Warren Buffett is known as the "Rock Star of American Capitalism" due to his immense success as an investor and businessman. Through applying the value investing principles of Benjamin Graham at Berkshire Hathaway, Buffett has grown his initial $15 million investment into a net worth of over $60 billion. In addition to his business acumen, Buffett is admired for his philanthropic vision, having pledged to donate 99% of his wealth. He does not want future generations to inherit vast sums but rather wants the money spent to help address problems like disease and access to education.
This document discusses the various types of risks faced by banks, including credit risk, liquidity risk, market risk, operational risk, capital risk, and others. It provides definitions and considerations for evaluating each type of risk, such as key ratios to examine for credit risk, balance sheet items that influence liquidity risk, factors that affect market risk, and guidelines for sufficient capital levels. The document also covers risk management strategies, off-balance sheet activities, CAMELS ratings, and other performance characteristics important for banks.
The document discusses how managers can better understand the expectations of the stock market regarding their company's strategy and performance. It explains that the market's expectations are reflected in a company's share price and can be divided into short-term expectations, based on analysts' forecasts for the next 2-5 years, and long-term expectations for performance beyond that time horizon. By analyzing a company's share price relative to its current performance and growth expectations, managers can gain insights into whether the market expects them to exceed competitors in the short and long run, meet expectations, or face challenges in doing so. Understanding these expectations provides guidance on what strategic actions may be needed to satisfy the market and improve the company's total shareholder return over time.
Traditional bank performance analysis has flaws when banks engage in diverse strategies and off-balance sheet activities. Return on assets and equity do not capture how activities create shareholder value. Alternative models allocate capital and income to business lines to calculate risk-adjusted return on capital. This helps evaluate performance and risk by business to identify best strategies and create shareholder value.
The document describes Howard's behavioural equation theory of the buying process. It includes 4 key elements - drives, cues, response, and reinforcement. Howard incorporates these into an equation: B = P x D x K x V, where B is response (purchase), P is predisposition, D is drive level, K is incentive potential, and V is cue intensity. The salesperson can influence each of these factors and thus the buying process. The document also discusses different sales organization structures like line, line-staff, and functional organizations.
This document discusses options on financial futures contracts. It defines call and put options, explaining that a call option gives the buyer the right to buy the underlying asset and a put option gives the buyer the right to sell. It describes how option value is determined from intrinsic value and time value. The document provides examples of how buying and selling options can be used by commercial banks to hedge their interest rate risk exposures from rising or falling rates. In general, options limit potential losses compared to futures but also cap potential gains.
This chapter discusses global banking activities and the evolution of U.S. banks' international operations. Key points include: (1) Technology has enabled banks to conduct global business more easily; (2) U.S. banks now offer similar products worldwide as foreign banks; (3) Restrictions previously limited U.S. bank size and activities internationally; (4) Laws passed in the 1990s-2000s like Gramm-Leach-Bliley eliminated restrictions, allowing large diversified financial firms like Citigroup to form; (5) Now some U.S. banks rank among the largest globally in terms of assets.
This document discusses interest rate risk and gap analysis for managing that risk. It defines key terms like rate sensitive assets and liabilities, funding gap, duration gap, and positive and negative gaps. It also covers traditional static gap analysis, factors that affect net interest income, and advantages and disadvantages of gap analysis. The primary purpose of gap analysis is to measure a bank's interest rate risk by comparing rate sensitive assets and liabilities over different time periods.
This document discusses the various types of risks faced by banks, including credit risk, liquidity risk, market risk, operational risk, capital risk, and others. It provides definitions and considerations for evaluating each type of risk, such as key ratios to examine for credit risk, balance sheet items that influence liquidity risk, factors that affect market risk, and guidelines for sufficient capital levels. The document also covers risk management strategies, off-balance sheet activities, CAMELS ratings, and other performance characteristics important for banks.
The document discusses how managers can better understand the expectations of the stock market regarding their company's strategy and performance. It explains that the market's expectations are reflected in a company's share price and can be divided into short-term expectations, based on analysts' forecasts for the next 2-5 years, and long-term expectations for performance beyond that time horizon. By analyzing a company's share price relative to its current performance and growth expectations, managers can gain insights into whether the market expects them to exceed competitors in the short and long run, meet expectations, or face challenges in doing so. Understanding these expectations provides guidance on what strategic actions may be needed to satisfy the market and improve the company's total shareholder return over time.
Traditional bank performance analysis has flaws when banks engage in diverse strategies and off-balance sheet activities. Return on assets and equity do not capture how activities create shareholder value. Alternative models allocate capital and income to business lines to calculate risk-adjusted return on capital. This helps evaluate performance and risk by business to identify best strategies and create shareholder value.
The document describes Howard's behavioural equation theory of the buying process. It includes 4 key elements - drives, cues, response, and reinforcement. Howard incorporates these into an equation: B = P x D x K x V, where B is response (purchase), P is predisposition, D is drive level, K is incentive potential, and V is cue intensity. The salesperson can influence each of these factors and thus the buying process. The document also discusses different sales organization structures like line, line-staff, and functional organizations.
This document discusses options on financial futures contracts. It defines call and put options, explaining that a call option gives the buyer the right to buy the underlying asset and a put option gives the buyer the right to sell. It describes how option value is determined from intrinsic value and time value. The document provides examples of how buying and selling options can be used by commercial banks to hedge their interest rate risk exposures from rising or falling rates. In general, options limit potential losses compared to futures but also cap potential gains.
This chapter discusses global banking activities and the evolution of U.S. banks' international operations. Key points include: (1) Technology has enabled banks to conduct global business more easily; (2) U.S. banks now offer similar products worldwide as foreign banks; (3) Restrictions previously limited U.S. bank size and activities internationally; (4) Laws passed in the 1990s-2000s like Gramm-Leach-Bliley eliminated restrictions, allowing large diversified financial firms like Citigroup to form; (5) Now some U.S. banks rank among the largest globally in terms of assets.
This document discusses interest rate risk and gap analysis for managing that risk. It defines key terms like rate sensitive assets and liabilities, funding gap, duration gap, and positive and negative gaps. It also covers traditional static gap analysis, factors that affect net interest income, and advantages and disadvantages of gap analysis. The primary purpose of gap analysis is to measure a bank's interest rate risk by comparing rate sensitive assets and liabilities over different time periods.
Warren Buffett is an American business magnate, investor, and philanthropist who is considered one of the most successful investors in the world. He formed Buffett Partnership Ltd. in 1956 which he used to acquire controlling stakes in companies like Berkshire Hathaway. Under his leadership, Berkshire Hathaway has become a large conglomerate holding company owning many businesses across diverse industries. Buffett is known for his value investing approach, buying whole companies, and philanthropic efforts.
DealMarket DIGEST Issue 113 // 18 October 2013CAR FOR YOU
The weekly Dealmarket Digest provides a concise summary of private equity news and trends from various sources. This issue discusses American family offices increasing direct investments in private equity deals, advice for working with private equity investors, Warburg Pincus raising funds focused on energy deals, private equity moving into mining industry deals, and a family office stepping up venture capital investments.
DealMarket Digest Issue 113 - 18th October 2013Urs Haeusler
The weekly Dealmarket Digest provides a concise summary of private equity news and trends from various sources. This issue discusses American family offices increasing direct investments in private equity deals, advice for working with private equity investors, Warburg Pincus raising funds focused on energy deals, private equity moving into mining industry deals, and a family office stepping up venture capital investments.
