Warren Buffett On Succession Planning & Investments

Below is an interesting clip from Warren Buffett's recent television tour where he talked about all things Berkshire Hathaway (BRK.A / BRK.B). He is questioned on possible succession plans and the names of Ajit Jain and David Sokol are both tossed around. Additionally, the interview encompasses talk of some of his investments. As always, worth listening to what the Oracle of Omaha has to say. And if you haven't checked out the list yet, make sure to pick up some of the books on Warren Buffett's recommended reading list.

One thing we did want to highlight though that has seemingly slipped through the cracks is the fact that Buffett had raised his stake in the supermarket Tesco. What's interesting is that in Buffett's annual letter he noted he had increased the position to 3%. Typically an investment of that threshold would have triggered a regulatory filing in the UK but we couldn't find one over there. So, we assume here that Buffett's stake is actually at 2.99% or so.... technicalities. Buffett first bought Tesco in 2006 as the supermarket had plans to enter the US market.

Below is the video of Buffett's discussion on succession plans and some of his investments:



As always, we've been covering his movements in-depth and you can view Warren Buffett's portfolio as well as Berkshire Hathaway's annual letter. Many are concerned about succession plans at Berkshire, but they are keeping them close to the vest. In the past we've posted an excellent video that examines potential Berkshire successors and we recommend checking it out.

Warren Buffett & Berkshire Hathaway's Annual Letter

For those of you who haven't had a chance to read this yet (shame on you), here it is: Warren Buffett's annual letter and Berkshire Hathaway's annual report. For value investors and future Buffett wanna-be's, this is must-read material.

One very interesting thing to note about Buffett's letter is how he mentions that many of Berkshire's holdings heavily rely on consumer spending and housing demand. While Berkshire has obviously survived the crisis, those are areas many foresee a very slow recovery in. So, those companies will have to operate efficiently as they continue to face challenges. At the same time though, Buffett took advantage of the crisis to secure many solid deals and acted on his old adage of buying when others are fearful. He even expanded on this with an excellent new quote, saying "When it's raining gold, reach for a bucket, not a thimble."

Additionally, as we assumed when we reviewed Warren Buffett's portfolio, he confirmed that he sold positions to finance his impending acquisition of railroad Burlington Northern Santa Fe. And this purchase continues to signify a growing trend in Buffett's portfolio: he's investing in industries that have monopolies or near-monopolies.

Buffett's letter below gives his take on the economy, his investments, and various Berkshire components. Embedded below is the document:



You can directly download the .pdf here.

Of course a lot of criticism surrounding the letter is the lack of discussion regarding succession plans for when Buffett eventually steps down. This is a legitimate concern for investors and in the past we've posted up a great video that examines potential successor candidates at Berkshire. Many think Sokol will be the man for the job, but we'll have to wait and see.

So while his latest letter didn't provide any breakthrough new information, it's always good to hear his thoughts. For more great investment reads, head to Warren Buffett's recommended reading list.

Warren Buffett's Portfolio: Fourth Quarter 13F Filing

(This post is part of our series on tracking hedge fund portfolios. If you're unfamiliar with tracking investments they disclose via SEC filings, check out our series preface on hedge fund 13F filings.)

Warren Buffett needs no introduction. Seriously. If you don't know who he is, you shouldn't even be reading this.

Through his early Buffett partnerships to the modern days of Berkshire Hathaway (BRK.A), he is regarded as one of the most successful investors ever. While many would argue that Baupost Group's Seth Klarman could give Buffett a run for his money, Buffett has garnered quite a massive following due to his enormous returns over time. Needless to say, investors are always anxious to find out what he has bought or sold, and that's exactly what we're here to do today. To learn to invest like the legend himself, head to Warren Buffett's recommended reading list.

The positions listed below were Berkshire Hathaway's long equity, note, and options holdings as of December 31st, 2009 as filed with the SEC. All holdings are common stock unless otherwise denoted.


