Whitney Tilson on the events in Omaha; Warren Buffett’s ‘ringmaster’ turns grand ideas into reality; Oriental Trading; Curtis Macnguyen is a former hedge fund star; The Divide; Jon Stewart; no, the banks aren’t losing; the $9B witness: meet JPMorgan’s worst nightmare.

Whitney Tilson: Berkshire Hathaway annual meeting

1) On Friday I’m flying to Omaha to attend my 17th consecutive Berkshire Hathaway annual meeting. I’m especially looking forward to it this year for two reasons: first, it’s the 50th anniversary of the year Buffett took control of Berkshire, so the carnival should be bigger than ever; and second, it’s the first time one of my children is attending (my oldest of three daughters, a 19-year-old college freshman, is flying in from Minneapolis).

If you’re going to be there as well, I’d like to invite you to three events on Friday evening, Saturday afternoon, and Sunday morning, all in the St. Nicholas Room at the Omaha Hilton:

1)    My friend Chuck Gillman and I are hosting our annual cocktail party from 8pm-midnight on Friday, May 1st. No agenda, no speeches, no dress code – just come, enjoy the drinks and snacks, and meet other value investors.

2)    Chuck and I are also hosting a casual get-together immediately following the annual meeting on Saturday, May 2nd – just walk across the street or take the skybridge to the Hilton. It will end around 6pm.

3)    On Sunday morning, May 3rd from 8-10am I will host my annual breakfast for investors and prospective investors in my funds. I will give a presentation and then take questions.

To RSVP for these events, please email Jill at [email protected] and include:

  • Which event(s) you plan to attend
  • Your name as you wish it to appear on your nametag
  • Firm (if any)
  • City you’re from

I look forward to seeing you!

Whitney Tilson: Warren Buffett’s assistants

2) Here’s a fun article in the WSJ about one of Buffett’s assistants, who spends much of the year organizing each meeting:

Berkshire’s annual meeting stands alone. Part question-and-answer session and part trade show, it offers attendees not just a chance to listen to Mr. Buffett and his partner, Vice Chairman Charlie Munger, but also to browse and buy products from Berkshire’s ever-expanding collection of businesses. About a decade ago as the event was beginning to draw tens of thousands of people to Omaha, Neb., Mr. Buffett created the role of meeting planner to oversee all the duties, from mailing credentials to transporting steers from Texas to a pen in the exhibition hall.

Four years ago with the circus format already in place, Mr. Buffett approached Ms. Sova about becoming the ringmaster. She “jumped at the chance,” according to one of Mr. Buffett’s annual letters, and since then she has been trying to turn increasingly ambitious ideas into reality. One year that meant figuring out how to park a working locomotive from Burlington Northern Santa Fe Corp., the Berkshire-owned railroad, on a track outside the CenturyLink Center in downtown Omaha, where the meeting is held.

“She never took a course in this, and she stepped right up,” Mr. Buffett said in an interview.

This year’s meeting is a grander-than-usual show. Berkshire expects more than 40,000 people, which would be a record for an event that is Omaha’s second-biggest draw after the College World Series, as it celebrates 50 years under Mr. Buffett’s control.

3) I had the pleasure recently of meeting Sam Taylor, the CEO of Oriental Trading, a Berkshire subsidiary. He’s a great guy and it’s a wonderful little business in the Berkshire empire (my wife is a loyal customer). He was on the TV show Undercover Boss a few years ago, which you can watch on Netflix or on the web at: https://www.youtube.com/watch?v=fnQdxwgVzic. I really enjoyed watching it – very powerful/emotional and, I imagine, a transformative experience for both Sam and the company.

Whitney Tilson: Curtis Macnguyen

4) An interesting profile of Curtis Macnguyen of $3.5B hedge fund Ivory Investment Management:

Macnguyen is every bit as intense at Ivory Investment Management, the $3.5 billion hedge fund firm he founded in November 1998. Through the end of 2014, his Ivory Flagship Fund returned 346 percent, or 9.7 percent a year. That’s twice the 139 percent delivered by the Standard & Poor’s 500 Index.

Even more impressive: Because Mac­nguyen hedges his bets by balancing long and short positions, he had, on average, about one-fifth of investors’ money exposed to potential losses. The S&P 500 is 100 percent exposed, by definition. When the market fell during those years, he either made money or lost very little. And when it rose, his portfolio often rose much more.

Macnguyen’s methods have made him rich. He likes Hawaii so much that he and a group of investors bought 873 acres (353 hectares) of oceanfront land that they’re developing. He gets there from Los Angeles on his very own Gulfstream G450.

But that’s not enough for Macnguyen. He could own every white-sand beach in the Pacific and not be content. Lately, he’s been pretty ticked off—with himself. A person could look at his track record and conclude that his best years are behind him. And that is just not acceptable.

In 1999, its first full year of operation, Ivory Flagship returned 28 percent, compared with 21 percent for the S&P 500. Even better, when the index fell 9 percent the next year, Macnguyen made 17 percent.

Investors who didn’t love him already should have swooned in 2008. The market plunged 37 percent that year, and Ivory Flagship fell just 7.6 percent. When the rebound came in 2009, Macnguyen was ready. Investors had been pestering him for a new fund that would take more risk, and he obliged with the Ivory Optimal Fund, now his largest. It jumped 28 percent that first year, compared with 26 percent for the S&P 500.

Then something changed. In 2010, Ivory Flagship lagged the index by 13 percentage points. In 2011, he lost 3.6 percent in Flagship while the market rose 2.1 percent. Ivory Optimal did worse. His mojo was missing in action.

“I never kicked a dog or smashed a computer or even yelled at anyone,” Macnguyen says. “I was just frustrated and pissed off at having to keep explaining to investors that the environment was tough for our strategy. I’ve always felt that we’re in a no-excuse business. Just like high-level competitive sports, no matter how tough the conditions are, it shouldn’t matter, because you just have to be better than your competitors.”

Macnguyen, like most hedge fund managers, lives pretty high up in psychologist Abraham Maslow’s hierarchy of needs. Food, water, sleep, sex? Check. Security, employment, health? Yep. Friendship, family, intimacy? Check, again. (He’s married and has a stepson, 21, and a son, 7.)

What began to elude him, it seems, is the next level: self-esteem, confidence, and perceived respect from others. He grumbles about rivals getting more attention—and money to manage—despite inferior performance.

Whitney Tilson: Matt Taibbi’s new book The Divide

5) I just finished reading today Matt Taibbi’s new book, The Divide: American Injustice in the Age of the Wealth Gap (www.amazon.com/exec/obidos/ASIN/0812983637/tilsoncapitalpar). He is a rabble-rouser and muckraker par extraordinaire (the literary equivalent of Elizabeth Warren), primarily focused on the endless scandals and abuses of the big banks – and the gutless weasel regulators and politicians who punish this vast malfeasance with nothing but fines, which

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