SF: Sequoia Fund
Q: Questioner
May 17, 2008

Note: No recording allowed. Notes are paraphrased.



http://tinyurl.com/5zkbxz
http://www.dailystocks.com/forum/showtopic.php?fid/21/tid/497/pid/735/post/last/\
#LAST

between 0000-00-00 and 9999-99-99  

Berkshire shareholders of all backgrounds and ages are invited to
attend the 2007 Yellow BRKer "Meet and Greet" party, to be held on
Friday, May 4, 2007 at the DoubleTree in downtown Omaha.

Hopefully, will be a wonderful opportunity to meet fellow Buffett
enthusiasts and enjoy the warmth of Omaha and fellow shareholders.

For full information please see:
http://www.YellowBRKers.com

Buffett Buying Iscar? Interesting Tax
by: berkiemanweb
Long-Term Sentiment: Strong Buy  05/17/06 12:19 pm
Msg: 333009 of 333208

Think Warren Buffett is paying $4 billion for Iscar? Think again

--------------------------------------------------------------------------------

Knight-Ridder Open
12:15 p.m. 05/17/2006


May 16, 2006 (Globes - Knight Ridder/Tribune Business News via COMTEX)
-- 1. What brought the world's biggest investor to Israel? The answer
is much simpler than people think: He found an investment that meets
his strict criteria in Israel's Tefen Industrial Park.

Having created substantial value for his investors for decades, Warren
Buffett has had difficulty continuing his success over the last two
years. The markets have been rising consistently, and the search for
long-term quality investments has become much more competitive. When
there's competition, prices rise, and yields go down, not the sort of
thing Buffett likes. And when Berkshire Hathaway Inc. (BRKA) (BRKB)
begins to falter, the need for investment outside the US grows ever
stronger.

This brings us to the investment in Iscar. On the face of it, Buffet
paid $4 billion for 80 percent of the Israeli metal cutting toolmaker
company. Why only on the face of it? Because in actual fact, the sum
was a great deal lower.

While the structure of the deal is not known, it seems that Buffett
has set up a local company that will acquire 80 percent of the
activity of Iscar from the Iscar group, controlled by the Wertheimer
family. The family will retain control over the old Iscar, which will
own 20 percent of the activity. In the next stage, a company will be
formed, into which Iscar's activity will be transferred (by both
sides), leaving Buffett with an 80 percent stake in the new company,
which will take in all Iscar's activity.

Buffett, therefore, is buying activity, rather than company stock. The
significance for tax is a benefit of around $1 billion over a 10 year
period. Why? Because income tax regulations allow the recognition of
amortization of goodwill on deals for acquisition of current activity
at an annual rate of 10 percent of the goodwill. Almost all the sum
paid for Iscar's activity will be attributed to goodwill, resulting in
an annual tax-deductible expense of $400 million. This expense will
generate a tax saving of $100 million, assuming an effective tax rate
of 25 percent for Iscar (for which it qualifies as a company with
approved enterprise status). $100 million over 10 years is the
expected saving, amounting to $1 billion.

That's not all. Buffett will probably be granted (quite rightly)
strategic investor status. This will mean that (subject investment in
plant), any increase in profit is tax free, and there will also be no
tax on capital gains or dividend distributions for 10 years. Iscar's
current profits are estimated at $400 million; the benefit for Buffett
will amount to several hundred million dollars at least.

To sum up: Buffett is actually getting 80 percent of Iscar for around
$2.5 billion. Iscar's value for Buffett will therefore total $3
billion, giving a profit multiple of 7.5, compared with multiples of
20 and 30 that his other companies have. This is why the legendary
investor didn't even bother to come to Tefen to close the deal. Anyone
would have seized the opportunity.

2. Buffett is the world's most important, best known, and most
respected investor. He is not just a successful investor; he has
become a real guru.

http://users.rcn.com/hpersson/WescoNotes2006.pdf

Oracle of Omaha offers words of wisdom
By: Georgina Russell, WG'07
Issue date: 2/27/06 Section: News





It had the makings of a perfect country song. A guy named "Lovelace"
from South Carolina drives 450 miles from Chicago at 110 miles an hour
on icy roads and hits a coyote along the way, all in the name of
"Omaha by Morning." But it wasn't rodeo or a long lost lover that
Lovelace was speeding through the boondocks for; it was the world's
greatest investor, Warren Buffett - and that's where the country music
ends, and Wharton begins.