Brand New Positions
n/a


Increased Positions
Republic Services (RSG): Increased by 128.7%
Iron Mountain (IRM): Increased by 107.6%
Beckton Dickinson (BDX): Increased by 25%
Walmart (WMT): Increased by 3.2%
Wells Fargo (WFC): Increased by 2.2%


Reduced Positions
Exxon Mobil (XOM): Reduced by 67%
United Health Group (UNH): Reduced by 65.4%
WellPoint (WLP): Reduced by 60.4%
Gannett (GCI): Reduced by 36.1%
ConocoPhillips (COP): Reduced by 34.3%
Ingersoll Rand (IR): Reduced by 27.6%
Johnson & Johnson (JNJ): Reduced by 26.5%
SunTrust Banks (STI): Reduced by 22.1%
Moody's (MCO): Reduced by 18.9% ~ we've detailed all of his sales as they've happened
CarMax (KMX): Reduced by 11.1%
Procter & Gamble (PG): Reduced by 9.2%


Removed Positions (Sold out completely):
Union Pacific (UNP)
Norfolk Southern (NSC)
These were both sold due to conflict with Berkshire's impending acquisition of Burlington Northern.


Top 15 Holdings by percentage of assets reported on 13F filing

1. Coca Cola (KO): 19.7%
2. Wells Fargo (WFC): 14.9%
3. Burlington Northern Santa Fe (BNI): 13.1% ~ this won't show up in future filings
4. American Express (AXP): 10.6%
5. Procter & Gamble (PG): 9.2%
6. Kraft Foods (KFT): 6.5%
7. Walmart (WMT): 3.6%
8. Wesco Financial (WSC): 3.38%
9. ConocoPhillips (COP): 3.32%
10. Johnson & Johnson (JNJ): 3.02%
11. US Bancorp (USB): 2.68%
12. Moody's (MCO): 1.47%
13. Washington Post (WPO): 1.31%
14. Nike (NKE): 0.87%
15. M&T Bank (MTB): 0.78%
    

The name of the game for Warren Buffett was selling shares of other holdings in order to make way for their acquisition of Burlington Northern Santa Fe in its entirety. That massive purchase obviously will not show up in future filings and is Berkshire's largest purchase ever. Obviously when you're purchasing that large of an entity, you're not going to be buying much else. However, Buffett did also double down on his Iron Mountain and Repulic Services positions.

Buffett reduced 'health' holdings by selling over half of his UNH and WLP stakes. Additionally, he sold nearly 70% of his Exxon Mobil position. We've also covered Buffett's sales of MCO shares as they became somewhat frequent occurrences. It remains to be seen if those sales were more-so because Buffett felt the business was threatened or because he was trying to free up capital for his BNI acquisition. Buffett has maintained a large position in Kraft for a while now, but shares have been center stage as Bill Ackman's hedge fund Pershing Square recently acquired a large stake and the company recently sealed a deal to acquire Cadbury.

Keep in mind that there are also some positions that won't show up on the filing because they are non-equity stakes. Buffett acquired many of these during the heart of the crisis in 2008 and as such sealed these deals with ridiculously good terms (for him).

To hear some of Buffett's recent thoughts, we posted up his recent television interview. For analysis of Berkshire Hathaway (BRK.A / BRK.B), we noted that hedge fund T2 Partners deemed shares undervalued in their in-depth presentation. And lastly, make sure you check out Warren Buffett's recommended readings.

We'll be tracking 40+ prominent funds in our fourth quarter 2009 hedge fund portfolio tracking series. We've already covered Seth Klarman's Baupost Group, Mohnish Pabrai's Investment Fund, Carl Icahn's hedge fund Icahn Partners, David Einhorn's Greenlight Capital, Stephen Mandel's Lone Pine Capital, John Griffin's Blue Ridge Capital, and David Tepper's Appaloosa Management. Check back daily for our new updates.

