Tilson Angry At NY Times For Calling Buffett ‘Ordinary’; Confirms ATHN Short

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The following is from an email which Whitney Tilson sent to ValueWalk. He attacks the NY Times for stating that Buffett was ordinary. He also confirms that he is short ATHN and briefly mentions his FNMA long, which we first reported.

The Ira Sohn Conference has posted the slides that David Einhorn and Larry Robbins presented a week ago here: www.sohnconference.org/events/new-york. I thought Einhorn’s takedown of athenahealth, Inc (NASDAQ:ATHN) was epic – the video clips alone were classic! (I am short ATHN.)

In addition, Bill Ackman gave a brilliant presentation on Fannie Mae and Freddie Mac. I think his analysis is spot on – and captures why I’m long Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA).

Whitney Tilson on Buffett being “ordinary”

There was a dopey article (www.nytimes.com/2014/04/06/business/the-oracle-of-omaha-lately-looking-a-bit-ordinary.html) in the NY Times last month about a new study showing that Buffett has become “ordinary”. Ha! I could have told you in three seconds, without “an elaborate spreadsheet filled with more than 30 pages of data and formulas”, that of course a cash-rich, conservatively managed business like Berkshire is going to underperform during one of the greatest bull markets in history – but that doesn’t mean Buffett’s lost his touch.

When was the last time you read an article in a major publication about Buffett being “ordinary”? Try 1999, which also happens to be the last time that silly companies trading at a zillion times revenues were leading the market – and we all know how that ended…

A friend of mine added:

That article was indeed REALLY stupid. Although Berkshire’s book value didn’t go up as much during 2009-2013 as the S&P 500 stock index (Buffett’s yardstick), Berkshire’s book value growth of 65.5% during that period outperformed the book value growth of the S&P 500 companies. (I don’t have the exact figure, but I believe it’s about 45%.) And, of course, if one looks at the 2008-2013 period, Berkshire outperformed the S&P 500 (INDEXSP:.INX) by Buffett’s yardstick: 61.79% growth for Berkshire versus 43.8% for the S&P.

And while Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B)’s stock has slightly trailed the S&P 500 since 1/1/09, as this chart shows:

It’s handily outpaced the S&P since the prior market peak on 10/11/07, as this chart shows:

7) I asked a question at the meeting: I said that I was reading and really enjoying the book, Dream Big (www.amazon.com/exec/obidos/ASIN/B00JUWYGDQ/tilsoncapitalpar) (which was just translated into English from Portuguese; it’s been a best-seller in Brazil since it was published last year), about the Brazilian guys they partnered with to buy Heinz. I said they were incredibly impressive and I hoped they would bag many more elephants together.

At that point, Buffett interrupted me to say what a great book it was, and I added that it’s only available on Kindle except for the few copies being sold there at the meeting.

I continued by asking Buffett and Munger what their secret sauce is? Here are Peter Boodell’s notes on their reply:

Buffett: …they are very smart, very focused, hard-working, determined, never satisfied. As I said earlier, when you make a deal, they don’t overreach, they don’t overpromise.

If you read the book, you’ll learn a lot more.

We want to be a good partner as it attracts good partners. Takes a lot of other people behaving in way to make people want to join and trust us.

Munger: The way to get a good spouse is to deserve one. It is same on partners. Still works in modern times. Behave correctly, amazing how well it works.

WB: What can we learn from 3G?

CM: Can’t skirt the fact that they are very good at removing unnecessary costs. I don’t consider that immoral, it is a service to civilization. It should be done with some mercy…

WB: and sensitivity.

CM: But our system should not have make-work.

WB: We are learning from them…

CM: Some reluctantly.

8) Below is a review/summary of the book and here’s the Amazon page:

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DREAM BIG: How Jorge Paulo Lemann, Marcel Telles and Beto Sicupira Acquired Anheuser-Busch, Burger King and Heinz and Revolutionized Brazilian Capitalism [Kindle Edition]

Cristiane Correa (Author)

5.0 out of 5 stars  See all reviews (1 customer review)

Kindle Price: $14.99


Book Description

Publication Date: April 21, 2014

“My friend – and now partner – Jorge Paulo and his team are among the best businessmen in the World. He is a fantastic person and his story should be an inspiration to everybody, as it is for me.” – Warren Buffett

In just 40 years this Brazilian trio built the biggest empire in the history of Brazilian capitalism and launched themselves onto the world stage in an unprecedented way.

The management method they developed, which has been zealously followed by their employees, is based on meritocracy, simplicity and constant cost cutting.

Their culture is as efficient as it is merciless and leaves no room for mediocre performance. On the other hand, those who bring in exceptional results have the chance to become company partners and make a fortune.

Dream Big presents a detailed behind-the-scenes portrait of the meteoric rise of these three businessmen, from the founding of Banco Garantia in the 1970s to the present day.

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