Despite much of the media coverage of him, Warren Buffett is not a saint, nor does he have a perfect investment record. However criticizing him for not having taken a larger share of the profits of Berkshire Hathaway since he has run it is based on a fundamental error. The great challenge for hedge funds is attracting “permanent capital” and creating a long-lasting, durable businesses that can be maintained over generations. The fact of the matter is the vast majority of hedge funds end with their original managers. Warren Buffett by eschewing the investment partnership route and funneling his investments into a publicly traded vehicle in which he invested alongside others without any incentive issues helped ensure that the company would outlive him. One need only look at last year’s purchase of Burlington Northern as an example of how he has transformed a (doomed) textile company into one of the world’s largest companies. In the process he became one of the richest men in the world. It is hard to see how that is in any way “a mistake.” In today’s screencast we examine Warren Buffett’s so-called mistakes.
Items mentioned in the above screencast:
Warren Buffett isn’t crazy about hedge fund fees. (Dealbreaker)
Business as usual at Berkshire Hathaway with the hiring of Todd Combs. (Bloomberg)
Warren Buffett’s worst trade. (Market Folly)
Warren Buffett’s biggest mistake. (Insider Monkey)