T2 Partners Presentation: General Growth Properties (GGWPQ), Iridium (IRDM) & Berkshire Hathaway (BRK.A)

Recently, Whitney Tilson and Glenn Tongue's hedge fund T2 Partners gave a presentation at the Boys and Girls Harbor Investment Conference that took place on February 3rd, 2010. Their presentation included a look at the macro situation and three stock picks: Berkshire Hathaway (BRK.A), General Growth Properties (GGWPQ), and Iridium (IRDM). When we covered T2's investor letter, we saw that they had large long positions in all three names.

Embedded below is T2's recent presentation on all three stocks:




You can download the .pdf here.


Additionally, last week we posted Whitney Tilson & T2 Partners' analysis of Berkshire Hathaway (BRK.A / BRK.B). Below you will find their revised slide-deck:




You can download the Berkshire presentation via .pdf here.

In a separate post this morning we'll also be covering Bill Ackman & Pershing Square's presentation on Kraft (KFT) from the same investment event, so stay tuned.

Buffett's Berkshire Hathaway Sells More Moody's (MCO)

In a SEC Form 4 filed just now, Warren Buffett's Berkshire Hathaway (BRK.A / BRK.B) has disclosed that they sold 6,201 shares of Moody's (MCO) on February 2nd at a weighted average price of $28.4566 per share. Berkshire still owns 31.8 million shares, where 16 million of those are owned by National Indemnity Company, and 15.7 million of which are owned by GEICO, both subsidiaries of Berkshire Hathaway.

This marks the umpteenth time that Buffett has sold shares and we detailed his sales as recently as late December. Additionally, Berkshire also sold shares in early December, had previously sold Moody's shares in late October, and in months prior as well. As you can see, he is obviously reducing his position size methodically and we've noticed a pattern with his sales. Each time shares of MCO hit the $25-$30 range, he unloads some. We'll have to see if this trend continues because keep in mind, he still owns over 31 million shares.

In Whitney Tilson and hedge fund T2 Partners' annual letter, we saw that they were short Moody's (among other names). Hedge fund colleague David Einhorn & Greenlight Capital are also short MCO. In Einhorn's recent investor letter, he mentioned how this short position has been causing them pain, but they still feel Moody's faces headwinds. Buffett has to be at least somewhat worried about the business going forward as he continues to shed shares on a frequent basis.

Taken from Google Finance, Moody's is "a provider of credit ratings and related research, data and analytical tools, quantitative credit risk measures, risk scoring software, and credit portfolio management solutions and securities pricing software and valuation models. The Company operates in two segments: Moody’s Investors Service (MIS) and Moody’s Analytics (MA)."

Is Steak 'N Shake The Next Berkshire Hathaway?

The following is a guest post from Chad Brand at PeridotCapitalist.com, a stock market blog focused on value investing.

"The Steak n Shake Company (SNS), an operator of 485 burger and shake focused casual dining restaurants in 21 states, has recently been quietly transformed by a new management team into a small Berkshire Hathaway type holding company. The move is very Warren Buffett-esque, with a 1-for-20 reverse stock split aimed at boosting the share price to well above normal levels (above $300 currently) and a bid to buy an insurance company among the noteworthy actions taken thus far.

What I find almost as interesting as the moves made by new CEO Sardar Biglari (a former hedge fund manager who has gained control of the firm and inserted himself into the top management slot) is the fact that this move has largely gone unnoticed by the financial media. Granted, Steak n Shake is a small cap regional restaurant chain ($450 million equity value) but the exact same strategy undertaken by Sears Holdings chairman Eddie Lampert garnered huge amounts of press.

Continue reading the rest of the article at PeridotCapitalist.com.

Hedge Fund T2 Partners' Berkshire Hathaway Analysis (BRK.A/BRK.B)

We've come across a lot of resources as of late from Whitney Tilson and Glenn Tongue's hedge fund, T2 Partners. Below you will find their in-depth presentation on the bullish prospects for shares of Warren Buffett's Berkshire Hathaway (BRK.A / BRK.B). As we have detailed before, T2 believes Berkshire is undervalued. In fact, they are so confident in the opportunity Berkshire Hathaway presents that it is one of their largest positions which we learned upon reading T2's annual letter.

