly steal here because he didn't want to post it himself. We were discussing credit rating agency, Moody's, and what went wrong. So this guy says to me that people don't understand that Moody's was a religion. It operated from a creed. When the company went public and needed earnings growth, it was selling the soul of the church for money. So far so good, this is not new news, right?

Reading Nassim Taleb

Sat, 02/20/2010 - 17:59

Ryan asked whether it makes sense to read Nassim Taleb's forthcoming book. Here's a few thoughts on that, because I dissed Taleb a couple of posts ago.

Back from California

Sat, 02/20/2010 - 01:34

Have just returned from a few days in Santa Monica where I attended a Renaissance Weekend. These events are private and confidential (some information is available on the web). My takeaway is to just keep learning everything you can about everything that interests you, whether or not it has an immediate payoff. Build the Mental File Cabinet.

Nancy Munger

Wed, 02/10/2010 - 14:17

From today's LA Times. She has been in poor health for awhile. This is sad news.

What is Nassim Taleb Smoking These Days?

Tue, 02/09/2010 - 13:16

Alex Crippen is reporting on CNBC that Black Swan author Nassim Taleb says Buffett may just be lucky. Taleb "says there isn't enough evidence to show that Warren Buffett's skill, and not his good luck, is responsible for the billionaire's enormous investing success over the decades.

Taleb is quoted as saying:

Garbage in the Moat

Fri, 02/05/2010 - 11:18

In my last post I wrote about the CIA's valuable brand and Warren's statement to me one time that if he could buy only one business it would be the Catholic Church (this was before the pedophile scandal). An interesting question to ask is, how do you model the value of the Catholic Church? (with no disrespect to Catholics!)

One of the World's Best Brands: the CIA

Wed, 02/03/2010 - 08:29

This week, Politico reported that the CIA has let its analysts trade on the agency's brand to form a consulting firm, "BIA," (Business Intelligence Advisors) that peddles expertise in “deception detection,” i.e., the art of detecting when executives are lying based on clues in a conversation. BIA was formed by ex-analysts, but active-duty agents have moonlighted there. The CIA allows it because letting them earn extra money keeps  talented employees from decamping the agency for more lucrative jobs.