Warren Buffett on How to Grow Wealth in a Responsible and Sustainable Manner

A few days ago, 90 MBA students were at IMD Business School in Lausanne for an interview session anchored by Mr Paul Hunter, Director of IMB Corporate Learning Network with his guests Warren Buffett, Israeli family business ISCAR Chairman Eitan Wertheimer and Prof Joachim Schwass, Director of Family Business Center at IMD.
You can also watch the 42-minute video of the entire session here:
Warren Buffet in IMD Business School

It’s available online until 19th Jun 2008.

Warren Buffet in IMD Business School

It’s available online until 19th Jun 2008.

Warren Buffett Salary is Only $100,000 A Year

I find it amazing that Warren Buffett is only taking a pay check of $100,000 a year while his net worth is more than $62 billions dollar.

This man is really amazing. That's also one of the screening criteria for value stock. We are constantly looking out for CEO of a profitable company with low pay check. This will assure you as an investor that the management is gear for the well being of the company instead of themselves.

Berkshire Hathaway Inc under the leadership of Warren Buffett is one such company. If it is trading below its intrinsic value, and provided you have the spare cash, it will be a good company to invest for long term compound growth.

How do you know if you are buying the stock below the intrinsic value or selling the stock above it intrinsic value?

You can find out more detailed information on how to calculate intrinic value with Adam Khoo (One of Singapore Youngest Millionaire Investor) at http://tinyurl.com/2aluvy

Here is an extract of the news from Bloomberg:

"March 17 (Bloomberg) -- Warren Buffett, the world's richest man, took a $100,000 salary for the 27th consecutive year in 2007 as profit surged 20 percent at his Berkshire Hathaway Inc.
Buffett received no bonus as he steered Berkshire into bond insurance and arranged for its largest cash purchase, a $4.5 billion deal to buy Marmon Holdings Inc., the Pritzker family's collection of 125 companies. Buffett gets no stock options or grants for serving as chief executive officer and chairman, the Omaha, Nebraska-based company said in a regulatory filing today.
Since wresting control of Berkshire four decades ago, Buffett, 77, built the once-failing textile manufacturer into a $200 billion investment and holding company with a $75 billion stock portfolio and businesses from candy making to insurance. Buffett held about a third of Berkshire's Class A shares as of Feb. 29 and has pledged the bulk of the stake to the Bill & Melinda Gates Foundation and four family charities.
``This guy doesn't care about putting the money into his own pocket, the money is his way of keeping score,'' said Guy Spier, who has about 15 percent of his Aquamarine LLC hedge fund in Berkshire shares. Spier along with a friend paid $650,100 last year in an annual charity auction to lunch with Buffett. ``Of course, we don't know what Warren's private fortune is. He's always run a separate pool of money, which could well be a billion itself, totally separate from Berkshire.''
Surpassing Gates
Buffett's wealth increased $10 billion in the 12 months through Feb. 11 to about $62 billion as he beat out Microsoft co-founder Bill Gates as the world's richest man, Forbes magazine said in its annual list.
Buffett did get $75,000 in 2007 for serving on the boards of companies in which Berkshire has stakes. The prior year, Buffett earned $114,250 in directors' fees.
Berkshire's shareholder equity, or assets minus liabilities, rose 11 percent to $120.7 billion in 2007 as the stock climbed 29 percent, outpacing the 3.5 percent gain in the Standard & Poor's 500 Index. Insurance, which typically provides about half of Berkshire's profit, benefited from another year of unusually light catastrophe claims, helping the company earn net income of $13.2 billion for the year.
``That party is over,'' Buffett said in his annual letter to shareholders, released with the 2007 annual report Feb. 29. ``It is a certainty that insurance industry profit margins, including ours, will fall significantly in 2008. Prices are down.'' "

Berkshire Hathaway spurns stock-split plan

This is a breaking news from Bloomberg written on Monday, January 28, 2008

"NEW YORK -- Billionaire Warren Buffett's Berkshire Hathaway Inc. won support from the U.S. Securities and Exchange Commission to prevent a vote on splitting the US$139,100-a-share stock, the New York Stock Exchange's most expensive.

Chief Financial Officer Marc Hamburg wrote in a Dec. 21 letter to the SEC that Omaha, Nebraska-based Berkshire planned to omit the proposed shareholder vote from annual proxy materials, according to documents posted by the agency Saturday.
The SEC's staff said the company was within its rights to reject the request in a Jan. 22 letter. By specifying a ratio for the split the proposal "relates to a specific amount of stock dividends," and can be excluded, the SEC wrote.

"Splitting of the Class A shares will increase shareholder liquidity and value for present shareholders," Robert Zelin wrote in a November letter to Berkshire on behalf of himself and three others calling themselves members of the Western New York Model Club, in Clarence Center, New York. "They may redeem a smaller portion of their investment and still be part of this great company."

Zelin proposed a vote to split the shares to lower the price to between US$10,000 and US$30,000.

The club members hold Class B shares, which trade for 1/30th the price of the Class A shares, yet confer 1/200th of the voting rights, and want the opportunity to own the more expensive A shares, Zelin wrote. The B shares would be split proportionally."

So the question is "Will Berkshire Hathaway Stock be split or not?"

It is good for the split as i think the stock is getting a bit too expensive for the commoners to make a purchase.

Buffet Buys Into Ailing Insurance World

I have just received this email from Coattail investor, here is the juicy story:

"Warren Buffett has confounded analysts by again investing in the ailing insurance world. According to reports released earlier this week, Buffett snatched up 3% of Swiss Re, the world’s largest reinsurer, at an estimated value of 859 million Swiss francs, or approximately $783 million US (although terms of the deal were not disclosed).

Berkshire Hathaway’s purchase of Swiss Re is interesting for another reason as well – it is a major competitor of General Re, another Berkshire Hathaway-owned company. Regardless, the move is further evidence that Buffett has managed to avoid being hit by the current credit crisis, and he is actually profiting from it. "

--- Coattail investor

Warren Buffett's Private Jet Business flying high...

Warren Buffett’s private jet business appears to be flying high. The European company NetJets has announced plans to expand by purchasing 39 new aircrafts, a 29% increase to the fleet. The cost of the planes is estimated to be $715 million.

NetJets saw a 17% increase in passengers in 2007, and had to hire 350 new pilots to help accommodate the growth. NetJets rents planes out in 25-hour periods, which is ideal for companies that cannot justify purchasing a jet of their own. The majority of NetJets passengers, approximately 80%, consist of CEOs rushing to meetings.

Berkshire Hathaway Update

Quote of the week:

“When [Berkshire] buys common stock... we approach the transaction as if we were buying into a private business.”- Warren E. Buffett

Last week we reported that Warren Buffett and Berkshire Hathaway had entered the ailing bond insurance market through the creation of Berkshire Hathaway Assurance Corp. This week, the newest division of Berkshire Hathaway, made its first deal insuring $10 million of New York City municipal bonds for Goldman, Sachs & Co.

Berkshire Hathaway Assurance Corp. was licensed in New York State near the end of December. It is reported that the company is also applying for licenses in Puerto Rico, California and a number of other U.S. states. The U.S. muni bond market is estimated to be a $2.5 trillion industry.

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