After publication of this analysis, it appears T2 has become even more bullish on the prospects for Warren Buffett's company. Recently, the 'B' shares of Berkshire (BRK.B) underwent a 50:1 stock split and it was also announced that they would be joining the S&P 500 index. This creates an influx of natural buyers as index funds will need to buy $38 billion worth of BRK.B, or around 23% of the shares outstanding.

Below you'll find hedge fund T2 Partners' analysis of Berkshire Hathaway:




You can download the presentation via .pdf here.

There you have it, an in-depth look at Warren Buffett's behemoth, Berkshire Hathaway. T2's Whitney Tilson and many other prominent hedge fund managers will be presenting investment ideas at the Value Investing Congress May 4th & 5th in Pasadena and we highly recommend attending. We've secured a discount to the event for our readers who can use discount code: P10MF5.

For more insight from Whitney Tilson and Glenn Tongue, head to our coverage of hedge fund T2 Partners.

Warren Buffett & Bill Ackman Interviews

Warren Buffett of Berkshire Hathaway and Bill Ackman of hedge fund Pershing Square recently sat down with CNBC in two separate interviews. While the two men shared a talking point in the recent Kraft deal (they are both large shareholders), we thought it was interesting to hear their recent takes on the economy and markets.

In his interview, hedge fund manager Bill Ackman says that you are buying Kraft (KFT) at less than 14 times earnings and get a 4% dividend yield. He liked the fact that Kraft used a limited amount of shares (and used more cash) in the deal and in the end paid a fair price to get the deal done. As we covered earlier, Kraft is now Pershing Square's largest holding.

Ackman argues that Kraft's purchase of confectioner Cadbury now makes Kraft a more 'defensive' play. Obviously it will take a bit of time to integrate the two businesses, but the Pershing Square hedge fund manager points out that Kraft has done it numerous times before with other transactions.

Embedded below is Ackman's video interview where he outlines his thoughts on the Kraft and Cadbury deal. RSS & Email readers will want to come to the site to view this post as there are a lot of videos included:


And here is part two of Ackman's video interview where he talks about some of his other portfolio activity and his take on the economy:


Moving next to Warren Buffett, we see that he shares a different opinion on the matter of the Kraft and Cadbury deal. Below he gives his thoughts on Wells Fargo (WFC), the economy, Ben Bernanke, and much more.




We've followed these two gentlemen extensively before and have covered numerous resources such as Warren Buffett's recommended reading list, Pershing Square's research on General Growth Properties (GGWPQ). For more insight from these two big time investors, head to our resources on Warren Buffett as well as our resources on Bill Ackman.

Whitney Tilson Says Berkshire Hathaway Is Undervalued (BRK.A)

T2 Partners hedge fund manager Whitney Tilson thinks shares of Berkshire Hathaway are undervalued. Speaking about the A shares (BRK.A), Tilson was recently on CNBC commenting that he thinks Berkshire has an intrinsic value of $130,000-140,000 per share. Under this assumption, this would mean Berkshire's A-shares are massively undervalued since they currently trade around $100,000.

Tilson also talks about the B-shares (BRK.B), noting that the potential 50:1 stock split could serve as a catalyst. Burlington Northern (BNI), a company Berkshire is purchasing, is currently in the S&P 500. Once this acquisition closes, BNI will cease to be in the S&P 500 and a spot will open up for a new stock to be admitted. Tilson thinks this could serve as a catalyst for Berkshire B-shares if the stock split is approved and shares become more 'affordable' on a per share basis. After all, Berkshire Hathaway is by far the largest company by market capitalization that is currently not in the S&P 500. Tilson also said in his weekly email that Berkshire Hathaway was now T2's largest position.

One of the main concerns for investors going forward is the succession plan at Berkshire once Warren Buffett steps down (if he ever does hah). He is obviously responsible for a large part of their success and this could potentially serve as a negative catalyst should anything happen to Buffett. Tilson has been a longtime believer in shares of Berkshire and we've covered his previous thoughts on the subject.

