Money and Finance
- Berkshire Avoids Rout As Buffett Sidesteps Bonds
Warren Buffett’s preference for buying stocks and whole companies rather than bonds is helping Berkshire Hathaway Inc. (BRK/A) weather a spike in interest rates better than other insurers. Book value rose 2 percent to about $122,900 per Class A share...
- Analysis Of Berkshire Hathaway
The paragraphs below are from an article by Whitney Tilson in November of last year when people were worried about Berkshire's index puts. T2's full analysis of Berkshire is available HERE. As Mr. Tilson pointed out, the worries were overblown...
- More Funds Find Security In Cash
"There are only two hedges to protect you in any market environment: knowledge and cash," Mr. Berkowitz of Fairholme says. "It makes no sense to me to be fully invested."...Strong conviction in your investments, infrequent trading and a highly concentrated...
- The Fairholme Fund - Annual Report And Letter To Shareholders
We have always been attracted to sectors showing large declining market values. Usually, stock prices of businesses within these industries drop faster than underlying values, tainted by the collapse of speculative securities. Such conditions create a...
- Oak Value Fund - Investment Adviser’s Review – Third Quarter 2007
Last quarter we dedicated a significant portion of our commentary to the notion of risk and the emotion of “fear.” In a short period of time, Mr. Market has become increasingly focused on this fear. The discipline that defines us requires that we...
Money and Finance
Fairholme: Semi-Annual Report
Over the eight and a half years since the Fund’s inception, we have lived by the belief that you should be fearful where others are greedy and to be greedy where others are fearful. We continue to ignore the crowd.
For instance, as energy stocks surged this year, we took profits in Canadian Natural
Resources, reducing our position to about 7% of net assets as of May 31, down from 15% on Nov. 30, 2007. Oil and gas prices have multiplied since our initial purchases and are now high enough to increase supply and slow demand. Alternative sources such as solar and wind are booming while sales of SUVs and other gas hogs have plunged.
We also halved our position in Berkshire Hathaway in the November-May period. While we have the greatest respect for Chairman Warren Buffett, we made this move because we cannot see how the company can replicate its past stellar performance given its current size and the age of its key personnel. Berkshire should still make good money for shareholders, but not enough to justify so large an investment at prices sold.
With the proceeds of sales, new inflows, and cash held for stressful times, we are buying healthcare stocks, ranging from manufacturers of ethical and generic drugs to health maintenance organizations, at what we consider reasonable or even dirtcheap valuations. Many of these stocks’ prices fell off the proverbial cliff prior to our purchases and have declined further since we took our initial positions. On May 31, global pharmaceutical giant Pfizer was about 10% of net assets, making it the Fund’s second largest holding. Also in the top ten is WellPoint, a provider of health maintenance organizations and other forms of medical insurance. These fundamentally sound businesses have become fallen angels, as slowing growth, rising costs, and election-year politics stoke investor fear. Still, these are companies with essential products and services and large free cash flows relative to purchase prices. We expect them to rise again.
For instance, as energy stocks surged this year, we took profits in Canadian Natural
Resources, reducing our position to about 7% of net assets as of May 31, down from 15% on Nov. 30, 2007. Oil and gas prices have multiplied since our initial purchases and are now high enough to increase supply and slow demand. Alternative sources such as solar and wind are booming while sales of SUVs and other gas hogs have plunged.
We also halved our position in Berkshire Hathaway in the November-May period. While we have the greatest respect for Chairman Warren Buffett, we made this move because we cannot see how the company can replicate its past stellar performance given its current size and the age of its key personnel. Berkshire should still make good money for shareholders, but not enough to justify so large an investment at prices sold.
With the proceeds of sales, new inflows, and cash held for stressful times, we are buying healthcare stocks, ranging from manufacturers of ethical and generic drugs to health maintenance organizations, at what we consider reasonable or even dirtcheap valuations. Many of these stocks’ prices fell off the proverbial cliff prior to our purchases and have declined further since we took our initial positions. On May 31, global pharmaceutical giant Pfizer was about 10% of net assets, making it the Fund’s second largest holding. Also in the top ten is WellPoint, a provider of health maintenance organizations and other forms of medical insurance. These fundamentally sound businesses have become fallen angels, as slowing growth, rising costs, and election-year politics stoke investor fear. Still, these are companies with essential products and services and large free cash flows relative to purchase prices. We expect them to rise again.
-
- Berkshire Avoids Rout As Buffett Sidesteps Bonds
Warren Buffett’s preference for buying stocks and whole companies rather than bonds is helping Berkshire Hathaway Inc. (BRK/A) weather a spike in interest rates better than other insurers. Book value rose 2 percent to about $122,900 per Class A share...
- Analysis Of Berkshire Hathaway
The paragraphs below are from an article by Whitney Tilson in November of last year when people were worried about Berkshire's index puts. T2's full analysis of Berkshire is available HERE. As Mr. Tilson pointed out, the worries were overblown...
- More Funds Find Security In Cash
"There are only two hedges to protect you in any market environment: knowledge and cash," Mr. Berkowitz of Fairholme says. "It makes no sense to me to be fully invested."...Strong conviction in your investments, infrequent trading and a highly concentrated...
- The Fairholme Fund - Annual Report And Letter To Shareholders
We have always been attracted to sectors showing large declining market values. Usually, stock prices of businesses within these industries drop faster than underlying values, tainted by the collapse of speculative securities. Such conditions create a...
- Oak Value Fund - Investment Adviser’s Review – Third Quarter 2007
Last quarter we dedicated a significant portion of our commentary to the notion of risk and the emotion of “fear.” In a short period of time, Mr. Market has become increasingly focused on this fear. The discipline that defines us requires that we...