Whitney Tilson's 2007 Wesco Annual Meeting Notes

Whitney Tilson just released his 2007 Wesco Annual Meeting Notes. Enjoy it !

Direct Link - Whitney Tilson's 2007 Wesco Annual Meeting Notes (PDF).

Source: BRKNEWS

*Related Link : Whitney Tilson's Notes from Berkshire Hathaway and Wesco Annual Meetings.

The Daily News spoke to Larry Coats

The Daily News spoke to Coats about his strategy and how investors should respond to the market's gyrations on Aug. 27, 2007.

• Most people do a lot of due diligence before buying a car or investing in real estate. But investment decisions are often based on hunches at a cocktail party or what's read in a periodical.
• Think logically, be rational.
• If investors can have a long-term horizon, there are some great investment opportunities.
• Yes, there is increased volatility in the short term. In the long term, the volatility tends to be more on the upside.
• We waited and bought Oracle, eBay and Microsoft.

Direct Link - When stocks stagger, focus on the basics.

Mark Sellers: Irrational world of institutionalised money managers

Mark Sellers has some interesting insights about institutionalised money managers at FT.com's column. The "institutionalised idea" comes from the movie The Shawshank Redemption (it's also one of my favorite films).

• Institutionalized
• “These prison walls are funny. First you hate ’em, then you get used to ’em. Enough time passes, you get so you depend on ‘em. That’s institutionalised.”
• Institutionalised money managers
• The average actively managed mutual fund in the US holds about 100 stocks. This means the managers can’t possibly be doing in-depth research on each company they hold.
• The reason for holding so many stocks is that you feel you cannot understand any single company well enough to assess the risks, and so you are going to hold many stocks to minimise the risk of being wrong on any single one.
• The most common way is for a manager to figure out what sectors they want to overweight or underweight and then have their analyst staff figure out which stocks to buy based on targeted sector weightings.
  
• The optimal sector weightings change daily based on valuations and momentum and other factors, and so managers have to continually re-balance their portfolios.
• For a manager, risk is defined as deviation from the index. For an investor, risk is defined as losing money.
  

Direct Link - Mark Sellers: Irrational world of institutionalised money managers.

Biweekly Reading List (8/12-8/25)

I recap some good articles I read in the past two weeks :

• Warren Buffett
• CNBC Interview with Warren Buffett
• Warren Buffett to CNBC: All the Speculation is Just Speculation
• Crisis Counsel with Warren Buffet, Bill Miller etc.
  
• Berkshire Buys 1.4 Million BNSF Shares
  
• Whitney Tilson
• Whitney Tilson on CNBC : Blue Chip Bargains
  
• Be ready to act when market opens a door to opportunity
• Bill Nygren
• Bill Nygren's Message About Oakmark Select
• Bill Nygren's Q&A at GuruFocus.com
• Larry Coats
• Businessweek Interview with Larry Coats - Riding Out the Storm with Quality Stocks
• MarketWatch Interview with Larry Coats
• David Dreman
• Bloomberg Interview with David Dreman
• Squalls Ahead
• Other Value Managers
• Morningstar Interview with Markel's Tom Gayner
• A Day In The Life of Anthony Bolton
• The World According to Eveillard - Why disciplined value investing is so difficult
• Mobius on the Markets
  
• Value Investing
• Remembering a Classic Investing Theory
• Cash Flow Analysis a la Longleaf Partners
• Piggback Investing
• A Bounty of Ideas from Berkshire's Portfolio
• Gannon On Investing: On Berkshire Hathaway's Holdings
  
• Third Avenue's Wadhwaney Sees `Great Value' in Japanese Stocks
• Five Funds That Juice Returns Without Unsettling Nerves
• The investment who's who
  

Whitney Tilson on CNBC : Blue Chip Bargains

CNBC had a short interview with Whitney Tilson about blue chips bargains. The best value on Wall Street may be found in blue chips, with Keith Wirtz, Fifth Third Asset Mgmt. CIO; Whitney Tilson, Tilson Mutual Funds managing partner; and CNBC's Maria Bartiromo.

Here is video link or you can watch directly below.

Morningstar Interview with Markel's Tom Gayner

Morningstar had an interview with Tom Gayner, Executive Vice President and CIO off Markel Corp, on Aug. 22, 2007. Markel's Tom Gayner reveals the firm's picks and process.

Here is video link - Stock Picks from a Berkshire-like Investor.
Or you can watch directly below. (About 10 minutes).

Businessweek Interview with Larry Coats

BusinessWeek's Karyn McCormack met with Larry Coats in New York on Aug. 14, and they talked about how he's navigating the market storm. Like Warren Buffett, Larry Coats of Oak Value Fund sticks with companies that are understood and valued.

I highlight some insights from this interview :

• Risk always gets mispriced. It becomes mispriced on the positive side, and then somewhere along the way it gets mispriced on the negative side. And therein lies the opportunity for people who are willing to take a long-term view.
  
• We sell for one of three reasons. Either a stock reaches our price target, we have a change in the fundamentals—which is a nice way of saying our investment thesis was wrong—or we have a better opportunity.
• We're attempting to buy a stock at 65￠ or 70￠ on the dollar, so a 30% to 35% discount.
  
• We use a discounted cash-flow model, using an 8% discount rate. The magic in that sauce is not around the discount rate, it's around the terminal multiple that you put in the valuation equation. Because at the end of year five, you have to assign something as the present value of the future cash flow.
  
• 3 basic principles of Benjamin Graham
• One is if you're going to own equities, you should own them as businesses, recognize that they're not pieces of paper, and understand the business.
  