Tilson also focuses on some short selling opportunities as he singles out the homebuilders and regional banks. Due to all the foreclosures around the nation and housing inventory levels, he feels homebuilders will have a rough road ahead as there is already so much supply. Turning to regional banks, Tilson thinks those with a lot of commercial real estate exposure are good short candidates given that he expects further losses in the CRE segment. We already knew this because we had previously gotten a glimpse at what companies Tilson's hedge fund T2 was shorting. For long positions, make sure to check out Tilson's case for General Growth Properties (GGWPQ) as well.

Here's the video of Tilson's recent interview:




For more insight from Tilson, check out him and many other prominent hedge fund managers at the Value Investing Congress May 4th & 5th in Pasadena, California. We've secured a discount for our readers with code P10MF4 so make sure to take advantage of it to receive investment ideas from some of the smartest investors out there.

Warren Buffett Sells Moody's (MCO) Shares Again

In a Form 4 filed with the SEC, legendary investor Warren Buffett and his Berkshire Hathaway disclosed that they have sold more shares of Moody's (MCO). On December 7th they sold 2,004,946 shares at a price of $25.0381 per share. The next day they sold an additional 704,346 shares at a price of $24.8074. In total, they sold 2,709292 shares and they are now left owning 35,357,393 shares. As we mentioned before, Buffett previously sold Moody's shares in late October, and in months prior as well. (Head over to TickerSpy to see Warren Buffett's portfolio).

So while Buffett and Berkshire have been selling shares multiple times over the past few months, keep in mind that they still own a sizable chunk of the company. It's going to be interesting to watch if Buffett continues to sell completely out or if he is merely trimming his position down to avoid possible risks associated with this name. David Einhorn's hedge fund Greenlight Capital has been publicly short Moody's (MCO) and McGraw Hill (MHP) and you can see his short thesis in his presentation on the curse of the Triple-A. It's certainly a situation worth watching.

To learn to invest like one of the greatest ever, check out Warren Buffett's recommended reading list. For words of wisdom, check out our top 25 Warren Buffett quotes. And lastly, for more insight from Mr. Buffett on this economy, investing, and life then check out his recent talk at Columbia Business School with Bill Gates.

Taken from Google Finance, Moody's is "a provider of credit ratings and related research, data and analytical tools, quantitative credit risk measures, risk scoring software, and credit portfolio management solutions and securities pricing software and valuation models. The Company operates in two segments: Moody’s Investors Service (MIS) and Moody’s Analytics (MA)."

Warren Buffett To Sell Union Pacific & Norfolk Southern Stakes (UNP & NSC)

Following Warren Buffett & Berkshire Hathaway's announcement of their Burlington Northern (BNI) purchase, we now see that he is set to make another round of moves in the railroad industry. As of last portfolio disclosures, Buffett owned shares in Burlington Northern, Union Pacific, and Norfolk Southern. Upon his impending acquisition of BNI, we now see that Berkshire Hathaway will sell their entire remaining 9.5 million shares of Union Pacific, a 2% stake in the company. Additionally, they will also sell their entire Norfolk Southern position of 1.9 million shares (or 1% of the company).

They will liquidate these positions between now and the impending transaction date for their BNI purchase as the news was revealed recently by Matthew K. Rose, chief executive of Burlington Northern. Buffett already owns 22.6% of BNI and will purchase the rest of the shares for $100 per share in cash and stock. In terms of other recent activity out of Buffett, we also saw that he has yet again sold shares of Moody's (MCO), his third sale this year. For more resources on Warren Buffett, check out Warren Buffet's recommended reading list, as well as the top 25 Warren Buffett quotes. Stay tuned next week as new disclosures (form 13F) will be filed with the SEC and we will update Berkshire's other portfolio activity.