Cost of investments in securities . Benefits of low brokerage . where to find lowest equity commodity brokerage in India .Advantages of low brokerage in trading profitability . WhatsAp 9 0 1 - 91 - 5 1 - 9 8 8
This document provides a summary of Warren Buffett's advice and Berkshire Hathaway news from 2015. It includes articles about Berkshire's acquisition spree that year, including purchases of Van Tuyl Group and Durecell Batteries. It also discusses Buffett becoming the third richest person as Berkshire shares hit a record high. Additional articles provide tips from Buffett for investing in oil stocks during a price rout, identifying "moats" around companies, and Buffett's view that Europe is a promising investment destination. The document outlines Buffett's philosophy of investing in "wonderful businesses at fair prices." It also summarizes Buffett's reflections on some of his biggest mistakes as an investor.
Warren Buffett is known for his long-term value investing approach and being one of the most successful investors in the world. He only invests in companies he understands and believes in for long-term growth. Some of his major investments include American Express, Coca-Cola, and Berkshire Hathaway. Buffett sat out the dot-com boom and instead invested in stable "cigar butt" companies. He is now the third richest man in the world and donates much of his wealth to the Bill and Melinda Gates Foundation.
The document provides an overview of Warren Buffett's life and investment philosophy in preparation for a trip to visit Berkshire Hathaway. It summarizes that Buffett started various small businesses as a child, was influenced by Benjamin Graham's teachings at Columbia Business School, started his own investment partnership in 1956 that achieved over 30% annual returns, and eventually took control of Berkshire Hathaway in 1967 which he grew into a massive conglomerate using an approach of investing in understandable, well-managed businesses with favorable long-term prospects bought at attractive prices.
Warren Buffett is an American business magnate, investor, and philanthropist. He is the chairman and CEO of Berkshire Hathaway and is considered one of the most successful investors in the world. The passage provides biographical details about Buffett, including that he was born in 1930 in Nebraska and began investing at a young age. It discusses some of his early career successes with his investment partnerships and the acquisition of Berkshire Hathaway. Buffett is known for his value investing style and for living a frugal lifestyle despite his immense wealth.
Sauer - Selling America Short; the SEC and Market Contrarians in the Age of A...jamesmaredmond
This chapter provides background on the author's career path prior to joining the SEC. After receiving his law degree, he disliked practicing law and instead pursued further education, receiving an advanced law degree from Harvard. He struggled to find meaningful work until securing a position at the Federal Trade Commission investigating consumer credit fraud. However, the FTC was ineffective under the Reagan administration due to cost-benefit analyses that found few consumer protection issues warranted intervention. The author realized the difference between not doing work and not accomplishing work, with the former frowned upon in government but the latter tolerated.
This document provides an overview of Berkshire Hathaway's history from its founding as a textile company in 1889 through the 1990s. It discusses Berkshire's humble beginnings in textiles, its diversification into insurance and other industries from the 1950s-1960s led by Warren Buffett, its transformation into a large conglomerate through numerous acquisitions in the 1980s, and its continued growth into a mega-conglomerate under Buffett's leadership in the 1990s. The document is divided into multiple chapters and sections covering Berkshire's history, industries, leadership, and financial performance over time.
The book discusses Warren Buffett's approach to analyzing companies using financial statements. Buffett looks for companies with durable competitive advantages, such as unique products or low costs, that allow high returns on revenue of over 20%. He favors those with consistent earnings, low expenses for research, depreciation and interest, and strong liquidity with little debt. By identifying firms with these characteristics in their financial statements, Buffett has been able to achieve remarkable investment returns over decades.
This document provides a biography of Warren Buffett, known as the "Oracle of Omaha", who is one of the richest and most respected businessmen in the world. It details his early life growing up in Nebraska and demonstrating business abilities from a young age. It discusses his education at the University of Pennsylvania and Columbia Business School, where he was influenced by Benjamin Graham. It outlines his career founding Buffett Partnership Ltd. in 1956 and assuming control of Berkshire Hathaway in 1965, growing it into a large conglomerate. It also discusses his significant philanthropic donations and continuing influence in business into his 80s and 90s.
America is in the grips of a speculative frenzy. Investment .docxgreg1eden90113
A
merica is in the grips of a speculative frenzy. Investment bankers, private investment firms, and even a few dozen recently graduated
MBAs labelling themselves “searchers” are calling, emailing, wining, and dining small business owners. Their goal is to translate prosaic
small businesses into the poetry of private equity.
The great postcrisis private equity gold rush is on, fueled by cheap debt and enthusiastic investors. A lawn care chain might get half a dozen calls
and emails a week from business brokers and “searchers.” A regional bank auctioning off a business with $15 million in profits might pitch two
hundred prospects, receive fifty letters of intent, and take twelve separate private equity firms to management meetings, ending in a sale price
which the majority of bidders considers crazy. And the greatest prize of all—a software company—could sell for many multiples of revenue,
regardless of profitability.
As with the mortgage-backed securities bubble, experts are the promoters and pioneers of an “asset class” that they claim will offer high returns
with low risk, guided by the sage wisdom of elite managers. The legendary leader of Yale University’s endowment, David Swensen, has gone so far
as to call private equity a “superior form of capitalism.”
The experts agree with Swensen. A recent survey of institutional investors found that 49 percent expect private equity (PE) to outperform the
public equity market by a whopping 4 percent per year or more. Another 45 percent believe PE will outperform by 2–4 percent per year. Only 6
percent think returns will be comparable. The survey did not even bother to ask if investors thought PE might underperform. This is particularly
shocking given that data from Cambridge Associates shows that private equity returns have lagged the Russell 2000 index by 1 percent and the
S&P 500 by 1.5 percent per year over the past five years.
This consensus has led institutional investors to flood private markets with capital, about $200 billion per year of new commitments. The result is
soaring prices for private companies of all shapes and sizes. Just before the financial crisis, in 2007, the average purchase price for a PE deal was
8.9x EBITDA (earnings before interest, taxes, depreciation, and amortization—a commonly used measure of cash profitability). Deal prices reached
8.9x again in 2013 and are now up to nearly 11x EBITDA.
But asset prices are going up everywhere. What makes private equity dangerous is the use of debt—and the use of phony accounting to conceal the
riskiness of these leveraged bets. The average PE deal is 65 percent debt financed, and whereas the valuations of public equities are determined by
transparent, liquid public markets, PE firms determine the valuations of their own portfolio companies. Unsurprisingly, they report far lower
volatility than public markets.
This appraisal accounting also encourages lenders to take risks. After the financial crisis, the Fede.
Warren Buffett says his guiding principle is to “be fearful when others are greedy and greedy when others are fearful.” There’s certainly plenty of fear out there, and thus plenty of opportunities to get greedy. Greed, however, does not necessarily translate into wealth.
In “Beyond Fear and Greed: Capitalizing on Opportunities in the Current Crisis,” we draw on our two years of research into more than 2,500 major corporate failures and our related consulting work to describe the landmines that companies are mostly like to hit as they try to capitalize on the turmoil that has roiled many markets since the summer of 2008. We also lay out a process for stress testing new business strategies, ensuring that greed does not send you down the wrong path and increasing the chances that you’ll pick a highly prosperous road.
When he took the helm at a Chicago-based law firm called Kirkland & Ellis in 2010, with the aim of turning it into a world-beater, few in the industry thought Jeff Hammes stood a chance.
For decades, the most lucrative and prestigious careers for ambitious young lawyers were to be found at the “white shoe” set of leading New York firms — long-established, fed by the best Ivy League graduates and nourished by work for Wall Streetʼs all-powerful banks and Fortune 500 companies.
Ashford Capital Management Small Cap Criteria White PaperCliff Short III
This “Small Cap Effect” has been analyzed, deliberated, and dissected for decades, and subsequent studies have proven that, with some caveats, the out performance of small capitalization stocks on both a risk-adjusted and absolute basis is real.
