Money Management, Financial Markets

Last May, as you may all remember, I went to the Berkshire Hathaway annual meeting.nbsp; My musings on the experience, and the future of value investing, are a href=”http://www.theatlantic.com/doc/200909/warren-buffett”here/a.br /br /The friend who showed me around sent some further thoughts this morning, which I thought were worth sharing:br /br /blockquoteThis link (a href=”http://www.rationalwalk.com/?p=201″ target=”_blank”http://www.rationalwalk.com/?wbrp=201/a)
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.br /br /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:br /br /br /(1) Sequoia Fund – From July 15, 1970 to 6/30/2009 average
annual total returns of 13.98% vs. 9.98% for the Samp;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.br /br /(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.br /br /(3) Fairholme Fund – From December 29, 1999 to 7/31/2009 average annual total return of 12.54% vs. inegative/i 2.29% for the Samp;P 500. This fund has about $6 billion under management.br /br /(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 Samp;P 500.nbsp; This is a hedge fund, unlike the others, which are
mutual funds, and it manages almost $17 billion.br /br /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.br //blockquoteimg src=”http://feeds.feedburner.com/~r/MeganMcardle/~4/2lCUSeF4aU8″ height=”1″ width=”1″/