Warren Buffett Sells Moody's Shares Again (MCO)

While the dominant headlines yesterday centered around Warren Buffett & Berkshire Hathaway's (BRK.A) acquisition of Burlington Nothern Santa Fe (BNI), we wanted to highlight one of his other recent moves. Having already trimmed his stake in Moody's (MCO) a few times prior, legendary investor Warren Buffett has sold even more shares of the ratings agency. On October 28th, 2009, Buffett sold 1,133,027 shares at a price of $24.8637. Additionally, he sold 19,600 shares the next day at a price of $25.2728 per share. This brings his total ownership to 38,066,685 shares. These sales are in addition to other transactions he completed back in the beginning of September where he sold 794,388 shares between $26-27. While he has obviously been selling shares, we need to highlight that he does still indeed own quite a sizable chunk of the company. We simply take note because he has now made multiple sales within a few months. Buffett is an iconic American investor and we've compiled some compelling resources on him for those interested. You can check out Warren Buffet's recommended reading list, as well as the top 25 Warren Buffett quotes.

Buffett's actions will certainly be to David Einhorn's liking. Einhorn's hedge fund Greenlight Capital has been publicly short Moody's and McGraw Hill (MHP) and we've covered his short thesis in-depth with his presentation on the curse of the Triple-A. It will be interesting to see if Buffett is slowly but surely making his way toward the exit, or if he is merely reducing his stake to a more 'comfortable' level given the potential risks associated with this name.

Lastly, we'd be remiss if we didn't cover the recent news that Buffett will acquire Burlington Northern Santa Fe for $100 per share, a nice premium above $75 where shares had been recently trading. Berkshire Hathaway already owns 23% of BNI so this move obviously makes sense. After all, we noted way back in October of last year that Buffett was selling puts on BNI in an attempt to capture more shares. Speaking on the deal, Buffett said, "It’s an all-in wager on the economic future of the United States, I love these bets." He is definitely staying true to the piece he penned back in the market panic last year about buying American. This activity in the railroad sector instantly reminds us of the once hedge-fund-favorites Union Pacific (UNP) and CSX (CSX). While many hedge funds dumped these names in the wake of the economic crisis, it will be interesting to see if any of them flock back like vultures now that Buffett has snatched up one of the dominant players in an oligopoly of an industry.

Taken from Google Finance, Burlington Northern is "a holding company. The Company, through its subsidiaries, is engaged primarily in the freight rail transportation business. BNSF Railway Company (BNSF Railway) is the Company’s principal operating subsidiary. BNSF Railway operates various facilities and equipment to support its transportation system, including its infrastructure and locomotives and freight cars. It also owns or leases other equipment to support rail operations, including containers, chassis and vehicles. Support facilities for rail operations include yards and terminals throughout its rail network, system locomotive shops to perform locomotive servicing and maintenance, a centralized network operations center for train dispatching and network operations monitoring and management in Fort Worth, Texas, regional dispatching centers, computers, telecommunications equipment, signal systems and other support systems."

Moody's is "a provider of credit ratings and related research, data and analytical tools, quantitative credit risk measures, risk scoring software, and credit portfolio management solutions and securities pricing software and valuation models. The Company operates in two segments: Moody’s Investors Service (MIS) and Moody’s Analytics (MA). The MIS segment publishes credit ratings on a range of debt obligations and the entities that issue such obligations in markets worldwide, including various corporate and governmental obligations, structured finance securities and commercial paper programs. The MA segment develops a range of products and services that support the credit risk management activities of institutional participants in global financial markets. These offerings include quantitative credit risk scores, credit processing software, economic research, analytical models, financial data, securities pricing software and valuation models."

Warren Buffett's Successor At Berkshire Hathaway (BRK.A)

Hat tip to My Investing Notebook for stumbling upon this video. Who will be Warren Buffett's successor? It is a very interesting question indeed. There have been many postulations and the like, but most likely no one will know until the day itself comes. That certainly won't stop speculation in the mean time though. Fact: the most discussed item on the agenda at Berkshire Hathaway board meetings is the succession plan. One particularly hot topic is how Buffett is essentially irreplaceable in his dual role as chief investment officer and chief executive officer. So, it only makes sense that you will most likely see one person handle CEO duties and another individual with investing prowess handle the portfolio in the future.