3 page minimum, credible references, charts & graphs.Read the ca.docxgilbertkpeters11344
3 page minimum, credible references, charts & graphs.
Read the case "Giving Away Facebook" at the end of Chapter 16.
Answer the following questions and/or statements in detail:
1. Can you know if you have a potentially hugely successful company on your hands when you first launch it?
2. Should all companies take the precautions Facebook failed to take? Or can some companies be more relaxed about such legal issues as partnerships and ownership? Why or why not? Use credible sources and research to support and explain.
3. What types of agreements and contracts do you think Mark Zuckerberg, his partners, and Facebook's early investors should have drawn up? Use credible sources and research to support and explain.
4. What contracts do you think the Winklevoss twins and Divya Narendra should have drawn up when they hired Zuckerberg to work for their company? Use credible sources and research to support and explain.
Be sure to property cite your sources using APA 6th citations rules as well as an APA “References”(bibliography) section at the end of your paper
Giving Away Facebook For a bunch of seemingly smart kids, the guys involved in Facebook’s founding did some pretty stupid things—at least from a legal point of view. This resulted in years of lawsuits and billions of dollars in settlements. Most new start-ups are in the position of having to give up some degree of ownership in return for early-stage financing. After all, investors want to get something for their money, and that is typically a percent of the equity—or ownership—of the company. And they deserve a big payout for taking a chance on an entrepreneur, for risking their money before anyone else. Nevertheless, those decisions shouldn’t be made lightly or without considering the legal consequences, even when a “business” is still in the idea stage. Or when it’s just being discussed in your college dorm. The exact facts revolving around the founding of Facebook remain in dispute. But some things are agreed upon. A site called “TheFacebook. com” was launched in 2004, by Mark Zuckerberg, Dustin Moskovitz, Chris Hughes, and Eduardo Saverin while they were students at Harvard University. Saverin, a wealthy student, provided Zuckerberg with $15,000 to purchase the servers for TheFacebook. In return, Zuckerberg allotted Saverin 30 percent of the company.1 That was generous—extremely so. And it was a decision that would come back to haunt Zuckerberg. In the meantime, while getting ready to launch TheFacebook, Zuckerberg was also working for twins Cameron and Tyler Winklevoss and for Divya Narendra, who had hired him to work on their own social networking site. Their site had essentially the same concept that would become Facebook. The decision not to tell his employers that he was working on a competing site was another problem that would come back to haunt Zuckerberg and Facebook. Those are the facts that are agreed upon. Other issues remain in dispute and have eventually ended up.
A Kinder, Gentler KKR Wants A Piece Of Your 401(k)Alexandra Holt
Scott Nuttall, head of KKR's asset management division, wants to make private equity investments available to individual 401(k) investors. He is leading KKR's expansion beyond leveraged buyouts into areas like credit, hedge funds, and trading. This will open KKR to retail investors for as little as $2,500 instead of the previous $10 million minimum. Nuttall sees trillions flowing into individual retirement accounts and wants KKR to attract this new source of capital and steady fee income to complement its traditional private equity business.
There are several types of sales quotas that can be used including sales volume, dollar sales volume, unit sales volume, and point sales quotas. Sales volume quotas are the most common and communicate a sales target for a given time period. Budget quotas can also be used to set targets for expenses, gross margins, or net profits. Combination quotas control both selling and non-selling activities by combining different performance metrics into a single measure. When establishing a quota system, management must ensure quotas are accurate, fair, attainable, and accepted by the sales force.
1) Sales organizations are structured to coordinate sales activities, define roles and responsibilities, and optimize executive time.
2) There are three main types of sales organization structures - line, line and staff, and functional. Line structures keep communication simple but lack planning. Line and staff structures use specialists to assist executives but increase costs. Functional structures highly specialize roles.
3) Factors like customer needs, products, size, and personnel determine the best sales organization structure for a company.
Warren Buffett is an American business magnate, investor, and philanthropist who is considered one of the most successful investors in the world. He formed Buffett Partnership Ltd. in 1956 which he used to acquire controlling stakes in companies like Berkshire Hathaway. Under his leadership, Berkshire Hathaway has become a large conglomerate holding company owning many businesses across diverse industries. Buffett is known for his value investing approach, buying whole companies, and philanthropic efforts.
DealMarket DIGEST Issue 113 // 18 October 2013CAR FOR YOU
The weekly Dealmarket Digest provides a concise summary of private equity news and trends from various sources. This issue discusses American family offices increasing direct investments in private equity deals, advice for working with private equity investors, Warburg Pincus raising funds focused on energy deals, private equity moving into mining industry deals, and a family office stepping up venture capital investments.
DealMarket Digest Issue 113 - 18th October 2013Urs Haeusler
The weekly Dealmarket Digest provides a concise summary of private equity news and trends from various sources. This issue discusses American family offices increasing direct investments in private equity deals, advice for working with private equity investors, Warburg Pincus raising funds focused on energy deals, private equity moving into mining industry deals, and a family office stepping up venture capital investments.
Cost of investments in securities . Benefits of low brokerage . where to find lowest equity commodity brokerage in India .Advantages of low brokerage in trading profitability . WhatsAp 9 0 1 - 91 - 5 1 - 9 8 8
This document provides a summary of Warren Buffett's advice and Berkshire Hathaway news from 2015. It includes articles about Berkshire's acquisition spree that year, including purchases of Van Tuyl Group and Durecell Batteries. It also discusses Buffett becoming the third richest person as Berkshire shares hit a record high. Additional articles provide tips from Buffett for investing in oil stocks during a price rout, identifying "moats" around companies, and Buffett's view that Europe is a promising investment destination. The document outlines Buffett's philosophy of investing in "wonderful businesses at fair prices." It also summarizes Buffett's reflections on some of his biggest mistakes as an investor.
Warren Buffett is known for his long-term value investing approach and being one of the most successful investors in the world. He only invests in companies he understands and believes in for long-term growth. Some of his major investments include American Express, Coca-Cola, and Berkshire Hathaway. Buffett sat out the dot-com boom and instead invested in stable "cigar butt" companies. He is now the third richest man in the world and donates much of his wealth to the Bill and Melinda Gates Foundation.
The document provides an overview of Warren Buffett's life and investment philosophy in preparation for a trip to visit Berkshire Hathaway. It summarizes that Buffett started various small businesses as a child, was influenced by Benjamin Graham's teachings at Columbia Business School, started his own investment partnership in 1956 that achieved over 30% annual returns, and eventually took control of Berkshire Hathaway in 1967 which he grew into a massive conglomerate using an approach of investing in understandable, well-managed businesses with favorable long-term prospects bought at attractive prices.
Warren Buffett is an American business magnate, investor, and philanthropist. He is the chairman and CEO of Berkshire Hathaway and is considered one of the most successful investors in the world. The passage provides biographical details about Buffett, including that he was born in 1930 in Nebraska and began investing at a young age. It discusses some of his early career successes with his investment partnerships and the acquisition of Berkshire Hathaway. Buffett is known for his value investing style and for living a frugal lifestyle despite his immense wealth.
Sauer - Selling America Short; the SEC and Market Contrarians in the Age of A...jamesmaredmond
This chapter provides background on the author's career path prior to joining the SEC. After receiving his law degree, he disliked practicing law and instead pursued further education, receiving an advanced law degree from Harvard. He struggled to find meaningful work until securing a position at the Federal Trade Commission investigating consumer credit fraud. However, the FTC was ineffective under the Reagan administration due to cost-benefit analyses that found few consumer protection issues warranted intervention. The author realized the difference between not doing work and not accomplishing work, with the former frowned upon in government but the latter tolerated.
