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May 1, 2004 |
| In this issue: Phillip Fisher dies at 96 Phillip Fisher dies at 96 Phillip Fisher, the great investment analyst, and one of the men Warren Buffett admits that he learned a lot from, has died at the age of 96. There is a fine tribute to him in Forbes here. Fisher is probably best known to the average investor as the author of ‘Common Stocks and Uncommon Profits’, always in print since it first appeared in 1958. It should be on every investor’s bookshop, because, although it is often difficult to understand, it contains invaluable investment lessons. The Graham-Dodd Award 2004 This annual award by the Financial Analysts Journal for the best in research and financial writing has gone to Clifford Assness who is the co-author of an article called 'Surprise! Higher Dividends = Higher Earnings Growth'. If you would like to read the full award-winning article, go here. Not everyone likes Warren According to the Atlanta Business Chronicle, proxy advisory firm Institutional Shareholder Services is advising stockholders in the Coca Cola Company not to vote for Warren Buffett as a director because he is an ‘affiliated outsider’ who happens to be on the audit committee of the company. The company takes the view that he is properly independent. Many other institutions seem to have jumped on this bandwagon. With all due respect to the good people at Institutional, if we were shareholders in Coke, we would be more than happy to have someone with Buffett’s outstanding record as a director. Who would Institutional prefer? Se the story here. Roto-Rooter follows Berkshire investment principles The Cincinnati Enquirer has an interesting story about the acquisition by Roto-Rooter Inc, a Cincinnati plumbing company, of a provider of end of life care. The business mix may seem unusual but apparently, the company’s acquisitions policy has been a resounding market success. The acquisition approach of the company is apparently to buy good businesses with outstanding management. Sound familiar? The full story is here. Credit derivatives According to the Business Telegraph, and this surprises us, over half the world market in credit derivatives, which is in the trillions of dollars, is in London. Credit derivatives allow providers of credit to spread their risks and is one of the many creative derivatives developed in the last few years. Warren Buffett has been [particularly critical of derivatives in the past few years, likening them to a time bomb placed in the world economy. Microsoft as a ‘value stock’ We find this a trifle difficult to accept but according to Bloombergs, Microsoft shares are, in the opinion of same investors, getting close to the type of value stock that Benjamin Graham would have loved to own. Some analysts are suggesting that at about 24 times earnings, well down on past performance, Microsoft is no longer a growth stock but a value one. We do not know about this but you can read the full article here. Buffett and the Color Purple We think that Fortune must be a bit short on current news after their recent item discussing the range of colors Warren Buffett uses on the annual Berkshire Hathaway reports. If this really interests you, go here. The ‘glass ceiling’ in the finance industry Martha Burk, Chair of the National Council of Women’s Organizations, who has been lobbying for women to be admitted as members of the Augusta Golf Club has now fixed her sights firmly on US companies. Burk and her associates see the finance industry as a specific area for investigation as to the ‘glass ceiling’ for women and has nominated a number of companies that they want to look at. They include Berkshire Hathaway, as well as companies in which Berkshire has a substantial interest like American Express. Other companies include Bank of America, Franklin Templeton, J.P. Morgan Chase, Morgan Stanley and Citigroup. Burk claims that many of these companies have high-ranking officers who are members of the Augusta Golf Club. Not everyone likes Warren (2) The Chairman of a New Zealand private equity company going public is apparently not much of a Buffett fan either. Chairman Jim Scott was apparently addressing a gathering of financial analysts in connection with the proposed float of Aquilina. A member of the panel alluded to Warren Buffett and his investment philosophy and the chairman retorted that: ‘"But he's listed, he's not scared of the markets". An interesting report on this meeting and the interaction between audience and promoter is available here. Cash a better bet? According to James Grant in Forbes, using Warren Buffett and Charlie Munger as authorities, investors would be better off with their money in cash at the moment than in bonds. The full article is here. The super-rich and John Kerry We know that several successful investors like George Soros and Warren Buffett are not to keen on George W Bush, who supposedly is the best hope for the billionaires to hang onto their money and not pay a lot in taxes, but John Berlau of Insight into the News has a different perspective on this point. He argues that the super-rich are likely to do better under John Kerry than under the current president. We do not quite follow his reasoning – after all Buffett has strongly advocated the case for fairer taxes – but subscribers can make up their own minds by reading the Insight article. TV Moments that we would prefer not to see There is a story going around at the moment that some of Warren Buffett’s friends thinks he should offer himself as a candidate for change in the TV show ‘Queer Eye for the Straight Guy’. Apparently, Buffett is not expressing much interest in reality TV and limits himself to the news, current affairs and the ‘Sopranos’ for his TV entertainment. New at Buffett Secrets Our latest article is on the incredible Rose Blumkin, founder of Nebraska Furniture Mart, who made famous the motto, "‘Sell cheap and tell the truth’. We are always interested in hearing from our readers. If you have any thoughts, comments, tips, or things you would like to see on Warren Buffett Secrets, email us: [email protected]
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