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Gartman: Warren Buffett Isn't An "Idiot" .. But He Allowed "Inexcusable" Losses

Published: Tuesday, 23 Jun 2009 | 7:30 AM ET

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By: Alex Crippen
Executive Producer

Dennis Gartman
Newsletter writer and frequent CNBC guest Dennis Gartman isn't standing behind his reported "Warren Buffett is an idiot" quote.

But Gartman does tell CNBC it's "inexcusable" that Berkshire Hathaway fell roughly 45 percent in one year because Buffett didn't do enough to "mitigate" his losses in a tough market environment.

(At its early-March closing low of $72,400, Berkshire was down over 48 percent from where it was 12 months before. For the 2008 calendar year, Berkshire was down 32 percent, outperforming the benchmark S&P's drop of over 38 percent.)

And Gartman says he has a short position on Berkshire, betting the stock will fall some more.

The Wall Street Journal's MarketBeat blog recently headlined this paragraph from a report in the Oregonian newspaper on a talk Gartman delivered earlier in the month at a country club near Portland:

He scoffs at value-oriented, buy-and-hold stock investors who incurred deep losses last year. "Warren Buffett is an idiot," he said, emphatically, in a short interview after the speech. "Shame on Warren Buffett. That'll be a good quote for your article."

At the tail end of a live telephone interview on CNBC's Fast Money last night, host Melissa Lee asked him about the quote.

Melissa: There have been reports that you have been quoted as calling Warren Buffett an idiot. (Gartman laughs.) And we want to just clarify that. Did you call him an idiot?

Gartman: No... (Laughs).

Melissa: ... and if so, in what context?

Gartman: I think Mr. Buffett made some terrible mistakes last year. We all made some mistakes. And the fact that Mr. Buffett was down, what, 45 percent, that Berkshire was down 45 percent, and that not enough action was taken to mitigate those losses, I thought was disconcerting and poor trading. I am short Berkshire Hathaway right now for that reason. It continues to sell at a huge premium to net asset value, so I'm short of it and I'm long of Goldman Sachs. I'm short of Berkshire, and I'm long of Loews because they sell at discounts. But I think that Mr. Buffett made some terrible mistakes last year and when you're down 45 percent for a year, I'm sorry, that's inexcusable.

Melissa: Right. OK. So maybe not an idiot but maybe some idiotic trading moves. (Laughs).

Gartman: Not an idiot. Clearly he's not. He's a genius trader ...

Melissa: Of course.

Gartman: ... a genius investor ...... but when you're down 45 percent in a year, I'm sorry, I don't know how you can defend that.

Tim Seymour: Well, Warren Buffett's not a trader though, and I think ..

Melissa: Right.

Tim: ... his trading in and out of positions last year is not something he would have done. He built some core positions. I think if he made some mistakes, you look at Conoco, he probably bought that way too high. I think a number of those other positions he's probably got a couple-year view on.

In his annual letter to shareholders in February, Buffett admitted to "at least one major mistake of commission (buying Conoco as energy prices peaked) and ... some errors of omission, sucking my thumb when new facts came in that should have caused me to re-examine my thinking and promptly take action."

Current stock prices:

Berkshire Class A: [US;BRK.A Loading... () ]