Lovelace is none other than Blake Lovelace, the outgoing president of
the Investment Management club. Blake wasn't accompanied by a bull
rider or a bucking bronco, but by a Brit and trip organizer
extraordinaire, Timothy Viles and several other Wharton students. And
Blake wasn't driving a truck, but instead a mini-van. Although he did
sport a modestly sized monogram belt buckle, he traded in his boots
for a pair of New Balance running shoes.

The group of Wharton students was scheduled to arrive in Omaha, via
Chicago, by plane, Thursday evening. But after hours on the tarmac in
Philly and numerous cancellations of connecting flights in Chicago due
to poor weather, the students were left with no alternative but to
drive all night to get to Omaha by morning. The caravan left the
Chicago airport around 9pm, and made it into Omaha around 4am. They
"hit the hay" for a few hours of rest at the Crowne Plaza Omaha, and
got up in time for a 10am meeting at Berkshire Hathaway Headquarters.

Students met with Mr. Buffett at his office, where he did a formal
question and answer session for 90 minutes, after which the group
headed to lunch at Gorat's Steakhouse.

Buffett agreed to discuss anything except "what we're buying and
selling." While there were twelve questions asked during the formal
session, and many more over lunch, he emphasized three themes, which I
have termed: Do Something You Love, Realize how Lucky You Are, and
Investing Made Simple.


"It's in the Genes" - Do Something You Love and have a competency in

"Rose Blumkin," proclaims Buffett, "is my kind of woman."

Blumkin is the founder of what is now the Nebraska Furniture Mart. She
came to America not speaking a word of English, and with $500 she
started the business in 1937. Blumkin was smart, said Buffett, but
smarter about her "circle of competence." She knew furniture and
carpet, and stuck to those, because she had an advantage there. "Ms.
B" as he calls her, worked until she was 103, and died at 104.

"When I hire managers or buy owner operated businesses, I ask: Do they
love the money or love the business? If they love the business, then
they are jumping out of bed to go to work. You've got something in you
when you do something like Ms. B did. It's not just a high I.Q or
solid education. We have a number of managers who dropped out of high
school." These managers, Buffett says, have the "business gene," and a
love for what they do.

"Ms. B never spent much time at home - she was always at the store,"
Buffett recalled. She never had many people over to her home, but
Buffett visited her on occasion.
"She had little green price tags hanging from all of the furniture in
her house because it made her feel at home, she said. That's my kind
of woman."

"I think to some extent I have an investing gene," Buffett said, but
he was quick to point out, "I was very lucky in getting this gene at
this time and this place in the world's history."

"Having the investing gene wouldn't do much good," he said, "if I were
in Africa running from lions, screaming 'I allocate capital!'"
Which brings us to his next theme.


"The Ovarian Lottery" - Realize how lucky you are

Prompted by a question regarding the obligations of the wealthy to
society, Warren Buffett posed the following scenario to Wharton students.

Suppose a genie comes to you twenty four hours before you're born and
asks you to design the world into which you are going to be born - the
social rules, the political rules, and so on. The catch is that you
have to go to a barrel of six billion tickets, and pick one at random.
The ticket identifies what you will be when you enter this world, for
example, rich or poor, black or white, retarded or bright, male or
female. Given the "randomness" of this trait assigning process, what
kind of world would you want to design?

Buffett sees this process as analogous to the one we go through in
real life, which he has termed the "Ovarian Lottery." Given the
circumstances outlined by the genie, Buffett believes that first you
would want a "bountiful world," one with no system that stifles
capacity or production. Our country, he says, has done pretty well in
setting up equality of opportunity. Second, you would want a
prosperous and just society. He however pointed out that some people
are just not going to fit very well in any world you design. And
finally, you would want to minimize fear and terror in your society.
When setting policy, Buffett believes a rich society should make it a
policy goal to minimize the terror and fear experienced by its
members. After presenting us with his view of the "ideal world,"
Buffett asked rhetorically, "Did any of you males peek at your ticket
when setting policy? Any whites peek?"

Buffett emphasized that Wharton students should spend some amount of
time realizing how lucky we got with our "tickets," and asked, "Would
any of you go back to that theoretical barrel and pick out 100 tickets
at random, and then, after looking at each one, trade who you are
today for what's written on one of those 100?" He answered for us,
"Probably not."


"IN, OUT, and TOO HARD" - Investing Made Simple

Warren Buffett is arguably the world's greatest investor. And like
anyone who is an expert at something, be it an Olympic athlete, an
Academy Award winning actor or a world renowned musician, he makes his
craft seem easy.