This document provides an overview of Berkshire Hathaway's history from its founding as a textile company in 1889 through the 1990s. It discusses Berkshire's humble beginnings in textiles, its diversification into insurance and other industries from the 1950s-1960s led by Warren Buffett, its transformation into a large conglomerate through numerous acquisitions in the 1980s, and its continued growth into a mega-conglomerate under Buffett's leadership in the 1990s. The document is divided into multiple chapters and sections covering Berkshire's history, industries, leadership, and financial performance over time.
The book discusses Warren Buffett's approach to analyzing companies using financial statements. Buffett looks for companies with durable competitive advantages, such as unique products or low costs, that allow high returns on revenue of over 20%. He favors those with consistent earnings, low expenses for research, depreciation and interest, and strong liquidity with little debt. By identifying firms with these characteristics in their financial statements, Buffett has been able to achieve remarkable investment returns over decades.
This document provides a biography of Warren Buffett, known as the "Oracle of Omaha", who is one of the richest and most respected businessmen in the world. It details his early life growing up in Nebraska and demonstrating business abilities from a young age. It discusses his education at the University of Pennsylvania and Columbia Business School, where he was influenced by Benjamin Graham. It outlines his career founding Buffett Partnership Ltd. in 1956 and assuming control of Berkshire Hathaway in 1965, growing it into a large conglomerate. It also discusses his significant philanthropic donations and continuing influence in business into his 80s and 90s.
America is in the grips of a speculative frenzy. Investment .docxgreg1eden90113
A
merica is in the grips of a speculative frenzy. Investment bankers, private investment firms, and even a few dozen recently graduated
MBAs labelling themselves “searchers” are calling, emailing, wining, and dining small business owners. Their goal is to translate prosaic
small businesses into the poetry of private equity.
The great postcrisis private equity gold rush is on, fueled by cheap debt and enthusiastic investors. A lawn care chain might get half a dozen calls
and emails a week from business brokers and “searchers.” A regional bank auctioning off a business with $15 million in profits might pitch two
hundred prospects, receive fifty letters of intent, and take twelve separate private equity firms to management meetings, ending in a sale price
which the majority of bidders considers crazy. And the greatest prize of all—a software company—could sell for many multiples of revenue,
regardless of profitability.
As with the mortgage-backed securities bubble, experts are the promoters and pioneers of an “asset class” that they claim will offer high returns
with low risk, guided by the sage wisdom of elite managers. The legendary leader of Yale University’s endowment, David Swensen, has gone so far
as to call private equity a “superior form of capitalism.”
The experts agree with Swensen. A recent survey of institutional investors found that 49 percent expect private equity (PE) to outperform the
public equity market by a whopping 4 percent per year or more. Another 45 percent believe PE will outperform by 2–4 percent per year. Only 6
percent think returns will be comparable. The survey did not even bother to ask if investors thought PE might underperform. This is particularly
shocking given that data from Cambridge Associates shows that private equity returns have lagged the Russell 2000 index by 1 percent and the
S&P 500 by 1.5 percent per year over the past five years.
This consensus has led institutional investors to flood private markets with capital, about $200 billion per year of new commitments. The result is
soaring prices for private companies of all shapes and sizes. Just before the financial crisis, in 2007, the average purchase price for a PE deal was
8.9x EBITDA (earnings before interest, taxes, depreciation, and amortization—a commonly used measure of cash profitability). Deal prices reached
8.9x again in 2013 and are now up to nearly 11x EBITDA.
But asset prices are going up everywhere. What makes private equity dangerous is the use of debt—and the use of phony accounting to conceal the
riskiness of these leveraged bets. The average PE deal is 65 percent debt financed, and whereas the valuations of public equities are determined by
transparent, liquid public markets, PE firms determine the valuations of their own portfolio companies. Unsurprisingly, they report far lower
volatility than public markets.
This appraisal accounting also encourages lenders to take risks. After the financial crisis, the Fede.
Warren Buffett says his guiding principle is to “be fearful when others are greedy and greedy when others are fearful.” There’s certainly plenty of fear out there, and thus plenty of opportunities to get greedy. Greed, however, does not necessarily translate into wealth.
In “Beyond Fear and Greed: Capitalizing on Opportunities in the Current Crisis,” we draw on our two years of research into more than 2,500 major corporate failures and our related consulting work to describe the landmines that companies are mostly like to hit as they try to capitalize on the turmoil that has roiled many markets since the summer of 2008. We also lay out a process for stress testing new business strategies, ensuring that greed does not send you down the wrong path and increasing the chances that you’ll pick a highly prosperous road.
When he took the helm at a Chicago-based law firm called Kirkland & Ellis in 2010, with the aim of turning it into a world-beater, few in the industry thought Jeff Hammes stood a chance.
For decades, the most lucrative and prestigious careers for ambitious young lawyers were to be found at the “white shoe” set of leading New York firms — long-established, fed by the best Ivy League graduates and nourished by work for Wall Streetʼs all-powerful banks and Fortune 500 companies.
Ashford Capital Management Small Cap Criteria White PaperCliff Short III
This “Small Cap Effect” has been analyzed, deliberated, and dissected for decades, and subsequent studies have proven that, with some caveats, the out performance of small capitalization stocks on both a risk-adjusted and absolute basis is real.
3 page minimum, credible references, charts & graphs.Read the ca.docxgilbertkpeters11344
3 page minimum, credible references, charts & graphs.
Read the case "Giving Away Facebook" at the end of Chapter 16.
Answer the following questions and/or statements in detail:
1. Can you know if you have a potentially hugely successful company on your hands when you first launch it?
2. Should all companies take the precautions Facebook failed to take? Or can some companies be more relaxed about such legal issues as partnerships and ownership? Why or why not? Use credible sources and research to support and explain.
3. What types of agreements and contracts do you think Mark Zuckerberg, his partners, and Facebook's early investors should have drawn up? Use credible sources and research to support and explain.
4. What contracts do you think the Winklevoss twins and Divya Narendra should have drawn up when they hired Zuckerberg to work for their company? Use credible sources and research to support and explain.
Be sure to property cite your sources using APA 6th citations rules as well as an APA “References”(bibliography) section at the end of your paper
Giving Away Facebook For a bunch of seemingly smart kids, the guys involved in Facebook’s founding did some pretty stupid things—at least from a legal point of view. This resulted in years of lawsuits and billions of dollars in settlements. Most new start-ups are in the position of having to give up some degree of ownership in return for early-stage financing. After all, investors want to get something for their money, and that is typically a percent of the equity—or ownership—of the company. And they deserve a big payout for taking a chance on an entrepreneur, for risking their money before anyone else. Nevertheless, those decisions shouldn’t be made lightly or without considering the legal consequences, even when a “business” is still in the idea stage. Or when it’s just being discussed in your college dorm. The exact facts revolving around the founding of Facebook remain in dispute. But some things are agreed upon. A site called “TheFacebook. com” was launched in 2004, by Mark Zuckerberg, Dustin Moskovitz, Chris Hughes, and Eduardo Saverin while they were students at Harvard University. Saverin, a wealthy student, provided Zuckerberg with $15,000 to purchase the servers for TheFacebook. In return, Zuckerberg allotted Saverin 30 percent of the company.1 That was generous—extremely so. And it was a decision that would come back to haunt Zuckerberg. In the meantime, while getting ready to launch TheFacebook, Zuckerberg was also working for twins Cameron and Tyler Winklevoss and for Divya Narendra, who had hired him to work on their own social networking site. Their site had essentially the same concept that would become Facebook. The decision not to tell his employers that he was working on a competing site was another problem that would come back to haunt Zuckerberg and Facebook. Those are the facts that are agreed upon. Other issues remain in dispute and have eventually ended up.