For whatever reason, the two names that pop up most frequently in the discussion are David Sokol and Byron Trott. Sokol is currently the CEO of one of Berkshire's companies, MidAmerican Energy. Trott, on the other hand, was a longtime banker at Goldman Sachs who has worked with Buffett on numerous deals in the past, including Buffett's recent investment in GS last year. Trott has since started his own venture fund backed by Buffett, making the ties that much more interesting.

Buffett and board member Bill Gates chatted with Bloomberg about Berkshire and the potential succession plan in a 20-minute video interview embedded below. Additionally, they interviewed Sokol and Trott as well on the same topic.

Here's the video:



For more on Buffett, we recently detailed his recommended reading list and don't forget to check our Buffett's top 25 quotes.

Top 25 Warren Buffett Quotes

When reading Berkshire Hathaway's annual letters or hearing him speak, one can always take away a few great quotes from value investor extraordinaire Warren Buffett. It should come as no surprise that he is so good at dishing out words of wisdom. After all, he is known as the Oracle of Omaha. We thought it would be prudent to assemble some of his best advice in one cohesive post.

In no particular order, here are 25 insightful investment sayings from legendary investor Warren Buffett:


1. "Rule No.1: Never lose money. Rule No.2: Never forget rule No.1"

2. "In a bull market, one must avoid the error of the preening duck that quacks boastfully after a torrential rainstorm, thinking that its paddling skills have caused it to rise in the world. A right-thinking duck would instead compare its position after the downpour to that of the other ducks on the pond."

3. "The fact that people will be full of greed, fear or folly is predictable. The sequence is not predictable."

4. "Be fearful when others are greedy. Be greedy when others are fearful."

5. "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

6. "When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is usually the reputation of the business that remains intact."

7. “You only find out who is swimming naked when the tide goes out.”

8. "Risk comes from not knowing what you're doing."

9. "If I was running $1 million today, or $10 million for that matter, I'd be fully invested. Anyone who says that size does not hurt investment performance is selling. The highest rates of return I've ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It's a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that."

10. "Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down."

11. "I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will."

12. "Price is what you pay. Value is what you get."

13. "I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over."

14. "If a business does well, the stock eventually follows."

15. "Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it."

16. "Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well."

17. "The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities — that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future — will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands."

18. "Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks."

19. "Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results."

20. "Investors making purchases in an overheated market need to recognize that it may often take an extended period for the value of even an outstanding company to catch up with the price they paid."

21. "I like to go for cinches. I like to shoot fish in a barrel. But I like to do it after the water has run out."

22. "We don’t get paid for activity, just for being right. As to how long we’ll wait, we’ll wait indefinitely."

23. "In the business world, the rearview mirror is always clearer than the windshield."

24. "The investor of today does not profit from yesterday's growth."

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


Great investing advice as always from Warren Buffett. And, in spirit of the market crisis, we wanted to toss this nice bonus quote in as well: "When you combine ignorance and leverage, you get some pretty interesting results. " Some of the investment banks (and even Warren himself) should have listened to that sound advice.

To learn more about Buffett and his investing ways, we highly recommend perusing the following reads:

- The Essays of Warren Buffett by the Oracle himself: Lessons from Warren Buffett over the years.

- The Warren Buffett Way by Robert Hagstrom: Outline of Buffett's tenets for investing.

- The Intelligent Investor by Benjamin Graham. If you had to own one book about value investing, this would most likely be it. Benjamin Graham was a legendary investor who helped pioneer the ways of value investing and taught Warren Buffett a lot of what he knows today.

- Security Analysis by Graham & Dodd (a staple on our fundamentals recommended list): Hands down THE book on fundamental analysis. Also authored by Buffett's mentor.

- The Snowball: Warren Buffett and the Business of Life by Alice Schroeder. She was hand picked by Buffett to be his biographer.

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As far as our coverage on Buffett goes, we touched on some of his recent moves in our hedge fund / market guru update. Additionally, we covered Berkshire Hathaway's Annual Report. We'll continue to track the Oracle of Omaha's latest moves so stay tuned for future updates.