When asked how he felt about Joel Greenblatt's recent bestseller, "The
Little Book that Beats the Market," Warren Buffett said "I agree with
buying good companies cheap." Sounds simple, but he also gave us a
well-known framework for doing it - a Benjamin Graham three-point
mantra, so to speak:

1) A stock is a piece of a business. If you don't want to own the
business don't buy the stock
2) Market is there to serve you not to instruct.
The market is a psychotic, drunk, manic depressive selling 4,000
companies everyday. "If you buy a farm, you look to the farm to
determine the value of your interest, not to some guy coming by giving
you a quote everyday."
3) Know your "Margin of Safety" with every investment.

That too, doesn't seem so difficult. So what's the catch? After
hearing it over and over again, not just from Warren Buffett but from
many of the experts who make their way through Wharton, you realize
it's not being able to say 1, 2, and 3, but to actually recognize and
act on them by identifying businesses you want to own, realizing when
the market is and isn't your friend, and knowing how to calculate your
margin of safety.

Perhaps the complexity in just doing 1, 2 and 3 is why Buffett looks
to minimize the difficulty he faces elsewhere, and invests exclusively
in businesses that are easy to understand. Business Wire, purchased by
Berkshire Hathaway in January, is a company that distributes over
1,000 corporate press releases a day to over 60 news agencies, and
charges a fee for it : simple. General Motors, on the other hand, is
something Buffett will never venture to understand, "It's too
complicated," he says.
"I have three boxes on my desk, IN, OUT, and TOO HARD," says Buffett.

Overall, this was a great trip, well worth risking life and limb on
I-80 to meet with the world's greatest investor.

http://www.investment-u.com/ppc/splash_rogers.cfm?kw=XVVIU282#timberland


     Sugar is now at almost 19 cents.

The co. was in bad shape when Buffett got it for 2.50 a share.

    He injected cash with covertabile bonds and saved it.

     They had strayed from their buissness model.

      It was not a great buiness when he got it.
      He has made a lot of buys like this.

      Am ex and Gillite were in a bad fix when he got in.

       Buffett makes sure that the assets will cover the bonds in
bankrupcy.


       Reason he got US AIR. Did not work out.

http://216.239.51.104/search?q=cache:GxEsfMNwGagJ:msnbc.msn.com/id/10710991/from\
/RL.4/+jim+rogers+and+refco&hl=en&gl=us&ct=clnk&cd=3&client=firefox


     Even the experts can get taken by fraud.

<img src="http://www.azstarnet.com/ss/2006/01/17/111650-1.jpg">

[relayed by brknews] here's the photo

Billionaire investor Warren Buffett impressed local Geico employees
with his homespun nature and stories of how he got his riches.

Here's the url, in case the photo doesn't show up.
  <img src=http://www.azstarnet.com/ss/2006/01/17/111650-1.jpg>
http://www.azstarnet.com/allheadlines/111650

- mike

----- Original Message -----
From: iluvbabyb
To: chucks_angels@yahoogroups.com
Sent: Tuesday, January 17, 2006 3:45 AM
Subject: [chucks_angels] Buffett in a Lime-Green Hawaiian Shirt

Now that's an outfit I'd luv to have seen ;-) Tidbits from Arizona
Daily Star:

Billionaire investor Warren Buffett visited Tucson on Monday to
deliver ice cream bars to Geico employees whose local call center
led the company in sales growth in 2005.

Buffett chatted with workers, posed for photos, autographed clothing
and dollar bills, and brought Dairy Queen Dilly Bars for everyone.
Geico, an insurance company, and International Dairy Queen Inc. are
subsidiaries of Berkshire Hathaway Inc., a holding company which
Buffett leads as chairman and CEO.

Buffett had promised to visit the Geico call center that won the
company's 2005 sales competition, said Martha Furnas, the Geico
assistant vice president who oversees the company's Tucson service
center.

Tucson employees earned first place, and on Monday, Buffett
delivered on his promise. Roughly 500 local employees received a
metaphorical pat on the back from Buffett. Quite a few received a
real one, too. He was hard to miss. Surrounded by navy and black
business suits, the 75-year-old Buffett wore a lime-green Hawaiian
shirt with a design featuring dozens of geckos. (A talking, animated
gecko serves as a spokeslizard in Geico's television
advertisements.)

Outdoors on a morning that was chilly by Tucson standards, Buffett
posed in his shirtsleeves for photos with employees and waved off an
offer of a jacket.

"I don't need that," Buffett said good-naturedly.

Geico employees said Buffett lived up to his reputation as someone
whose wealth hasn't robbed him of a folksy, plain, Midwestern
style. "He's just warm and open," Furnas said. "I don't think you
can find anyone more down-to-earth. I guess you could call it
homespun."

