Two-Way Street

Tipping the Hat to an Anti Buffett-Hype Reader

I want to acknowledge the reader, Charles, who wrote not too long ago to question our wall-to-wall Warren Buffett coverage and point out that the legendary investor hasn't been so hot over the last few years.

He has good company. Namely, Doug Kass, founder and president of Seabreeze Partners Management, who made news over the weekend taking a short position against Buffett's Berkshire Hathaway .

Kass was on Kudlow & Co. last night, and explained:

"Yogi Berra once said, 'Even Napoleon had his Watergate.' And in the case of Warren Buffett, his Watergate is an investment style drift which is really a no-no in the money management business. You have to stick to your knitting. Look, I worship at the knee of Warren Buffett, and all he has accomplished over the years.

"But the reality is, in the last decade, he’s under performed dramatically, and he’s drifted in terms of strategy. He calls derivatives ‘financial weapons of mass destruction,’ yet he has about $40 billion dollars on his books, and lost $1.2 billion in the first quarter. And [while] everyone admires him, and goes to the Woodstock of Capitalism in Omaha and praises his accomplishments, his stock is starting to do poorly. And, frankly, in terms of being a value investor, he’s opened up his book in the last decade, and there are many Buffett wannabes who follow exactly what he does, so it’s much harder for him to do what he does. You look at his largest investments, he has $9-10 billion dollars in Coca-Cola, Wells Fargo and Bank of America, those stocks have flat lined for nine years."

Our Warren Buffett blog carries more about this debate and offers some counters to Kass' argument.

Regardless, I just wanted to note that our readers can call it well before us media types and the fund hotshots. Would we still cover Buffett like we do? Yes. But it's good to have a reminder to keep perspective.