Life After Warren

Last May, as you may all remember, I went to the Berkshire Hathaway annual meeting.  My musings on the experience, and the future of value investing, are here.

The friend who showed me around sent some further thoughts this morning, which I thought were worth sharing:

This link (http://www.rationalwalk.com/?p=201) is a post considering Berkshire's insurance businesses. It notes that from 1999 to 2008 they have generally made an underwriting profit. Meaning Buffett has written policies conservatively enough to receive the float for free. Even if the result had been a 1% per year LOSS, that would be very cheap money. So he certainly benefits from leverage.

Buffett's record is pretty incredible (in one way or another it can be tracked back over 50 years and works out to around 20% per year). Its length is what makes the returns so amazing. I don't know of anyone else who has a track record of as many decades. But there are a few guys who are worth mentioning and following. These are some value-focused managers who are not Buffett yet who have good long-term (10+ to 30+ year) track records:


(1) Sequoia Fund - From July 15, 1970 to 6/30/2009 average annual total returns of 13.98% vs. 9.98% for the S&P 500. - Sequoia was started by Bill Ruane, a friend of Buffett's, and it is where Buffett recommended that investors in his private partnership put their money when he shut down the partnership to run Berkshire (if they didn't want to just hold Berkshire stock). This fund has about $2 billion under management.

(2) First Eagle Global Fund - From January 1, 1979 tp 7/31/2009 average annual total return of 14.33% vs. 9.45% for the MSCI World Index. This fund has about $16 billion under management.

(3) Fairholme Fund - From December 29, 1999 to 7/31/2009 average annual total return of 12.54% vs. negative 2.29% for the S&P 500. This fund has about $6 billion under management.

(4) Baupost Group - From February 1, 1983 to 12/31/2008 average annual total return of 16.5% net of fees and incentives, vs. 10.1% for the S&P 500.  This is a hedge fund, unlike the others, which are mutual funds, and it manages almost $17 billion.

If Baupost is still investing in 25 years I wouldn't be surprised if their record deserved to be classed with Buffett's by then.
Presented by

Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well. Bestselling author Mark Bittman teaches James Hamblin the recipe that everyone is Googling.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well.

Video

Before Tinder, a Tree

Looking for your soulmate? Write a letter to the "Bridegroom's Oak" in Germany.

Video

The Health Benefits of Going Outside

People spend too much time indoors. One solution: ecotherapy.

Video

Where High Tech Meets the 1950s

Why did Green Bank, West Virginia, ban wireless signals? For science.

Video

Yes, Quidditch Is Real

How J.K. Rowling's magical sport spread from Hogwarts to college campuses

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

More in Business

Just In