A Kinder, Gentler KKR Wants A Piece Of Your 401(k)Alexandra Holt
Scott Nuttall, head of KKR's asset management division, wants to make private equity investments available to individual 401(k) investors. He is leading KKR's expansion beyond leveraged buyouts into areas like credit, hedge funds, and trading. This will open KKR to retail investors for as little as $2,500 instead of the previous $10 million minimum. Nuttall sees trillions flowing into individual retirement accounts and wants KKR to attract this new source of capital and steady fee income to complement its traditional private equity business.
There are several types of sales quotas that can be used including sales volume, dollar sales volume, unit sales volume, and point sales quotas. Sales volume quotas are the most common and communicate a sales target for a given time period. Budget quotas can also be used to set targets for expenses, gross margins, or net profits. Combination quotas control both selling and non-selling activities by combining different performance metrics into a single measure. When establishing a quota system, management must ensure quotas are accurate, fair, attainable, and accepted by the sales force.
1) Sales organizations are structured to coordinate sales activities, define roles and responsibilities, and optimize executive time.
2) There are three main types of sales organization structures - line, line and staff, and functional. Line structures keep communication simple but lack planning. Line and staff structures use specialists to assist executives but increase costs. Functional structures highly specialize roles.
3) Factors like customer needs, products, size, and personnel determine the best sales organization structure for a company.
The document outlines J.A. Howard's behavioural equation theory of marketing which identifies 4 key elements: drives, cues, response, and reinforcement. It then provides details on each element, such as the two types of drives (innate and learned), the two types of cues (triggering and non-triggering), and how reinforcement strengthens responses. The theory is expressed through an equation, B=p X D X K X V, relating response to predisposition, drive, incentive potential, and cues. The document also discusses how salespeople can influence the variables in the equation to make sales.
This document outlines accounting standards for amalgamations in India. It defines amalgamations and the two types: amalgamations in the nature of a merger and amalgamations in the nature of a purchase. It describes the two methods of accounting for amalgamations - the pooling of interests method and the purchase method - and how they are applied based on the type of amalgamation. It also provides guidance on accounting treatments for consideration, reserves, goodwill, and balances of profit and loss accounts in amalgamations.
The document discusses securitization, which involves a corporation transferring assets like mortgages or receivables to a special purpose vehicle (SPV) that issues securities backed by those assets. The key aspects of securitization include bankruptcy remoteness of the assets, credit enhancement to obtain high credit ratings, and structuring cash flows and securities to meet investor needs.
The document is a master circular from the Reserve Bank of India providing guidance to banks on housing finance. It covers topics such as direct and indirect housing finance, loans under priority sector lending, refinance from RBI, construction activities eligible for financing, reporting requirements, and opening specialized housing finance branches. The circular consolidates all existing circulars on housing finance into a single document for ease of reference.
The document discusses the benefits of exercise for mental health. Regular physical activity can help reduce anxiety and depression and improve mood and cognitive function. Exercise causes chemical changes in the brain that may help protect against mental illness and improve symptoms.
This document discusses factoring, which is an arrangement where a firm sells its receivables to a financial institution called a factor. The factor then provides financing to the firm, maintains accounts/ledgers related to receivables, collects on receivables from customers on behalf of the firm, and assumes the risk of payment defaults by customers. There are different types of factoring arrangements depending on whether the firm retains liability for unpaid receivables. The key entities involved are the client firm, its customers who owe payment, and the factor.
This document provides an overview of leveraged buyouts (LBOs). It discusses that an LBO involves acquiring a company using a substantial amount of borrowed funds. It then summarizes the history and growth of LBOs from the 1980s through today. Finally, it outlines the typical structure of an LBO transaction including the types of debt and equity used, as well as exit strategies and criteria for evaluating potential LBO targets.
The document summarizes the evolution of India's takeover code, which regulates mergers and acquisitions. It discusses 3 key phases: [1] Before 1990, takeovers were regulated by various acts but hostile takeovers were almost impossible. [2] In 1990, amendments were made lowering the threshold for public offers to 10% and requiring disclosure at 5%, but issues remained. [3] In 1994, SEBI issued comprehensive takeover regulations, introducing provisions around negotiated deals, open offers, and minimum shareholding levels, though some conflicts existed. The takeover code aimed to increase transparency and shareholder protection during corporate acquisitions and control changes.
The document contains financial information about multiple companies including Educomp, Everonn, and Edserv Softsyst. It also contains valuation information for TARAhaat using different valuation methods at different points in time, showing changes in enterprise value, stake value, and internal rate of return. Finally, it shows historical revenue, EBITDA, net profit, and implied valuation multiples for several companies from FY09.
The document appears to be stock market data showing the monthly opening, high, low, and closing prices for a stock or index fund over a 24 month period from January 2007 to December 2008. It also includes columns for price to earnings ratio and price to book value for each month. The data shows the prices fluctuating each month with an overall decline from January 2007 highs to lows in late 2008 during the financial crisis.
The document discusses successful post-merger integration and realizing synergies between merged companies. It notes that while cost-cutting is often a focus, truly achieving synergies requires engaging employees from both companies. It recommends conducting cultural due diligence during mergers and involving employees from both companies in integration project teams. If done properly through clear vision, communication, and focus on cultural and human aspects, mergers can provide opportunities for growth and innovation rather than just reductions.
The document outlines details of a 20-year mortgage for $1,000,000 with a 10% interest rate and 240 monthly payments of $9,650.22. It shows the payment schedule, remaining balance, interest accrued, and remaining cost of the mortgage over the full repayment period. Extra lump sum payments of $20,000 are also noted to be applied to the principal, lowering the remaining balance and cost of the mortgage over time.
The document discusses business valuation methods like the market approach, comparable transactions approach, and sum-of-parts method. It then discusses the synergy trap that acquirers can fall into when pursuing acquisitions based primarily on projected synergies. Acquirers often overpay for acquisitions due to unrealistic synergy projections, setting high performance targets that acquired companies struggle to meet. Studies find that most acquisition programs fail financially due to paying too high a premium without considering integration challenges. The document emphasizes that acquirers must quantify required synergies upfront to justify paying acquisition premiums.
This document discusses various methods for valuing a business, including:
1) The asset approach values a business based on its assets and liabilities. The income approach values a business based on its expected future earnings by using methods like discounted cash flow analysis.
2) The market approach values a business based on comparisons to similar publicly traded companies.
3) Key aspects of valuation methods are discussed in more detail, including calculating cost of capital and dealing with factors like control premiums and discounts.
4) The document emphasizes that valuation requires significant judgment and there may be different values depending on strategic interests and other factors.
The document discusses corporate restructuring in the cement and tea industries in India. It provides three key points:
1) The cement industry in India is highly fragmented with many small players having excess capacity, leading to consolidation in the industry through mergers and acquisitions. The market share of the top six cement companies in India increased from 40.1% in 1997 to 50.5% in 2001.
2) For the tea industry, the document analyzes costs at different stages of the value chain from tea gardens to packaged tea and loose tea wholesalers. It finds operating margins are negative for auctioned tea but range from 7.5-12% for downstream processed and packaged tea.
3)
Corporate restructuring involves identifying the best option to address a company's challenges and opportunities, valuing potential gains, and navigating legal and regulatory issues. The goals are to achieve corporate objectives, unlock value, and fulfill stakeholder needs through internal restructuring, external restructuring, and aligning manager and owner interests. Case studies of companies like Reliance Industries and BP illustrate how vision statements guide restructuring efforts to maximize long-term shareholder value.
The document contains stock market data for various companies from January 2004 to June 2004 including daily closing values and percentage changes. It also includes beta values for some companies compared to the Nifty index for various years. The table shows fluctuations in stock prices on a daily basis with some general upward and downward trends over the period.
