The Berkshire Hathaway
But the Berkshire meeting isn't the only game in Omaha this weekend. The city also played host to the Value Investing Conference, organized annually by Robert Miles, author of The Warren Buffett CEO. This year's meeting featured speakers who rank among some of the brightest minds in the value realm, so it was a real treat to sit back, soak up the discussion, and furiously pound out notes on my laptop.
You had to be there to have enjoyed the presentations, banter, and Q&A in full. But here's my stab at sharing some of the more interesting themes of this stellar event.
- On stocks being cheap: Both Charles Brandes and Legg Mason's Robert Hagstrom presented compelling cases for stocks being cheap -- especially those in the bargain bin. According to Brandes, the cheapest quintile of global stocks on a price-to-book basis are 20% below the historical average.
On attractive sectors: I got a nice jolt of confirmation bias from a couple of speakers who believed that IT, health care, and telecom are all attractively priced right now. Indeed, my last two purchases have been Johnson & Johnson
, which represents a fantastic risk-adjusted opportunity in health care, and Google, an information juggernaut that's also building itself a new mobile moat with its wildly successful Android operating system. (NYSE: JNJ)
- On materials: There was a general vibe that commodity prices and basic material stocks are overheated right now.
- On Japan: This marks the third value-investing conference in the past years where I've heard smart folks make an ardent case for Japan. This time around, global investor and Benjamin Graham pupil Brandes was making the case for the down-and-out country. And although Japan does face very serious challenges, I tend to agree that there could be some great opportunities there.
On Berkshire Hathaway: Surprise: These guys like Berkshire. According to Markel
CIO Tom Gayner, Berkshire has been Markel's largest holding since 1990. (NYSE: MKL)
- On biggest mistakes: Miles asked each of the speakers to fess up to their biggest investing mistake. Nearly every speaker sheepishly talked about getting hit by the financial steamroller back in 2008. Said Brandes: "We bought bank stocks too early. We did our own stress tests on their portfolios, but they weren't stressful enough."
- On cash: The speakers were collectively bullish, but Gayner doesn't mind sitting on cash: "It isn't as though I like cash. It is a pathetic investment. It earns you next to nothing and depreciates each day. It does give you optionality, though, and the ability to act decisively and quickly."
- On going global: According to Hagstrom, the S&P 500 is now correlating more with global GDP than with U.S. GDP. In addition, almost 70% of the S&P 100 has more than 25% of revenues coming from outside the United States.
On holding periods: The humble Chuck Akre ironically wowed the crowd with the massive returns of some of his uber-long-term holdings, including American Tower
. Pat Dorsey, meanwhile, argued that Mr. Market is myopic and that Wall Street is abysmal at incorporating longer-term information into market prices. (NYSE: AMT)
On the very long view: Akre, when pressed for a stock that he could see as a future 10-bagger over a very, very long time horizon, said that both beleaguered Visa
or MasterCard (NYSE: V) could fit the bill. (NYSE: MA)
- On beating the S&P 500: Gayner: "You want to beat the S&P 500? Buy 500 stocks and sell the airlines."
Hungry for more value goodness? Read up on the questions Buffett must answer, follow Warren and Charlie's Q&A session with us as we live blog, and check out our photos and videos from Berkshire weekend on The Motley Fool's Facebook page.
Stay thrifty, my friends.