• Two, always require a margin of safety.
  
• And know what the business is worth—the valuation discipline is important.
• People are selling things because they don't know what they're worth. This is a great time to be able to say: I know what this business is worth. It makes it a lot easier to sleep at night.
• Worry is a wonderful thing. One of the interesting challenges is people become so overwhelmed by the emotion, and by the fear (of what, they don't know).
• It's one thing to know what you don't know, but it's another thing when you realize how much you don't know.
  

Direct Link - Riding Out the Storm with Quality Stocks.

*You can also watch "MarketWatch Interview with Larry Coats (Video)".

A Day In The Life of Anthony Bolton

Independent News had an interesting article about Anthony Bolton, managing director and senior portfolio manager of Fidelity International, on Aug. 17, 2007.

I highlight some Mr. Bolton's insightful ideas :

• One thing I have learned in following the market is that it is cyclical and that it doesn't go up for ever or down for ever. When it has been going up steadily for four years, there will be setbacks.
• When everyone is bullish, I like to be more cautious, and vice versa. I was expecting something to come along, and one never knows what the catalyst will be.
• Anyone who runs a mainly long-only fund can't go up when everything is going down, but one can protect oneself [from going down too far].
• My message to individual investors was: Don't panic but be prepared for volatile markets for a while.
• You buy stocks you want on bad days and sell stocks you don't want on good days.

Article Direct Link - A Day In The Life Of: Leading fund manager Anthony Bolton.

Crisis Counsel with Warren Buffet, Bill Miller etc.

Will the subprime lending meltdown and credit crunch send us into a financial free fall? Fortune asked the sharpest minds in business to share their reactions to the downturn, and their insights on the road ahead.

• Warren Buffett
• Many institutions are marking to model rather than marking to market. The recent meltdown in much of the debt market, moreover, has transformed this process into marking to myth.
  
• Wilbur Ross
• Henry M. Paulson
• John Mack
• Bill Miller
• These things flow through the system, and they're part of the system. They're normal. They happen usually every three to five years.
• But these events represent opportunities. When markets get locked up like this, it's virtually always the case that you'll have opportunities if you have liquidity.
  
• Instead of worrying how bad it's going to get, I think people should be thinking about where the opportunities might be.
• The NYSE financial index is probably the best barometer of what's to come. So far it's telling you it's not over. It's still falling.
  
• But just as financials lead on the downside, they will lead on the upside.
• Robert Shiller
• Jim Rogers
• Market corrections are coming.
  
• Jim Chanos
• We don't know how bad this gets. The problem is we don't know how bad the hole is.
• The areas of excess are going to get pulverized, and any overreactions will be areas for people to look for bargains ultimately.
  
• But I don't think we're anywhere close to that yet.
• Stephen S. Roach
• Amy Brinkley
• Laura Tyson
• Jeremy Grantham
• Ben Stein
  

Full Article Link - Crisis Counsel.

Whitney Tilson's : Be ready to act when market opens a door to opportunity

This is Whitney Tilson's latest article on FT's Inside Curve column. I highlight some Tilson's points :

• It’s human nature: for most investors, the pain of stocks going down is more tangible than the joy of when they go up. The common impulse is to do something – anything – to minimise the pain.
• More volatility equals cheaper stocks, which equals higher returns.
• Successful value investors work hard to position themselves and their portfolios to capitalise on just such turbulent times. In essence, they do their worrying well in advance of market turmoil, not after it starts to happen.
• To begin our search, we asked ourselves: what’s the most despised sector in the stock market today? The clear answer: financial companies in general, especially those with exposure to structured finance and/or subprime.
• Keep a close eye on stocks you like and be ready to act with conviction when Mr Market opens the door to opportunity – it may not stay open long.

Full Article Link - Whitney Tilson: Be ready to act when market opens a door to opportunity.

Bill Nygren's Message About Oakmark Select

Bill Nygren released a message for investors. I highlight some insightful points below:

• In the short run, however, stock price performance is controlled by supply and demand, which is strongly influenced by investor emotion.
• We buy businesses we believe are growing and well-managed, and we do so when we believe the company’s stock price does not reflect its real value. Then we wait.
• The waiting part can be frustrating, especially at a time when our stock prices are moving in the wrong direction.
• But there are only two ways we can fail – we can fail if our analysis is wrong, and we can fail if we run out of patience.
  
• That frustration, however, will not cause us to abandon the discipline that has served us so well for so many years.
  
• Prices and values will eventually converge, and we believe that convergence will be positive for our results.
  

Direct Link - A Message About Oakmark Select.

CNBC Interview with Warren Buffett

Warren Buffett tells CNBC's Becky Quick in an exclusive interview that market chaos often creates opportunities due to mispricing.

I highlight Buffett's insightful ideas below:

• We've had problems all along. If you look at the last century, we had that Great Depression and World War Two, we had the Cold War, we had the atomic bomb, but the country does well.
• It will probably present more opportunity to us, because when dislocations occur, things get more mispriced and certain things.
  
• But the lenders, if people lend money that they're not gonna get paid back, that's their problem, basically.
• And people, when everything has been good for a while, they get careless and they assume that prices will keep going up and that will bail out anything that happens and every now and then there's a rude awakening.
  
• The consumer is still spending a lot, but they're not quite spending at the rate they were six months ago, but we've had nothing in the way of a huge consumer pullback yet.
  

Here is video link and transcript - Warren Buffett Sees Potential for Opportunities: The Complete CNBC Exclusive Interview.