The document provides operational and financial projections for TARAhaat Information & Marking Services Limited from FY 2010-11 through FY 2017-18. Key highlights include an expected increase in the number of TARA Kendras (training centers) from 391 in FY 2011 to over 10,000 by FY 2018 along with growth in total revenue from INR 80 million to over INR 3 billion. While losses are projected in early years, the company expects to become profitable by FY 2014 with net profits growing over 25% annually through FY 2018. The projections assume continued expansion of training centers and programs along with increasing student placements and associated revenues.
TEST BANK Principles of cost accounting 17th edition edward j vanderbeck mari...Donc Test
TEST BANK Principles of cost accounting 17th edition edward j vanderbeck maria r mitchell.docx
TEST BANK Principles of cost accounting 17th edition edward j vanderbeck maria r mitchell.docx
TEST BANK Principles of cost accounting 17th edition edward j vanderbeck maria r mitchell.docx
13 Jun 24 ILC Retirement Income Summit - slides.pptxILC- UK
ILC's Retirement Income Summit was hosted by M&G and supported by Canada Life. The event brought together key policymakers, influencers and experts to help identify policy priorities for the next Government and ensure more of us have access to a decent income in retirement.
Contributors included:
Jo Blanden, Professor in Economics, University of Surrey
Clive Bolton, CEO, Life Insurance M&G Plc
Jim Boyd, CEO, Equity Release Council
Molly Broome, Economist, Resolution Foundation
Nida Broughton, Co-Director of Economic Policy, Behavioural Insights Team
Jonathan Cribb, Associate Director and Head of Retirement, Savings, and Ageing, Institute for Fiscal Studies
Joanna Elson CBE, Chief Executive Officer, Independent Age
Tom Evans, Managing Director of Retirement, Canada Life
Steve Groves, Chair, Key Retirement Group
Tish Hanifan, Founder and Joint Chair of the Society of Later life Advisers
Sue Lewis, ILC Trustee
Siobhan Lough, Senior Consultant, Hymans Robertson
Mick McAteer, Co-Director, The Financial Inclusion Centre
Stuart McDonald MBE, Head of Longevity and Democratic Insights, LCP
Anusha Mittal, Managing Director, Individual Life and Pensions, M&G Life
Shelley Morris, Senior Project Manager, Living Pension, Living Wage Foundation
Sarah O'Grady, Journalist
Will Sherlock, Head of External Relations, M&G Plc
Daniela Silcock, Head of Policy Research, Pensions Policy Institute
David Sinclair, Chief Executive, ILC
Jordi Skilbeck, Senior Policy Advisor, Pensions and Lifetime Savings Association
Rt Hon Sir Stephen Timms, former Chair, Work & Pensions Committee
Nigel Waterson, ILC Trustee
Jackie Wells, Strategy and Policy Consultant, ILC Strategic Advisory Board
OJP data from firms like Vicinity Jobs have emerged as a complement to traditional sources of labour demand data, such as the Job Vacancy and Wages Survey (JVWS). Ibrahim Abuallail, PhD Candidate, University of Ottawa, presented research relating to bias in OJPs and a proposed approach to effectively adjust OJP data to complement existing official data (such as from the JVWS) and improve the measurement of labour demand.
University of North Carolina at Charlotte degree offer diploma Transcripttscdzuip
办理美国UNCC毕业证书制作北卡大学夏洛特分校假文凭定制Q微168899991做UNCC留信网教留服认证海牙认证改UNCC成绩单GPA做UNCC假学位证假文凭高仿毕业证GRE代考如何申请北卡罗莱纳大学夏洛特分校University of North Carolina at Charlotte degree offer diploma Transcript
Confirmation of Payee (CoP) is a vital security measure adopted by financial institutions and payment service providers. Its core purpose is to confirm that the recipient’s name matches the information provided by the sender during a banking transaction, ensuring that funds are transferred to the correct payment account.
Confirmation of Payee was built to tackle the increasing numbers of APP Fraud and in the landscape of UK banking, the spectre of APP fraud looms large. In 2022, over £1.2 billion was stolen by fraudsters through authorised and unauthorised fraud, equivalent to more than £2,300 every minute. This statistic emphasises the urgent need for robust security measures like CoP. While over £1.2 billion was stolen through fraud in 2022, there was an eight per cent reduction compared to 2021 which highlights the positive outcomes obtained from the implementation of Confirmation of Payee. The number of fraud cases across the UK also decreased by four per cent to nearly three million cases during the same period; latest statistics from UK Finance.
In essence, Confirmation of Payee plays a pivotal role in digital banking, guaranteeing the flawless execution of banking transactions. It stands as a guardian against fraud and misallocation, demonstrating the commitment of financial institutions to safeguard their clients’ assets. The next time you engage in a banking transaction, remember the invaluable role of CoP in ensuring the security of your financial interests.
For more details, you can visit https://technoxander.com.
The Impact of Generative AI and 4th Industrial RevolutionPaolo Maresca
This infographic explores the transformative power of Generative AI, a key driver of the 4th Industrial Revolution. Discover how Generative AI is revolutionizing industries, accelerating innovation, and shaping the future of work.
Economic Risk Factor Update: June 2024 [SlideShare]Commonwealth
May’s reports showed signs of continued economic growth, said Sam Millette, director, fixed income, in his latest Economic Risk Factor Update.
For more market updates, subscribe to The Independent Market Observer at https://blog.commonwealth.com/independent-market-observer.
Vicinity Jobs’ data includes more than three million 2023 OJPs and thousands of skills. Most skills appear in less than 0.02% of job postings, so most postings rely on a small subset of commonly used terms, like teamwork.
Laura Adkins-Hackett, Economist, LMIC, and Sukriti Trehan, Data Scientist, LMIC, presented their research exploring trends in the skills listed in OJPs to develop a deeper understanding of in-demand skills. This research project uses pointwise mutual information and other methods to extract more information about common skills from the relationships between skills, occupations and regions.
A toxic combination of 15 years of low growth, and four decades of high inequality, has left Britain poorer and falling behind its peers. Productivity growth is weak and public investment is low, while wages today are no higher than they were before the financial crisis. Britain needs a new economic strategy to lift itself out of stagnation.
Scotland is in many ways a microcosm of this challenge. It has become a hub for creative industries, is home to several world-class universities and a thriving community of businesses – strengths that need to be harness and leveraged. But it also has high levels of deprivation, with homelessness reaching a record high and nearly half a million people living in very deep poverty last year. Scotland won’t be truly thriving unless it finds ways to ensure that all its inhabitants benefit from growth and investment. This is the central challenge facing policy makers both in Holyrood and Westminster.
What should a new national economic strategy for Scotland include? What would the pursuit of stronger economic growth mean for local, national and UK-wide policy makers? How will economic change affect the jobs we do, the places we live and the businesses we work for? And what are the prospects for cities like Glasgow, and nations like Scotland, in rising to these challenges?
Ending stagnation: How to boost prosperity across Scotland
Buffett
1. Buffett: Rock Star of American Capitalism: Knowledge@Wharton (http://knowledge.wharton.upenn.edu/article.cfm?articleid=2284)
Buffett: Rock Star of American Capitalism
Published : July 15, 2009 in Knowledge@Wharton
Warren Buffett's rock star status is evident from the fact that each year tens of
thousands of fans from all over the world travel to Omaha, Nebraska, to listen to
him speak at his company Berkshire Hathaway's shareholder meeting. For many at
this event, which Buffett calls the "Woodstock for Capitalists," it is an annual ritual
of paying homage to the man who made them money through Berkshire's stock and
from his investing and business insights. Little wonder that Alice Schroeder's
insightful biography titled, The Snowball: Warren Buffett and the Business of Life,
has proved popular among readers. She seeks to explain how Buffett became one
of the world's richest men and why he is admired for his business ethics and for
uniquely pledging most of his money to philanthropy.
