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Quoting Buffet
Old 07-06-2006, 05:11 PM   #1
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Quoting Buffet

I heard someone quoting Warren Buffet today. Buffet said it was very hard to get great returns anymore because his investment holdings were so huge.

He then said, "But if I had only $10 Million or less to invest I could get a 50% return per year."

He may be an investment God but I would still like to see the detail on that strategy. Even for the "man" himself that is a tall order.

boont
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Re: Quoting Buffet
Old 07-06-2006, 05:40 PM   #2
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Re: Quoting Buffet

I think we would need the citation
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Re: Quoting Buffet
Old 07-06-2006, 05:45 PM   #3
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Re: Quoting Buffet

Buy a struggling business in dire financial straights worth $10 million in trouble. Secure financing, turn business around, make (and grow) profits. Sell in two years for $22.5 million. Repeat.
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Re: Quoting Buffet
Old 07-06-2006, 05:59 PM   #4
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Re: Quoting Buffet

Quote:
Originally Posted by boont
I heard someone quoting Warren Buffet today. Buffet said it was very hard to get great returns anymore because his investment holdings were so huge.
He then said, "But if I had only $10 Million or less to invest I could get a 50% return per year."
He may be an investment God but I would still like to see the detail on that strategy. Even for the "man" himself that is a tall order.
He still has a personal portfolio where he's been buying up troubled debt, taking over voting majorities in small companies and turning them around, buying warrants in emerging companies, and so on.

Not for the faint of heart. In the early days of his 1950s partnerships he wouldn't tell his investors what he was doing-- only the results and the audited statements. If people demanded to know what was happening to their money he cashed them out.

I think his deal for Level 3 junk bond financing a few years back had them paying him a truly usorious rate-- something on the order of 30-70%. Absolutely the financier of last resort, one step above Vinnie the Shark but with a bit more in the capital resources department...
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Re: Quoting Buffet
Old 07-06-2006, 07:03 PM   #5
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Re: Quoting Buffet

Quote:
Originally Posted by boont
I heard someone quoting Warren Buffet today. Buffet said it was very hard to get great returns anymore because his investment holdings were so huge.
Thats a combination of trying to mute brk investors expectations and playing a little "dont throw me in that briar patch".

Warrens been saying that stuff since i owned an A share many years ago and kept up on his utterings. He keeps saying he's got nowhere to put the money and wont be able to do as well as years past, then finds stuff to buy and does fine year on year.

I'd still own the stock if I wasnt dead certain that it'll drop like a rock when he steps aside or gets run over. Shareholders in that company are more cultlike than Apple owners...
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Re: Quoting Buffet
Old 07-06-2006, 07:23 PM   #6
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Re: Quoting Buffet

Someone asked for the exact quote. It was from Business Week...


Back in the heady days of 1999, in an interview with Business Week, Warren Buffett stated: "If I was running $1 Million today or $10 Million for that matter, I'd be fully invested. Compared to running Billions, it is 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 it".

Comes with a guarantee, no less.

boont
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Re: Quoting Buffet
Old 07-08-2006, 09:21 AM   #7
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Re: Quoting Buffet

Quote:
Originally Posted by boont
Someone asked for the exact quote. It was from Business Week...


Back in the heady days of 1999, in an interview with Business Week, Warren Buffett stated: "If I was running $1 Million today or $10 Million for that matter, I'd be fully invested. Compared to running Billions, it is 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 it".

Comes with a guarantee, no less.

boont
Having a smaller portfolio may have some advantages but having a huge one can have many more. Case in point:

In 2003 Williams Companies (WMB) was one bond maturity away from bankruptcy. WMB unsecured debt traded at 20 cents on the dollar. No buyers anywhere to be found because all the banks and traditional investors piled in at much higher levels and were sitting on huge losses. Strangely enough, BRK was buying WMB bonds in large size. The day the maturity was due WMB issued a press release that it had garnered financing from BRK (and Lehman I think) secured by the company's E&P assets at 1-year rates of between 20% and 30%. Either the same day or shortly thereafter BRK announced it was buying a large natural gas pipeline (Kern River) from WMB at a very attractive price. WMB's pending bankruptcy was averted.

Meanwhile BRK more than doubled up on its WMB bond position, earned 20-30% on a loan that wasn't all that risky (knowing what BRK knew) and bought a very good asset for a song.

The "Oracle of Omaha" my arse.
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Re: Quoting Buffet
Old 07-08-2006, 09:33 AM   #8
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Re: Quoting Buffet

As I often say, its a lot easier to be an oracle when you've got enough money to buy whole companies and create entire financial scenarios to suit.

Money changes everything...
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