Saturday, February 26, 2011

What's so special about this Buffett guy, anyway?

The amount that I talk about/praise this guy, one would think he must be paying me to do it or something. Well, I wish. Truth is, he is just the absolute most brilliant investor (among other things) that has ever lived. Don't just take my word for it (or his astounding networth), look at the money people are willing to shell out just to have lunch with him! (This is taken from

Buffett’s $2.6 Million Lunch Auction Shows Reputation
June 14, 2010, 8:46 AM EDT

(Updates with Moody’s in seventh paragraph.)

By Andrew Frye

June 14 (Bloomberg) -- Warren Buffett’s annual charity- lunch auction reached a record $2.63 million after a year in which the billionaire defied an economic slump by completing his biggest takeover and boosting Berkshire Hathaway Inc.’s profit.

Bidding outpaced last year’s during the first days of the weeklong event and ended in a frenzy June 11 with 77 offers, according to EBay Inc., which ran the online sale. Proceeds go to the San Francisco-based Glide Foundation, a favorite charity of Buffett’s first wife, Susan, who died in 2004. The winner asked to remain anonymous, the organization said.

As a global credit crisis accelerated in 2008, firms seeking capital appealed to Buffett, 79, for support, and Barack Obama enlisted his economic expertise during the presidential- election campaign. Omaha, Nebraska-based Berkshire prospered without a U.S. bailout, providing Buffett with funds for a $27 billion buyout of railroad Burlington Northern Santa Fe in February.

“Warren Buffett’s reputation, if anything, has been enhanced over the last couple of years” as Berkshire was sustained by the $44 billion cash cushion that he built through the end of 2007, said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business. “For those who can afford it, this lunch can have great value.”

New York Steakhouse

Buffett, the world’s third-richest person, rose to prominence through five decades of investing success. Like in previous years, he will meet the winner and as many as seven guests for lunch at Smith & Wollensky, the steakhouse on New York’s Third Avenue with the commercial tagline “Nice to see you again.”

Berkshire’s investments in firms that were blamed for contributing to the housing slump have increased pressure on Buffett to publicly discuss the financial crisis, assign blame and recommend remedies.

At his company’s annual meeting in May, shareholders pressed Buffett about his investment in Goldman Sachs Group Inc., which was sued by regulators in April for misleading investors. Buffett on June 2 defended credit-ratings firm Moody’s Corp., another Berkshire holding, at a hearing by the Financial Crisis Inquiry Commission.

Moody’s management shouldn’t be singled out for failing to anticipate the nationwide decline in housing prices, Buffett said. John Taylor, chief executive officer of the National Community Reinvestment Coalition, said after Buffett’s testimony that ratings firms deserve blame for assigning top grades to securities created by Wall Street that plunged in value.

‘Stinking Garbage’

Investment banks “walked into the room with a bagful of stinking garbage and the rating agencies not only embraced it but put their best sale of approval on it,” Taylor said.

Diners at the charity lunch may leave the table with investment ideas, business contacts and career advice, said Kass, who accompanied 48 students to Omaha for a lunch with Buffett five years ago. After that meal, Buffett picked up the tab, Kass said.

The auction’s previous record was set in 2008, when hedge fund manager Zhao Danyang of Hong Kong won it for $2.11 million. A group led by Courtenay Wolfe of Salida Capital paid $1.68 million last year. Greenlight Capital Inc.’s David Einhorn prevailed in 2003 with a $250,100 bid. Including this year, Buffett has raised more than $8 million with the auctions to help Glide, which serves meals to the needy.

“It’s actually a remarkable calibration of his value,” said Jeff Matthews, author of “Pilgrimage to Warren Buffett’s Omaha” and founder of hedge fund Ram Partners LP. “It measures what people think his worth to them is.”

Profits Amid Crisis

Berkshire’s earnings increased 61 percent to $8.06 billion in 2009, helped by Buffett’s investments during the crisis. The company got a coupon of 12 percent on an investment of 3 billion Swiss francs ($2.6 billion) in Swiss Reinsurance Co. and of 10 percent on a $3 billion allocation to General Electric Co.

The $5 billion that Buffett injected in Goldman Sachs 2008 yields $500 million a year for Berkshire, and the warrants he negotiated as part of the deal show a paper profit of more than $897 million. Weeks before he invested in the New York-based bank, he rebuffed a request for funds from American International Group Inc., which then needed a U.S. rescue.

Buffett’s fortune was estimated at $47 billion by Forbes magazine in March, placing him behind telecommunications investor Carlos Slim and Microsoft Corp. co-founder Bill Gates in the worldwide rankings. Buffett’s stock picks and takeovers turned Berkshire from a failing textile mill to a $184 billion seller of bricks, power and hurricane insurance.

Annual Meeting

His views on markets are followed by investors around the world, and tens of thousands of people gather in Omaha each year at Berkshire’s annual meeting to hear Buffett expound on the economy and public policy. He advised Obama during his successful 2008 campaign, and the president seized upon Buffett’s characterization of derivatives as “weapons of mass destruction” to rally support for reform.

In 2006, Buffett pledged 85 percent of his Berkshire holdings, a commitment valued at about $37 billion at the time, to the Bill & Melinda Gates Foundation and charities of four of his family members. The Gates donation is being made in annual installments, and will continue after Buffett’s death. The charity, established by Gates and his wife, combats disease and global poverty, and funds U.S. education initiatives.

--With assistance from Dakin Campbell in San Francisco. Editors: David Scheer, Dan Reichl

To contact the reporter on this story: Andrew Frye in New York at

To contact the editor responsible for this story: Dan Kraut at


  1. but i think it's important to note that he did lose money in the process and that there are still bad investments out there

  2. its so messed up how the ratings companies were in best with the issuers of these mortgage backed securities, should be illegal IMO.

  3. So basically Warren Buffet is the man and is actually pretty generous too. At least that's what I got from it, a lot of it went over my head.

  4. Warren Buffet is pretty awesome. Wouldn't have expected that.

  5. Daang... Maybe Obama should listen to Buffett even more, because he clearly does not know what really needs to be done to fix the economy, if it even is broken at all.

  6. and hes looking for the next elephant to bag

  7. Interesting. Thanks for sharing.

  8. Buffet is a super charitable man, and other people should follow after him.

  9. Yes Lewis, when it comes to investments Buffet is the man; and he's generous. He's the Bill Gates of the investment world haha.

  10. Great read, and as thuganomics said, it is important to note that he lost money.

  11. Damn! That is a lot of money just to have lunch with a guy. I bet he doesn't pay for the tab either.

  12. I agree with Lewis, thanks for the article!

  13. It's too late to be reading this kind of stuff, maybe I'll go over it in the morning d;

  14. they should send me some of that money