Wally Weitz letter

It is no wonder that investors are confused and frightened. Huge, well-known financial institutions have faced embarrassing losses (or worse) and the viability of whole industries (e.g. mortgage insurance and bond insurance) has been questioned. Everyone—lenders, borrowers, investors, speculators, regulators and rating agencies—played a part in creating the financial crisis. Every corner of the financial world is affected, yet the dimensions of the future losses are not yet measurable. Lenders and borrowers are hesitant to do business with each other, and the financial markets are not functioning normally.

In this environment, the stocks of companies with real problems have been punished severely. Unfortunately, the stocks of many other companies that have been impacted in minor or temporary ways have also been subject to heavy selling pressure. The potential rewards for successfully navigating this kind of market are great. However, to earn these rewards, investors must have the courage of their convictions so they can stick with their investments during extended periods of uncertainty. This can be painful.

Some people do not have the temperament for investing in markets like this, and they would probably be better off owning Treasury Bills or a government securities money market fund (we offer one). There is no shame in staying on the sidelines if that allows one to sleep well. Peace of mind is important.

For those with the courage and patience to buy good assets when nobody else wants them or can afford to buy them, we think this is a very good time for investing. Terrific assets and companies with strong franchises are available at very attractive prices. We believe that it takes very little imagination to envision the possibility of 50% appreciation in most of our stocks over the next 2-3 years.

Direct Link - Portfolio Manager Letter–Value, Hickory, Partners Value, Partners III Opportunity.

Wally Weitz letter to shareholders about market conditions and fund performance

1. We are continually re-assessing each company’s prospects and financial strength, and we have made some portfolio changes that we believe reduce our exposure to future credit problems while maintaining considerable upside potential. We believe we are being realistic and willing to adjust to an evolving environment;
   
2. While few financial company stocks have escaped unscathed (Berkshire Hathaway, our largest holding, being a notable exception), we believe that the market has over-reacted to the potential credit exposure of many good companies;
   
3. Many stocks’ prices already appear to discount a recession that may or may not occur. We believe our companies are priced at discounts to their intrinsic values whether or not their earnings and cash flows are depressed for a few quarters by a weak economy.
   

Direct Link - A letter from Wally to shareholders about market conditions and fund performance.

Weitz Funds Conference Call Transcript

The Weitz Funds Conference Call Transcript - November 14, 2007.

This is Wally. I'm here with Brad Hinton and Tom Carney, and we welcome you to the call. I hear there are 48 people at this point. It's been a while since we did one of these calls. I think we felt like we got to the point where we didn't have much to say a year or two ago and now there does seem to be more to talk about and we invited questions. We got quite a few and the three of us will spend, we haven't timed this, but maybe 15 minutes or so talking about the things that seem to be of most interest. Strangely enough there is one stock that seemed to dominate the questions and most of them were politely worded.

At any rate, we're going to start right in with Countrywide Financial (CFC). I wrote some about it in the third quarter letter to shareholders. Things change daily in the mortgage world these days though, so here is a summary of where we are and how we got where we are and what we plan to do going forward.

Direct Link - Weitz Funds Conference Call Transcript.

Weitz Fund 2007 Semi-Annual Portfolio Manager Letter

Weitz Fund released their 2007 Semi-Annual Report.

Over the years, our investors have gotten used to seeing our Funds zig while the market zagged. We write regularly, and with conviction, about our willingness to be "out of step" with the market. In the 3rd quarter of calendar 2007, we outdid ourselves.

• Errors of omission. Energy, industrials and commodities bound for China attracted lots of investor capital. The stocks did not meet our investment criteria and they went up without us;
• Errors of commission. Countrywide Financial was more vulnerable to a liquidity crisis than we had realized and it declined sharply;
• "Good ideas that have not worked yet." Many of our businesses met or exceeded our expectations but their stocks lagged due to investor apathy or short-term concerns that we do not share;
• Looking ahead, there are lots of things to worry about (there always are), but we feel very good about the prospects for the businesses we own and their stock prices.