Michael Spaulding, sales and service director for Geico in Arizona,
said Buffett told Tucson employees about the first time Buffett set
foot in a Geico office - in 1951. It was a Saturday, and Buffett was
a graduate economics student at Columbia University. Only one person
was at work at Geico that day - one of the company's top executives -
  but he invited Buffett in, and they talked about the business.
Buffett was so impressed, Spaulding said, he started telling others
to invest in the company.

Buffett had a net worth of $44 billion in 2005, according to Forbes
magazine's annual list of the world's wealthiest individuals. He
trailed only Microsoft co-founder Bill Gates.

Geico opened its Tucson call center in March 2003. Tucson employees
won the national contest with a 17 percent increase in number of
policies in force, Furnas said.

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http://www.gurufocus.com/score_board.php

Marty owns GMAC bonds at 10-11% ytm. He also thinks GM might have to
file Chapter 11.

Full notes from the meeting.

http://groups.yahoo.com/group/marty_whitman_club/

http://www.ticonline.com/buffett.partner.letters.html

   Also all of Ben Graham,s letters to stk holders. Hit home at bottom
to got to web site.

http://www.freemarketnews.com/Analysis/102/3420/2006-01-11.asp?wid=102&nid=3420

OID.com - Vinvesting.com-Guru Focus.com - Focus Investor.com

   Buffett secrets.com  - Sandmans place.com


     JIm Rogers may have lost 362 mil. in the Refco scam.

     Bull by Maggie Mahar - best book ever on stock markst.

     Howestreet.com has some good Guru interviews.

     SmartMoney.com has a very good IV calulator.

     Money Chimp.com has all the Guru calculators.

     StingyInvestor.com has good Ben Graham info.

      Nasdaq.com has a good Ben Graham stock screen.

      GrahamInvestor.com has lots of Graham screens and info.

       Graham had several ways of screening for stocks.

         Value or Value Trap that is the key.Look at Pier One  ,a Lou
Simpson buy.He runs Gieco for BRK.  Graham never bought money losing
co.s or ones with poor balance sheets.

http://www.leithner.com.au/circulars/circular2.htm

Do you know how to screen for accounting fraud at data centers ?

    Footnoted.org is a good site for footnotes .So many stocks like AOL
and Boston Chicken were frauds.The SEC does very little to stop
it.There is S&P CORE earning ,also.  10K Wizard-- can you use it?It
looks like it has a lot of info. Also do you use Lexus/nexus? Howard
Shilitz has a book on it.

This transcript is for fellow value investing group members only.
Please do not distribute to other groups because of copyright

issues. Thanks.

Transcript of a Video Interview on Bloomberg (Jan. 3, 2006 13:50 PM)
B - stands for Bloomberg
J - stands for Joel Greenblatt

B:  What are some of the  best companies in the market that are
trading at bargain prices? We have here Joel Greenblatt, managing

partner of Gotham Capital and author of Little Book that Beats the
Market. We welcome Joel and thank you for joining us.What is the

strategy in the book?
J:  Well, we try to make it as simple as possible.  We test 2 things
over 17 years.  We asked, "What happens if we only buy the good

companies?"  If you have a store that earns 200,000 dollars on 400,000
dollars of cost, it has 50% returns on capital. If you have

another store that also costs 400,000, but returns 10,000 that is 2.5%
return on capital. We ranked them based on the return on

capital. 50% return on capital is better than 2.5%.  And then we
ranked the companies based on cheapness.  We combined the two and

Over 17 years,the strategy did 30% a year.
B: How did the strategy do in 2005?
J: Last year, it beat the market by 10-11 points following this
strategy. The reason I believe this strategy will continue to work

even though I am such a blabbermouth is that it does not always work
[every year]. Value investing will underperform in 1, sometimes

even 3 years. But over longer term, say 3-5 years, it will beat the
market significantly.
B: One of the companies in your list is Walmart. Today it announced
sales came on the lower end of expectations, and stock is down

14% over the last 12 months.  Why would it be favored? Is that based
on the longer term view?
J: If you ranked the large companies by returns on capital, Walmart is
a great business. Every store it opens makes a lot of money

and generates a very good return on its cost.  It's a good and cheap
company. In addition, it is trading at 15 times P/E net of cash.