Buffett's annual letters to shareholders (see Warren Buffett's Letters to Berkshire This is a single/personal use copy
Shareholders on berkshirehathaway.com) are widely read. The letters analyze good of Knowledge@Wharton. For
multiple copies, custom reprints,
and bad businesses, give examples of managers who treat customers and employees e-prints,contact PARS
please
posters or plaques,
International:
fairly while also making good profits, and expose accounting tricks that fool many reprints@parsintl.com P. (212)
221-9595 x407.
investors. Some letters have noted that executives should be paid bonuses only if
their company's long-term performance is better than that of industry peers; others
have warned of looming disasters – such as the red flag he raised about derivatives morphing into
"weapons of mass financial destruction." During the subprime mortgage crisis that led to the global
financial collapse, one of Buffett's letters pointed out that rich people like him should be made to pay a
higher tax rate than wage earners like his secretary.
Buffett's most important act has been to donate much of his wealth to the Gates Foundation, to be spent
over 20 years mainly on health care and education. As he states: "The idea of passing wealth from
generation to generation so that hundreds of your descendants can command the resources of other people
simply because they came from the right womb flies in the face of a meritocratic society." Also, unlike
most other philanthropists, Buffett has not set up a foundation nor paid for buildings at hospitals or
museums to try to perpetuate his name.
Rational Money Machine
By the late 1970s, according to an earlier biography, Buffett had spent $15.4 million to buy 46% of
Berkshire, including 3% for his wife Susan, paying an average $32.45 per share. (See Roger Lowenstein,
Buffett: The Making of an American Capitalist.) With Berkshire stock recently around $87,200, Buffett
has grown his wealth nearly 3,000-fold in some 30 years. This massive capital accumulation is based on
an investment discipline he learned from Benjamin Graham. Buffett's approach to investment involves
using seventh grade math and common sense to analyze a company's underlying economics; buying a
business not a stock; ignoring the fluctuations of the stock market; and, most importantly, maintaining a
margin of safety.
After initially attending business school at Wharton, Buffett got his MBA degree from Columbia
University in 1951 so that he could study under Graham. Buffett modified Graham's process of holding a
widely diversified portfolio of statistically cheap stocks, and made concentrated investments in a few easy
to understand, stable, growing businesses run by good, shareholder-friendly managers. Berkshire's
earnings and value have risen due to a mutually reinforcing combination of investing the policy premiums
of its insurance and re-insurance operations in buying companies such as See's Candies, Borsheim's fine
jewelry and electric utility MidAmerican Energy, and investing their free cash flow, low turnover and
hence low taxes on investments like The Washington Post, Coca-Cola, American Express and Procter &
Gamble. Of course, the mathematical magic of compounding gains over time have also helped Berkshire
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2. Buffett: Rock Star of American Capitalism: Knowledge@Wharton (http://knowledge.wharton.upenn.edu/article.cfm?articleid=2284)
Hathaway multiply its wealth.
Buffett's three rules of portfolio management are: 1) Don't lose money; 2) Don't forget rule one and 3)
Don't go into debt. His focus, an intellect which is a perpetual learning machine, rationality, confidence
and an ambition from childhood to become rich are identified by Schroeder and others as personal traits
that drove his success. Moreover, he attracts talented people to work, partner and deal with him due to his
honesty, fairness, letting them do their job without interference and crediting them for success.
Buffett freely acknowledges making several errors. The biggest was his purchase of Dexter Shoes for
$433 million in 1993, and then compounding the error by paying with 1.6% of Berkshire stock,
effectively costing shareholders more than $2.2 billion at the current stock price. Also, following years of
losses, Buffett liquidated Berkshire's original textile operations in 1985. While the textile business
provided the capital for entry into the insurance business -- "the cornerstone of Berkshire," as Buffett
puts it -- the employees who lost their jobs got minimal severance compensation.
Obviously Buffett's successes are far more numerous than his failures. In the stock market, notes
Schroeder, his strategy has been strict adherence to Graham's main principle of margin of safety. In frothy
bull markets, Buffett is fearful while others are greedy, taking profits on some holdings and piling up the
cash generated by Berkshire's businesses. For instance, Berkshire sold its stake in PetroChina for $4
billion in 2007 amid rapidly rising oil prices and the craze for investing in emerging markets, having
bought it in 2002 and 2003 for $488 million. Then, during severe stock market or industry declines, he is
greedy when others are fearful, buying good businesses at attractive prices. His reputation and large cash
holdings also get Berkshire favorable terms, which benefited him in deals with Goldman Sachs and
General Electric during last year's stock market panic.
Lucky Man
While the likeable qualities of Buffett have been widely publicized, Schroeder reveals a far more
complex person who caught some lucky breaks. In the 1940s, while a teenager, Buffett avoided getting
caught while repeatedly stealing things like golf balls and clubs from a Sears store in the Washington,
D.C., area. The family lived there while his father, Buffett's close friend and role model, served as an
ultra conservative Republican Congressman from Nebraska. Buffett was a street smart teenager, not
getting into any trouble while buying coin operated pinball machines and installing them in barber shops
in poor neighborhoods, with whose owners he split the money from the machines.
Later, in the mid 1970s, he got lucky again over Securities and Exchange Commission charges about his
purchases of Wesco Financial stock, after the failure of a buyout attempt. The failure was engineered by
Buffett and partner Charles Munger since they wanted to buy Wesco, which they ended up doing. In
1976, one of their companies paid a $115,000 fine to settle with the SEC, without admitting or denying
any wrongdoing. Buffett avoided being named and fined, a potentially "terrible, irreversible damage" on a
budding reputation. Two weeks after the settlement, the SEC put Buffett on a panel to study corporate
disclosure practices.
The SEC settlement led Buffett and Munger to dissolve their structure of interlocking partial ownerships
in numerous businesses, eventually folding them all into Berkshire. While Schroeder writes that Buffett
got the idea for the structure from another investor he admired, the question remains whether Buffett was
also attempting to minimize paying taxes by copying what the late Jay Pritzker, one of his business idols
whose family owns the Hyatt Hotels, was then doing through a maze of holdings.
Right Side of the Edge
Buffett criticizes the high fees charged by investment managers, especially of hedge and private equity
funds. Last year, he took a bet with a fund of hedge funds predicting its high fees would result in
long-term performance worse than that of the S&P 500 Index. (See: "Buffett's Big Bet," Fortune, June 9,
2008.) Yet, Buffett himself accumulated much of his initial capital from the fees he charged a hedge
fund-type partnership, pocketing half the gains over 4%. Buffett's partnership began in 1957 with
$105,000 from family and friends and only $100 of his own money. When he closed it in 1969, Buffett's
share was $26.5 million of the partnership's $100 million in assets, entirely due to the retention and
compounding of his fees on a growing asset base. However unlike the high fee-charging fund managers of
today, Buffett also agreed to bear a quarter of the losses, which he did not have to do since his partnership
All materials copyright of the Wharton School of the University of Pennsylvania. Page 2 of 4
3. Buffett: Rock Star of American Capitalism: Knowledge@Wharton (http://knowledge.wharton.upenn.edu/article.cfm?articleid=2284)
today, Buffett also agreed to bear a quarter of the losses, which he did not have to do since his partnership
had a 31% compound annual gain over its 12-year life.
In the 1980s, Buffett publicly opposed the greenmail tactics of corporate raiders who threatened to
dislodge management but went away if the company bought their stock, enabling them to make a profit.