Direct Link - Weitz Fund 2007 Semi-Annual Portfolio Manager Letter or Full Semi-Annual Report (PDF) .

Morningstar Interview with Wally Weitz Part 2 - More Picks from the Other Oracle of Omaha

Brad Hinton and Wally Weitz discuss Ultimate Stock-Picker's Portfolio watch list names held by Omaha-based Weitz Funds.

Here is video link or you can watch directly below :

Morningstar Interview with Wally Weitz - Picks from the Other Oracle of Omaha

Wally Weitz and Brad Hinton discuss Weitz Funds holdings.

Here is video link or you can watch directly below.

Weitz Funds 2007 Q2 Letter to Shareholders

Weitz Funds released their 2007 Q2 letter to shareholders. I highlight some points below:

• Portfolio Review
• We made only minor adjustments to our portfolios during the quarter. Generally, we added to positions in building materials and mortgage-related stocks which were weak and trimmed holdings of media and other stocks that were strong.
• Credit Problems Continue to Dominate Financial News
• One of the reasons that investors bought all these securities without really knowing what they were getting is that the bonds were rated by Moody’s and Standard and Poor’s.
• It is very difficult to know how low the prices will go or who the ultimate owners of the problem mortgages and securities will turn out to be.
  
• What we can know about our mortgage-related companies is that subprime lending was a relatively small part of their businesses; that they have historically been better than average underwriters of credit risk; that they are long-term players who would not "bet-the-ranch" for a quick profit; and most importantly, they have strong enough balance sheets to absorb losses and avoid any liquidity problems.
• Corporate Buyout Financing
• Another aspect of the credit markets that is beginning to tremble is financing for corporate buyouts.
• Leveraged buyouts are not new, but the number and size of the transactions in recent years have been unprecedented.
• Frenzied takeover activity provides an occasional small windfall for us, but it also leads to some measure of inflation in stock prices that makes it difficult for price-sensitive value investors like us to find attractively priced investments.
• Outlook
• Human nature would eventually carry some basically sensible idea to extremes and create financial mischief.
  
• There are signs that serious credit problems exist and markets are reacting fearfully.
• We believe that our companies are well-positioned to withstand the volatility and to come out of this period with larger market shares and higher earning power.
  

Article Direct Link - Weitz Funds 2007 Q2 Letter to Shareholders

Morningstar Interview with Wally Weitz (Video)

Morningstar interview with Wally Weitz, founder of The Weitz & Co on July 18, 2007. Wally talks how to invest like Buffett, subprime concerns, large-cap values, and more.

Here is video link or you can watch directly below.

Highlights from Weitz Funds 2007 Shareholder Meeting (Video)

The Weitz Funds have made available highlights from 2007 Shareholder Information Meeting. You can go to Weitz Fund to watch these video clips or just click on the links below.

• 1. Eight Funds - One Investment Philosophy (1:53)
• 2. The Power of Compounding (:21)
  
• 3. Brad Hinton’s comments on managed care industry (UnitedHealth and Wellpoint) and mortgage industry overview (3:41)
• 4. Wally’s comments on current impact of private equity funds (5:03)
• 5. Wally’s response to shareholder question about Warren Buffett’s successor (1:52)
• 6. Response to shareholder question about concentration of risk (4:12)
• 7. What do we think about the Fed’s next move? (3:17)
• 8. Shareholder question on “margin of safety” and Peter Supino’s comments on USG (4:04)
• 9. Tom Carney on “margin of safety” and patience (1:39)
• 10. Wally’s response to shareholder question about his career path (5:08)
• 11. Response to shareholder question about Wal-Mart and the negative publicity WMT has received (3:06)
• 12. Wally and Dave Perkins respond to shareholder question about Cabela’s (1:30)
• 13. Shareholder question about stop orders (3:53)
• 14. Wesley House Academy student asks “What do we expect to go up the most?” (2:23)
• 15. Shareholder question about 2008 elections (2:31)
• 16. Plaid shirts! (:53)

Source: BRKNEWS