  It has pretty good, not as good as in the past, but still excellent
growth prospects.
ah, wmt really if you rank large cos, just by criteria, do they earn
high roc . every store they open makes a lot of money. that's

very cheap for a company like this.  it's a good anc cheap company.
B: I know that Viacom is also on your list, which is in the news today
because of it is splitting into two companies.
J: Viacom came up on the list as the combined company [before the CBS
spin-off]. We would have to look at these two companies

separetly [now that they are separate]. The big picture is that Viacom
is not as cheap as the other companies but it is interesting

because of this spin-off. Relatively, it is cheap and splitting the
company in two will bring it closer to fair value.
B: Were there any headwinds that made last year's returns only 11
percent versus the last few years.
J: I have no idea. In the short term, the market will do anything but
over the long term, it will trade for what it is worth and that

is what you get.
    Walmart is cheap.  Microsoft is cheap. Another company that has
come up is Autozone (AZO) and it is the first time in 25 years

that large caps have come up cheapest out there.[Disclosure:
Greenblatt and related entities own Autozone at the time of interview.]
B: Micrososft(MSFT).  I have to challenge you on that. It's been dead
money for a long time, even though it comes out as your pick.
J: That is what makes it great.  A lot of these stocks that come up on
the screen have something wrong with them. Microsoft stock has

gone nowhere for the last five years, but earnings have increased
significantly. So it actually makes this company cheap.  What

matters is not the past, but what will happen next year.
B: Lexmark (LXK)
J: LXK is interesting biz. They make printers and compete with
Hewlett-Packard. The ink business is a great business. Printing is a

money losing business. They had short term problems that caused them
to lose money last year. It is cheap relative to its future

prospects.

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"Michal Karsch - Long Renault. Thinks that the selling in the auto
sector is overdone, and that people will continue to use cars."

Now ya gotta admit... that's funny. :-)) LOL!

Mike

yes, i was there.

Did you attend the dinner?
Could you corroborate Chanos position?
Thanks in advance
MD

Please, which NYC Hedge Fund was it?
Could someone corroborate Chanos position?

--- In buffett_munger_berkshire_shareholders@yahoogroups.com,
"benbyrnes" <benbyrnes@y...> wrote:
>
> Stock Picks from Chanos, Gabelli and Michael Karsch (Karsch Capital
Group)
> Jim Chanos - Short on PRTY (PartyGaming). This company is part of the
> poker craze.  It is based in Gibraltar and the background of
> management is questionable.  Nielsen ratings are showing single-digit
> to double digit declines of poker TV shows (the only exception is
> ESPN's poker show). Chanos says this is often a leading indicator as
> it happened with Martha Stewart.  Interesting story: He recently heard
> there is a firm in NYC who hires quants from Oxford and India to play
> online poker and make money for the firm.  Crazy?
> Mario Gabelli - Long on Danone Yogurt (Symbol: DA).  Wellness and
> convenience is growing around the world.  The yogurt is a 45 Billion
> industry. Danon is selling for 21$, growing revenues 6-10%
> organically, and cash flow will grown 12%. Danon's sales in China is
> $1 billion dollars and growing rapidly. (Joked that people should
> short Brewers, Bucks as he was ribbing Chanos who hails from Milwaukee
> and is short many of the stocks Gabelli is long.)
> Michal Karsch - Long Renault.  Thinks that the selling in the auto
> sector is overdone, and that people will continue to use cars. Renault
> owns Nissan.  Also picked Omnicare, which just purchased the largest
> competitor that increased its market share to 50%. Payor mix has
> significantly improved.
>
> Interestingly, the 2 long ideas were outside of the US. Danone and
> Renault.
>

Stock Picks from Chanos, Gabelli and Michael Karsch (Karsch Capital Group)
Jim Chanos - Short on PRTY (PartyGaming). This company is part of the
poker craze.  It is based in Gibraltar and the background of
management is questionable.  Nielsen ratings are showing single-digit
to double digit declines of poker TV shows (the only exception is
ESPN's poker show). Chanos says this is often a leading indicator as
it happened with Martha Stewart.  Interesting story: He recently heard
there is a firm in NYC who hires quants from Oxford and India to play
online poker and make money for the firm.  Crazy?
Mario Gabelli - Long on Danone Yogurt (Symbol: DA).  Wellness and
convenience is growing around the world.  The yogurt is a 45 Billion
industry. Danon is selling for 21$, growing revenues 6-10%
organically, and cash flow will grown 12%. Danon's sales in China is
$1 billion dollars and growing rapidly. (Joked that people should
short Brewers, Bucks as he was ribbing Chanos who hails from Milwaukee
and is short many of the stocks Gabelli is long.)
Michal Karsch - Long Renault.  Thinks that the selling in the auto
sector is overdone, and that people will continue to use cars. Renault
owns Nissan.  Also picked Omnicare, which just purchased the largest
competitor that increased its market share to 50%. Payor mix has
significantly improved.

Interestingly, the 2 long ideas were outside of the US. Danone and
Renault.

Thanks for posting these notes. I didn't get a chance to attend.