Some of Buffett's investments for his partnership were also made based on the expectation that
managements would buy back his stock at a higher price. In fact, in 1965 he would have sold his stock in
Berkshire Hathaway, then a Massachusetts-based high cost manufacturer in the declining textiles
business, had he not been angry at being offered 12 cents less, $11 3/8 per share instead of the $11 ½
promised by the management. The greenmail operators often pushed company managements to take on
huge debt to finance the buy back of only their stake. In contrast, Buffett's activism was aimed at
companies which could enhance shareholder returns by using the cash or other assets not reflected in the
deeply undervalued share price.
By 1989, Berkshire owned 6% of Coca-Cola stock, then worth about $1.2 billion. Coke was Berkshire's
largest holding and Buffett joined Coke's board. In the mid 1990s, after Coke's stock had risen by several
multiples, Coca-Cola chief executive Roberto Goizueta was promising mid- to high-teens earnings
growth to Wall Street analysts. But as Schroeder writes, by then Goizueta was using financial engineering
to "maintain the illusion of the company's rapidly rising earnings flow." Schroeder writes that Buffett
knew Coke was buying and selling bottlers in order to time the profits and boost earnings.
This was "neither illegal nor technically deceitful," observes Schroeder, and Buffett remained silent about
it on the board. Buffett says Goizueta "was just not a guy you questioned," adding that "as a board
member, you can do practically nothing." His son, Howard Buffett, who was on the board at Berkshire as
well as Coca-Cola Enterprises, the major Coke bottler, said, "he had no problem challenging Coca-Cola
on behalf of CCE." But Howard eventually got off the CCE board, says Schroeder, since "there was just
too much potential for conflict between the CCE and Berkshire board." What kind of conflicts? Did
Buffett also face any conflicts since he was running Berkshire and was on Coke's board?
Since 1993, Buffett has argued for the expensing of stock options, which many chief executives liberally
give as incentives and bonuses to themselves, other managers and employees. Only in 2002, going against
the views of most CEOs, Buffett found the time was right to push Coke's board to make it the first major
company to expense stock options. Coke's action, which was allowed but not required by accounting
rules, was soon followed by the boards of The Washington Post, Microsoft and others. Buffett draws a
token $100,000 annual salary from Berkshire and awards himself or other managers no stock options,
grants or warrants.
Personal and Family Life
Schroeder confirms that Buffett owns no fancy houses, cars or yachts. He wears cheap clothes, craves
hamburgers, French fries and cherry Coke and appears awkward in social situations. Buffet also spends
hours playing bridge online, enjoys golf, handball and table tennis and plays the ukulele. Schroeder
describes Buffett as a showman who avoids confrontation and hides his true opinions behind coy remarks,
if being blunt may hurt his business or other relationships.
In his family life, writes Schroeder, since Buffett was consumed with his work -- "a sort of holy mission"
to find more ways to make more money -- he had little extra time for his wife and three kids. "While he
was friendly with his kids, he hadn't really gotten to know them" while they were growing up at home in
Omaha. On occasion Buffett's secretary blocked even his family's access to him, not on explicit but on
implicit orders, a typical Buffett method of operating, notes Schroeder.
In the 1970s, while his youngest child was in high school, Buffett found time to go to black tie parties at
embassies in Washington, D.C., and mansions on Fifth Avenue in New York where they mostly served
French food. He went to these events accompanying Kay Graham, then publisher of The Washington
Post. Schroeder uses Buffett's term, "elephant bumping," to describe these events.
In 1978, after all the children had grown and left home, his wife Susan moved to live permanently in San
Francisco. In addition to being a nurturing mother and generous with time and money to friends and
strangers in need, Susan boosted Buffett's confidence, enhanced his people skills and expanded his social
conscience, Schroeder notes. Susan wanted him to stop being consumed with making more money once
All materials copyright of the Wharton School of the University of Pennsylvania. Page 3 of 4
4. Buffett: Rock Star of American Capitalism: Knowledge@Wharton (http://knowledge.wharton.upenn.edu/article.cfm?articleid=2284)
conscience, Schroeder notes. Susan wanted him to stop being consumed with making more money once
he had made his initial millions. His actions that led Susan to leave their home in Omaha are the major
regret of Buffett's life, Schroeder writes. Later in 2003, while helping care for Susan, who was being
treated for cancer, Buffett, 73, told a group of students at Georgia Tech: "If you get to my age in life and
nobody thinks well of you, I don't care how big your bank account is, your life is a disaster." In 2006,
Buffett married longtime companion Astrid Menks.
Unlike most other capitalists, Buffett believes that children should not inherit money just because of the
lottery of their birth. He says children should be left "enough money so that they feel they could do
anything, but not so much that they could do nothing." Implementing his views, in June 2006 Buffett
announced the donation of 85% of Berkshire stock, then worth about $40 billion. Five sixths of the shares
were to go to the Bill and Melinda Gates Foundation and the rest to foundations run by his three children
– including one named "Sherwood," after the forest in the Robin Hood story -- and one named after his
late wife Susan. Buffett also plans to give his remaining Berkshire shares to philanthropy.
As with his business projects, in philanthropy Buffett has found willing partners in Bill and Melinda Gates
to try and fulfill shared goals of eradicating major diseases like malaria and HIV/AIDS in developing
countries, and improving high school education standards in the U.S. Buffett and Bill Gates, friends since
1991, were one and two on the Forbes list of the world's richest people in 2008. Buffett's views on
inheritance and on capitalists giving their money back to society, to which he believes they owe their
wealth in the first place, influenced Bill and Melinda Gates to set up their foundation. "Buffett's ideal was
a world in which winners were free to strive, but narrowed the gap by helping the losers," writes
Schroeder. The Gates foundation had around $30 billion before Buffett began adding his billions.
Melting Snowball
According to Schroeder, Buffett has often spoken with other wealthy people about the poor history of
most foundations, where managers stray from the vision of deceased donors or, even worse, use the
money for their own goals and salaries. So, while Buffett expresses confidence in the Gates Foundation
and others he is donating to, his plan forces them to spend his money as they receive it each year over 20
years. It is one of the few philanthropic donations where the money will run out relatively quickly,
contrary to the self-interest of foundation bureaucracies to survive as long as they can.
Other self-made American billionaires who are known to have pledged much of their wealth in their
lifetimes include George Soros and Charles Feeney. Funding by the Soros Foundation, set up by the
highly successful hedge fund manager, is said to have helped undermine the apartheid regime in South
Africa and communist rulers in the former Soviet Union and Eastern Europe. (See Soros on Soros.)
Feeney, a founder of the duty free shopping business, is said to have played a major role in bringing about
peace in Northern Ireland. Since 1982, unknown to even his close friends, Feeney had given away more
than $4 billion anonymously, including $600 million to his alma mater, Cornell University, and $1 billion
to schools in Ireland. Feeney owns no homes, flies coach and rides subways and cabs. Feeney's
foundation, which does not identify him in any way, plans to give away its remaining billions by 2017.
(See The Billionaire Who Wasn't, an authorized biography by Conor O'Clery.)
Schroeder was the only Wall Street analyst covering Berkshire whom Buffett spoke to before she began
writing this book. She was the first biographer to have full access to him, his family and his extensive
archives. She was also aware that "Buffett always avoided or limited his time with anyone he feared
might criticize him." Given these facts, Schroeder's work comes across as fair and honest, though it
would be a better read if at least 100 of its 976 pages were cut.
As Buffett has often noted, the American economy in the second half of the twentieth century provided
the ideal environment – lots of wet snow and a long hill to roll and grow his snowball -- for someone of
his skills, temperament and personality to become immensely wealthy. As Buffett's huge snowball quickly
melts, it should turn into a gushing stream that fulfills his philanthropic goals.
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